Urgent Debates — Grounding of Aratere Ferry—Government Response

I move, That the House take note of an urgent item.

We all know that the Interislander known as the Aratere ran aground just out of Picton on Friday evening with 47 people aboard.

💬 SPEAKER: Can I just interrupt the member, please. Those who are leaving the House, do so quietly and without conversation on the way through. The member’s time will start again.

Thank you, Mr Speaker. The Interislander that we all know as the Aratere ran aground just out of Picton on Friday evening with 47 people aboard, and that was a very distressing sight for all of us to see and to take note of what occurred over the coming hours. The primary focus, of course, at that time was on the safety and on the wellbeing of everyone who was on board. I want to acknowledge the efforts that were made to ensure that those who were on board were safe throughout the incident—particularly those who were seen as the first responders, the Maritime Union of New Zealand and other local MPs, including my colleague Rachel Boyack, who was there as well. There will be, no doubt, many lines of inquiry into what went wrong, and they will work through their processes for sure.

What I can say is that I’m sure all members of this House will know that it is extremely fortunate that we are not here this afternoon referring to an incident that had an outcome that would be much more devastating, much more dire, because it could have. If that vessel had made its way out of the location where it was into the Tory Channel or, indeed, into the Cook Strait proper, the outcome could have been one of devastation. Those are notorious water bodies, and everyone knows that. It is only luck that this breakdown was not more serious. It ran aground in relatively safe, calm waters. As we know, the Cook Strait ferries are massive machines. They are huge vessels often actually carrying hundreds of passengers and people, and they travel that expanse of water with swells and winds, and a malfunction in the wrong place could be nothing short of fatal.

This latest incident not only further enforces the need for a reliable and sustainable Cook Strait ferry option but also the need for ferries that are built to last. The current Government-owned Interislander ferries, that are owned by the State-owned enterprise KiwiRail, are either at or past the end of their lives. They are limping along, and the cost of keeping them in a seaworthy state is large, and that continues by the day.

I think, if there was a further disaster, you wouldn’t need much more of an inquiry to determine perhaps what went wrong, and Government Ministers need to take responsibility in this space. They are the ones who run KiwiRail, in terms of setting the priorities and providing the financial envelope for them to function, and they need to make sure that they are taking responsibility for this.

There were, last week, questions in the Transport and Infrastructure Committee that were put to Simeon Brown as the Minister of Transport around the nature of the ferry fleet. My colleague Arena Williams and I put very squarely to Minister Brown these questions. Now, this grounding came the very day after those questions were put to the Government to respond. Minister Brown pushed back on concerns that we raised relating to the need for an immediate replacement and that costs would actually continue to grow beyond the $551 million that the former Government was able to lock in as a suitable replacement. Not only that but also the increasing nature of maintenance costs that some have established could be in the region of $65 million a year from next year. The Minister did not believe that there was a lot of substance to that, and just 24 hours after those questions, we have this unfortunate situation where we still have no options in terms of what the replacement might look like moving forward.

Of course, National have a habit of doing this. They have a habit of, effectively, switching out the lights and keeping people in the dark, and they simply need to front up to the communities of interest all around Aotearoa New Zealand to give certainty around what the future ferry options look like for the Cook Strait. We do not have time to continue to dilly-dally around and to wait for them to actually get their ducks in a row and to share with the community and to share with this House what their options will be. Nicola Willis, Simeon Brown, and Paul Goldsmith have placed us in this exact uncertainty that we find ourselves in.

The solution to all of this was the ferries related to iReX, a brand-new set of ferries that were being built—actually were starting to be constructed by the Korean Hyundai Mipo Dockyard back in 2021, when this was commissioned. They were to be delivered in February 2026, to avoid the business summer season. Now, the finance Minister, at the end of last year, indicated that she would simply cancel the contract, and she has been dragging her heels for the last six months while this Government has tried to sort themselves out about what the replacement option will be. One thing I will say is if the Government can prioritise nearly $3 billion in tax cuts for landlords, they can prioritise a resilient, safe, and reliable ferry service between the North and South Islands.

We are being seen as the laughing stock in maritime circles, not just here in New Zealand but all around the world. All one needs to do is to look at the imagery and the photos of that 24-hour period to indicate why it is that New Zealand is seen as the laughing stock, where we are not taking any action in this particular space. What is really important is that the Government seems to like to talk about cost overruns and blowouts and all of these sorts of things. The situation is this: what occurred on Friday evening was in the context of having no plan B.

