The project to replace the ageing Interislander ferries was scrapped in December. Photo: RNZ/ Rachel Thomas
Labour leader Chris Hipkins says he would be "astounded" if new replacement ferries cost less than the previous plan, and the cancellation costs are still unknown.
Meanwhile, government ministers are talking up the prospect of a "refresh" of KiwiRail's board after the chair retired, and in the wake of one of the current ferries having run aground near the Picton terminal on Friday, apparently due to a steering failure.
The coalition in December had refused KiwiRail's request for $1.47b in additional funding for iReX, the project to replace its ageing ferries and related port infrastructure, after what Finance Minister Nicola Willis described as a "major cost blowout".
The two new ferries would have meant double the passenger and vehicle capacity and triple rail capacity, while reducing the carbon footprint by about 40 percent.
KiwiRail then confirmed the project would not go ahead. The government subsequently set up a Ministerial Advisory Group to look into alternative options.
The group reported back last week, with some media suggesting it recommended ships without rail capacity. Some commentators have also suggested KiwiRail was not the right body to be running the ferries.
Ahead of National's weekly caucus meeting on Tuesday, Prime Minister Christopher Luxon said shareholding ministers needed time to digest the report.
"But what you can be assured about is we're going to get the right ships on the Cook Strait ferry given the importance of that infrastructure."
He refused to "get into the detail" of whether the report had recommended ships that could carry trains. Luxon said the State-Owned Enterprise was still an appropriate model for KiwiRail, but the government wanted to refresh the board.
"Yeah, it is, but we expect that company to be well managed and well run. And as you see, we want to refresh the board, we've had to put a ministerial advisory group in. You know, I think when you want to go buy a house for $750,000 and you go build it and it turns into a $3.2m house build, that's a problem.
"We get it, it's a tough situation, we're very determined to get the right ships on the Cook Strait ferry, trust us, we'll get that sorted."
Finance Minister Nicola Willis said the advisory group had considered the matter of rail capacity in depth, but the ministers were yet to make decisions on it.
"It is for us to have confidence in the board, the board decides who their executive and management are, and as we announced at the weekend, the chair of KiwiRail has retired early from that board.
"We will be refreshing that position and we will be looking to refresh the board more generally to ensure it has the skills and expertise needed to lead that organisation into the future."
Labour leader Chris Hipkins, however, said he did not think it was realistic not to have a rail link between the North and South Islands, as it would lead to "significant inefficiency" in the way that freight is transported.
"Ultimately we'll probably end up with more freight on roads in both the islands which leads to more road damage and more road congestion, because it will become less economic to actually transport goods by rail at all if there's not a connection between the two islands."
He would be "absolutely astounded" if the government managed to get new ferries for a lower price than what had been signed up to previously, he said.
"We ordered new ferries at a very very competitive rate," he said. "I would be absolutely astounded if they managed to get new ferries for less than what we had purchased those two new ferries for."
He said the landside infrastructure cost escalation had been a concern for the previous government.
"We hadn't signed all of that off, we were still talking to KiwiRail about how to get that cost down," he said. "But there are some stark realities here. Even if you ordered three new smaller ferries instead of two big ones, the wharves still need to be replaced, they are very old. So let's see what they come back with but I don't think they're going to get anything cheaper than what was already under way."
"Ultimately I think it highlights that they were wrong to make such a knee-jerk response."
The government was being "very cagey" about whether the previous order for the new ferries has been cancelled or not, he said, and he heard from "people who would know" that the contract had not been cancelled.
"I've received some suggestion that those ferries are still in the process of being built right now, that the contract hasn't actually been cancelled, and that the dollar liability to the New Zealand government for cancelling that order hasn't yet been finalised."
Labour's Transport spokesperson Tangi Utikere also said it was unclear whether the contract for the replacement Interislander ships has been cancelled or not.
"But what is clear is that every day that continues, there's a lot of uncertainty and I think many are thinking that the original locked-in figure of $551m, the actual cancellation cost might potentially be in excess ... no one knows.
"We locked in $551m for the physical build [of the ships], that was in 2021, prices have increased - so naturally it would be significantly higher."
He said rail "absolutely" needed to be part of the solution for moving freight effectively and efficiently.
The matter of a proposed "refresh" of the board of KiwiRail was a matter for the ministers, he said, but "there does need to be some accountability around this, what we all saw on Friday evening was unacceptable and so I'll leave people to form their own views on that".