KiwiRail chief executive Peter Reidy said he respects the government's decision. Photo: RNZ / Kate Green
There will be job losses in Wellington and Picton as work on an axed mega ferry project winds down, KiwiRail chief executive Peter Reidy says.
KiwiRail had requested an additional $1.47 billion for the project, a component of which had been agreed to in-principle by the previous government, to address cost escalations related to associated harbourside infrastructure in Wellington and Picton, including to accommodate new larger ferries.
To date, $435.1 million of Crown funding has been assigned for the Inter-Island Resilient Connection (iReX) project of which about $63 million remains.
The project was set to deliver two rail-enabled ferries by 2026, but construction had not yet started on those.
Finance Minister Nicola Willis declined the request for funding and said ministers would engage with the board and officials about alternative options.
She likened the current option to a Ferrari and said "we're going to go off and see whether there are any good reliable Toyota Corollas available".
Reidy told RNZ's Nine to Noon that while there is still some work to be done, they KiwiRail be looking to "demobilise" contractors in the coming months.
There was a design team of 50-60 people and 200-300 contractors, he said.
"I've spoken to the contractors, we've obviously got work to do to close work out, then obviously the contractors are looking to where they can demobilise staff - but there's still work to do.
"There'll be work for them for a number of months but of course, that's demobilising the current project. As we look for the new options, we have to do something."
Reidy said KiwiRail respected the government's decision but it was looking for the next option.
"There'll be work for them for a number of months but of course, that's demobilising the current project" - KiwiRail chief executive Peter Reidy
They had spent the last 48 hours going through options and there would be a board meeting on Monday, he said.
There had been $400 million spent to date on ship design as well as works like upgrading culverts, rental car areas and a passenger walkway in Picton. This money was not lost, he said.
It was the infrastructure costs that had blown out, he said.
"The infrastructure costs have been designed for a 100 year design life, that's three ship cycles, not 10 and not 20 years.
"Now, that's a question for New Zealand to be solved. If we don't want the resilience, reliability for 100 years, let's go back to cheapen up the wharf structures - which we're prepared to do but that hasn't been the base assumption because it's been about resilience and reliability across the Cook Strait."
In 2018, the original estimated cost for the two new, larger ferries and the portside infrastructure was $775 million.
Within months of the project being announced, KiwiRail was already asking the government for more money, and the requests have kept coming.
The latest overall cost estimate has quadrupled to almost $3 billion dollars which Finance Minister Nicola Willis said she will not agree to.