💬 Arena Williams: No plan B.

No plan B. We are still waiting to hear what their plan is going to be.

💬 Glen Bennett: Plan C.

So what then did—plan C. Actually, I think Kiwis wouldn’t mind plan D at this rate. I know that Nicola Willis says she does not want to have a Ferrari. OK. She said she prefers a Toyota Corolla. All right. I think people, at this stage, would settle for a Mini. They would settle for a Suzuki Swift. They would settle for a replacement that is going to meet the needs of communities to connect the two islands of Aotearoa New Zealand.

Prior to the election, there had been a lot of work that was going on in this space. There had been work with KiwiRail on a more suitable and sustainable solution. That was then over to the Government to pick up that conversation and to pull together a plan. What they have done is they have made cancellation the priority, although we actually heard in question time today that cancellation may actually not have been actioned. We hear repudiation is where things are at, at the moment. The Government have said that, actually, it is cancelled, but I don’t know. I’m none the wiser as to whether or not the contract has actually been cancelled, and it’s over to the Government to share with us whether that is the case or not.

We also hear that it is possible that the reputation of New Zealand in being able to secure future contracts in terms of ship builds could be compromised. It could be. I don’t know, but it could be. All we need to do is think about that. When you are engaging with a partner as a form of business and someone wants to withdraw from a transaction that has been locked in back in 2021, then surely there must be some reputational risk to New Zealand as a result of that. But this is also a financial envelope that, just for the ferry build itself, is continuing to grow—the lock-in of $551 million for the ferry build itself. We don’t know the full wind-down costs of that particular exercise. It could be $200 million; it could be $300 million. We don’t know what the actual break penalty clause is as a result of cancelling these two ferries. It could be $100 million; it could be $200 million. That is on top of the wind-down costs.

Then, of course, we have the shipyards that may still very well be building these ships all the way through to completion, because they started the build when the Government virtually signalled that they were going to cancel the build. Then if they sell them, there is an opportunity that the cost would actually be, over that three-year period, significantly higher. So possibly three to four times higher as a build. So already the financial cost that is being drawn as a relation to this is probably much significantly higher than the $551 million just for the build itself, because the ferries, of course, were just a small component of that.

It is unfortunate that there is no certainty for New Zealanders and for Kiwis around what a resilient service will look like between the North and South Islands. We continue to wait while this Government drags its heels. I thought, actually, maybe yesterday that we would have heard something, the Cabinet had come together and maybe had a chat and may have had a chance to actually think—

💬 Hon Peeni Henare: Where’s the urgency?

You know what, where is the urgency? Well, there does not seem to be urgency from this Government in terms of providing a safe, secure, resilient, and sustainable connection for the future. We cannot wait to 2029 as Nicola Willis has said. She seems to think that it’s all right; it’s only a few years. Well, a few years are a few years far too late. We had a plan. We were prepared to deliver a safe, reliable, and sustainable option. This is a Government that is not prepared to do that, and despite the activities and actions of the last week or so, they continue to be no further down the road.

Well, thank you, Mr Speaker, for the opportunity to respond in this debate. As is well known, on Friday, 21 June, the Aratere ran aground at 9.56 p.m. just outside of Picton, with a total of 47 aboard: 39 crew and eight passengers. It is a relief to everyone that there was no one injured during this incident, and as it was a freight sailing, the usual travelling public were not aboard and not impacted by this event. I also want to acknowledge the swift action from the emergency response agencies to ensure that those aboard were safe, and the actions which led to the successful refloating of the vessel late on the evening of 22 June, the following day.

The operation to refloat Aratere on Saturday night was successful and the vessel is now berthed in Picton. Now the ship has been safely refloated, investigations can begin into the incident and how KiwiRail can ensure that this does not happen again. There are three investigations under way at this stage. KiwiRail is undertaking its own internal investigation. Maritime New Zealand, as the regulator, is undertaking an investigation. This investigation may result in administrative action or prosecution in regard to the issues. The Transport Accident Investigation Commission will also be undertaking an independent safety investigation. This investigation will determine the circumstances and causes of accidents and incidents with a view of avoiding similar occurrences in the future, rather than to ascribe blame to any person.

The debate from the other side of the House is trying to put this perspective forward—that the incident that took place on Friday night would have all been fixed if iReX hadn’t been cancelled. Well that is, quite frankly, completely untrue—completely untrue—and the point that they’re trying to make is completely untrue. The reality is this is an issue that KiwiRail, as the owners and operators of those ferries, must take responsibility for. They are responsible for the maintenance of their ferries, and the reality is, over the last number of years, when the last Government was in charge, there was so much focus on the big shiny new ferries, they lost sight of the focus on actually maintaining what they already had—they lost sight of what they already had.

So the focus was on the new thing—the new berths, the new flashy big ferries that the last Government signed up to, and the billions of dollars they were planning to spend—and they lost sight of the fact that their number one job is to keep New Zealanders safe going across the Cook Strait on those ferries. We’ve seen incident after incident in that regard where the safety of New Zealanders has been put at risk by KiwiRail and by Interislander when that is their number one job.

Unfortunately, on Friday night, the latest incident took place in relation to what we saw on the Cook Strait. As the member said earlier, we are grateful that it took place in the circumstances that it did and that no one’s life was lost. But what this highlights, and what the shareholding Ministers for the State-owned enterprise KiwiRail have made very, very clear, is that this Government’s expectation of KiwiRail is that the maintenance and the resilience and the safety of their existing ferries must be the number one priority for the board of KiwiRail—that must be the number one priority for the board of KiwiRail.

Those expectations have been made abundantly clear by the shareholding Ministers—the Hon Paul Goldsmith and the Hon Nicola Willis—to KiwiRail in terms of their expectations, and the concerns that they have made has led to action being taken by KiwiRail in relation to the maintenance of those ferries. But the reality is not enough has been done. There has been work done by KiwiRail in relation to getting independent ferry safety experts in to actually ensure that they are undertaking full safety operations of those ferries, but there is more work that needs to be done. The reality is that, regardless of the iReX decision, these ferries have to run for at least another two years, and so that work is critically, critically important.

When I was in Picton on Saturday, we discussed these issues, and the Transport Accident Investigation Commission made this point, which I think is a very important point. They made the point in the meeting that there are a large number of ships of this age which operate around the world and which operate safely. So that is the point that needs to be debated here today. It is the need for KiwiRail and Interislander to ensure the safety and operation of those services. The reality is that this does also raise questions in relation to the future. The member opposite—Tangi Utikere—tried to make the point that “Well, the ferries were only going to cost $550 million.” Well, the iReX project was blown out to over $3 billion.

The reality is that when it started, the project was worth $750 million. Now, that sounds perfectly reasonable. The analogy you could use is buying a house and land package, and you’ve signed the contract for $750,000. Well, you come back five years later and, whilst the house is still only worth $550,000, the land’s gone up to $2.25 million, and suddenly it’s worth $3 million. No one would continue to be signed up with that type of deal, but that is exactly what the last Government let happen. The landside, port-side infrastructure went from being around $200 million to being over $2.2 billion as part of that particular project.

I have a letter here which the former finance Minister Hon Grant Robertson sent to KiwiRail on 19 September 2023, saying, “We note that KiwiRail under-scoped the landside infrastructure in 2021, meaning the decision to procure two large rail-enabled ships at the time was premature. To date, we are yet to see a satisfactory explanation for why this was the case.” So—

💬 Dana Kirkpatrick: Who was the Government?

The Government at the time was the Labour Government. It was making the point which we were then shown when we became Government, which is that the cost of the landside infrastructure, which was being foisted on to the Crown, was being driven because of the fact that it was under-scoped due to the size of the ferries and also due to the fact that they were rail-enabled, leading to significant cost escalations on the port-side infrastructure.

Tough decisions did have to be made when we came into Government. In fact, the time line that was released by the Minister of Finance when the decision was made showed that between early November 2023—before the Government had been formed, but we were briefed during the negotiation phase. The incoming Government was informed of the most recent cost escalation in early November 2023, and that it would be $2.6 billion. When we became Government, we were advised it was $3 billion. In less than a month, the cost had blown out by over $400 million—over $400 million. It would be, frankly, irresponsible to have continued with that project.

This Government is committed to having a safe and resilient Cook Strait. We are committed to new ferries. The Minister of Finance and the Minister for State Owned Enterprises have a ministerial advisory group which has, just as of last week, provided a report with further advice on how we can assure the safety and resilience of the Cook Strait. There are options that will be considered. Decisions will be made in an affordable and cost-effective manner to ensure the resilience of this critically important part of our supply chain.

Those are decisions which we will make in the appropriate time to make sure that we make those appropriate decisions, and we won’t make the mistakes the last Government made where they let this project go from being $750 million to over $3 billion and counting, and they refuse to take responsibility and accountability over those things. We will make the tough decisions on this side of the House, and we will ensure the resilience of the Cook Strait. Thank you very much.

E te Māngai, tēnā koe. Tēnā koutou e te Whare. I think, just there, members of the New Zealand public have seen a shining example of why it is that we have an approximate $200 billion infrastructure deficit in this country. We constantly see the chopping and changing of legacy parties in charge, binning projects that the other one did not like, with no meaningful plan on the horizon.

I just here want to refer to a document from 2020, and I want to quote from it, if I can. It says—and I quote—“This Government is committed to restoring rail to its rightful place in New Zealand. Bigger, better ships, with new technology are yet another step on that journey … These will be the first brand-new purpose built ferries New Zealand has had in over 25 years. Of the current ships, only the Aratere is rail-enabled, and an unwillingness from previous governments to invest properly in New Zealand’s rail infrastructure has meant the Aratere has had a number of costly technical and mechanical issues. It is vital that we act now to ensure our Main Trunk Line between the North and South Islands is resilient and well-provisioned [into] the future”. That is, of course, a quote from the Rt Hon Winston Peters, who then was acting in his capacity as Deputy Prime Minister, in a press release from 27 May 2020 titled “Government investment supports the acquisition of new Interislander ferries”.

Unfortunately, how times have changed, because what we’ve just heard there from one of the shareholding Ministers for KiwiRail, one of our State-owned enterprises, is that despite all of this bluster and approximately 10 minutes in a speech, we have no meaningful plans whatsoever for what is to happen in 2026 and beyond.

Look, the Green Party can absolutely agree with the point from the Minister, as actually was reflected in this press release from the former Deputy Prime Minister and the now new Deputy Prime Minister or co-Deputy Prime Minister, that these are not new problems. We have known for a really long time that our ferry infrastructure, the Interislander ferries, need an upgrade. They need proper and meaningful investment. That is why the lead times exist on these kinds of investments. It is not a new problem and these investments could be requisitely made.

This Government likes to talk a lot about how they are, for some reason, great financial managers. Let’s dig into the detail on that specifically for this problem, which so well is an emblem of a lot of these issues that we have with the infrastructural deficit in this country. You’d tend to say that when you are a good financial manager that you invest early in an issue to stop it escalating.

Well, as we already know, based on the hearings that other speakers have alluded to, we have already spent $424 million on this iReX project, yet we are now also not all too transparent from this Government when it comes to the cost of the cancellation fees. Yet, as I understand it, on Breakfast television this morning, the Minister was not rebutting a figure in the arena of $300 million on the cancellation of that. We also, of course, have the cost of refloating the ferries every time they run aground because, as we’ve seen, this is not a new problem, and it is likely to continue out into the future.

The Government also passed up the opportunity to futureproof the fleet. We had a guarantee of delivery in 2026, but now we are looking at an approximate at least 40 percent increase in inflation in the cost of purchasing those new ships. On top of that, we’ve also passed up the opportunity to double capacity not only for passengers but also for freight. We also have passed up the opportunity to reduce carbon emissions of that fleet by 40 percent and to accommodate alternative fuel sources as they develop, not to mention a 100-year lifespan for both of the ports, and to get greater rail capacity, something that New Zealand First used to be proud of and campaign for, to get trucks off the road, and ultimately not only to reduce those carbon emissions but to reduce congestion, not least for rural Aotearoa New Zealand.

The Minister Simeon Brown just before was saying that he has expectations that the fleet keeps up with maintenance. I’m sure that’s something that actually everybody in this House would fundamentally agree with—I didn’t see any disagreement whatsoever on that basis—but the question for the Minister and for Government members is to show us the money, to show us the plan and the contribution, because right now we are left with far more questions than we have answers to as to what occurs in 2026.

That bill is going to continue to climb, not only because, based on the fact that I’ve just well canvassed that this is not a new problem, we are likely to see more groundings of these ships; we are likely to see more issues eventuate; and we also are going to continue to see price inflation for the purchasing of these new ships. To that effect, I think it also needs to be noted that as far as we’re aware, there are only about 20 of these ships in the world, none of which are currently in action—

Thank you. The member’s time has expired.

Thank you, Mr Speaker. What we saw occur with the Aratere on Friday night was extremely concerning. It was a great relief, however, that there was no loss of life and everyone on board the ship was able to get off safely. But this actually does raise some serious concerns about KiwiRail and KiwiRail’s mismanagement. In ACT’s view, KiwiRail’s 100 percent Government ownership has been a contributing factor to the general mismanagement of the Cook Strait ferry service in recent years.

ACT’s policy is to add KiwiRail to the mixed-ownership model. By selling 49 percent of the Government’s shares, this would ensure KiwiRail has the accountability and flexibility needed to keep the ferry service running properly—100 percent Government ownership means KiwiRail isn’t subject to commercial accountability; KiwiRail’s investment decisions are dominated by politics rather than commercial realities.

Right now, KiwiRail’s commercial performance is monitored by a small, overworked team at Treasury. In Budget 2024, the budget for Crown company monitoring—that’s all Crown companies; not just State-owned enterprises (SOEs)—was roughly $5 million, whereas the net asset value of SOEs alone was roughly $40 billion. That’s a management fee of 0.1 percent. Even the cheapest private equity funds charge around 1 percent plus performance fees. Either the Government is getting a bargain of the century or many taxpayer assets are being seriously under-managed.

By contrast, the partially owned electricity companies and Air New Zealand have dozens of analysts from private sector investment funds and stockbrokers poring over their quarterly returns and other performance data. Those financial companies often have their own skin in the game, as shareholders and would-be shareholders. Their analysts can ask executives questions, and when they are truly dissatisfied with their performance, they can send a clear signal by selling their shares or advising their clients to do so. The stock price gives a signal to executives as to whether the market supports their business plan. That means things like maintenance schedules, capital investment programmes are rigorously monitored.

With all the will in the world, the Public Service has neither the incentive nor the means to subject their portfolio companies to such scrutiny. Moreover, the SOE Act, quite properly, prevents Ministers from getting directly involved themselves. The investment statement prepared by Treasury in 2022 helps confirm this. The Government stake in listed companies significantly outperformed their cost of capital, whereas Government stakes in unlisted companies underperformed. That’s even with the then COVID-afflicted Air New Zealand being counted amongst the listed companies. That means the Government has lost taxpayers’ money by leaving it in these unlisted companies, relative to the equivalent risk investments elsewhere.

A more closely monitored KiwiRail may well have made fewer disastrous investments and maintenance choices. In addition to better accountability, partially private ownership would have given KiwiRail more flexibility to make decisions based on economics rather than politics. When the mixed-ownership or private companies need more capital—like KiwiRail has asked for with the ferry programme—they prove the case not to the Cabinet but to private investors. That means that access to capital is determined by the rates of return on offer rather than the Government’s political or fiscal position. That makes it easier for good projects to go forward and bad projects to be stopped. Private investors have no incentive to throw good money after bad simply to avoid embarrassment. Private investors can move quickly when needed, rather than forestalling a decision for political convenience, as the previous finance Minister seems to have done. The involvement of private investors would have allowed for alternative financing of the ferry programme to be considered.

Private and partially private transport companies are not immune from accidents, but they do tend to make fewer white elephant investments like iReX that delay and distract from the real solutions to ageing machinery. A 49 percent privatised KiwiRail would be more accountable, more flexible, and possibly better capitalised. That would make it less likely for a comedy of errors, like this ferry debacle has been, to occur. Thank you, Mr Speaker.

Thanks, Mr Speaker. Look, we all agree that the Cook Strait crossing is an essential part of New Zealand’s transport infrastructure, and we all know it’s a problem, which is why we’re having the debate that we’re having at the moment. However, Tangi Utikere opened this debate by, essentially, stating that plan A is still the right plan, is still a good plan—two large ferries. I’ll come back to that in just a moment. But I say to him and to the Opposition: let’s stop playing politics with this; let’s work together to try and find the solution.

Plan A was fundamentally flawed. We know that the cost of iReX project had blown out enormously. I would take that as an illustration that what we’ve got to stop doing is saying, “We think that a project is going to cost”—in this case—“$750 million.” before we’ve done any of the design assessment, before we’ve done any of the geotechnical work, and before we have actually any real idea of what it’s really going to cost. But, no, we go and say, “It’s going to cost $750 million.”, and then, a few years later, it turns out to be “It’s $3 billion and counting.” So the initial thing we should do with all of these projects is to be putting money aside to look at options, to look at feasibility, to look at geotech—to look at all those things—and then we’ve got some vague idea of what the cost is going to be. But that’s not what happened in this case.

The Opposition has told us that the ferry deal was a very good one. Actually, the ferry deal was a good one. It was a good one because it was done during COVID, it was done at a time when ship builders didn’t have a lot of market, but the problem was that this is a package. It’s not just a ferry; it is also a ferry and all the land-based infrastructure. We’ve already heard from the Minister Simeon Brown there that the cost, effectively, of the land-based infrastructure exploded not by a factor of one, but a factor of 10 times—10 times more expensive. You can’t have the ferries without the land-based infrastructure as well.

So, Tangi Utikere, we had a plan, but the problem is that the plan was deeply flawed. Even—

💬 Hon Dr Duncan Webb: Your plan.

—the then Minister of Finance Grant Robertson knew that it was a flawed plan. I don’t think that he signed off on it, did he, Mr Webb? He didn’t sign off on it either.

The big problem here was that KiwiRail, I think, were exceedingly arrogant. I think that what, basically, they assumed is that everybody was going to jump to their tune. That was their assumption, and I’m going to come to some illustrations on that. They ordered the ferries before they had anywhere to put them—they ordered the ferries before they had anywhere to put them. I can remember, at the time when that was news, thinking that is extraordinarily brave—extraordinarily brave—to the point of being reckless.

The other piece of information that we’ve had more latterly is that the port of Marlborough harbour master hadn’t even given approval—in fact, I don’t think, at that point, he’d even been asked to give approval—for whether these larger ferries would be able to operate in Tory Channel. He gave the indication that, in fact, he wasn’t going to give that approval. So an extraordinary piece of work from KiwiRail.

So let’s talk about the port infrastructure at either end. At both ends, they are very difficult construction environments—at the Wellington end, particularly the seismic and sea-level rise. So look at this, an overall package: roughly one-sixth of the package is for the ferries; one-sixth is for the port of Marlborough end; and a whopping four-sixths—two-thirds of it—is for the port of Wellington end. That reflects the complexity of that end. It was $3 billion and counting. So either the incoming Government wrote a blank cheque and said, “Look, just keep going. However much it’s going to cost, keep going.”—and we know the business case for that would have been appalling—or push pause and think about that.

Those of us who are members of the Transport and Infrastructure Committee would recall that KiwiRail appeared before us in February as part of their annual review, and both the chair and the CEO made the point that they had only come to the company in 2022. When they came to the company, they said, actually, they were alarmed at what they saw, and they alerted the then Minister of Finance to their concerns. So it’s not as though the new administration of KiwiRail was saying this was all beer and Skittles; they had real concerns. What I saw KiwiRail having done is wasting years and years of time that should have been used constructively to deliver an outcome.

So let’s take the Wellington end. They wanted to bring large, new ferries into the inner harbour of Wellington, didn’t mind about any other users; no mind about the impact on CentrePort’s business—they were stuck right in the middle of CentrePort; they were, effectively, destroying the business—and no mind about the impact on the road network from having road and rail services at a new location. They didn’t mind about any of that; they just assumed that everybody was going to jump to their tune. They did exactly the same thing at the other end with the port of Marlborough, as well, to the extent that the port of Marlborough said, “Yours. Your project. You work it out.”

So we have a fundamental problem here. It’s a problem that we need to work together on. I’m really looking forward to seeing the outcome of the ministerial working group. That is the basis on which we should be moving forward from this. Anything else, at this stage, is speculation.

Before I move to the next speaker, just for the awareness of the House, if a party does not take their allocated call and there is no indication that they have transferred it, any other member who has not yet spoken may seek that call at the end of the debate.

This knee-jerk, political point-scoring, “shoot from the hip” Government has the chutzpah to come down to this House and give the Labour members a lecture on working together. This Government, who got out in front of the cameras at their first opportunity and said, “Look at us—we’re so cool. We’re going to get these chief executives who have been running up the costs by cancelling the contract.” They’re cancelling a contract which that member Andy Foster just told this House was a good deal: $551 million for ferries, which will enable a resilient crossing of the Cook Strait—a resilient crossing of the Cook Strait that that Minister of Transport, who spoke earlier in this debate, came to the Transport and Infrastructure Committee on Thursday and promised that committee in his answers. Further, the Prime Minister stood in front of cameras on Monday and promised New Zealanders a resilient crossing of the Cook Strait because it is nationally significant infrastructure, not only to the South Island but to all New Zealanders who rely on that for the economic benefits it gives to everyone.

This is such an important piece of infrastructure investment in the hands of a Government that does not believe it is responsible for it—a Government that will stand here and kick the KiwiRail board. Those members will say they are reckless, will say that they are exceedingly arrogant, and will do everything that it can to undermine the public’s trust in a State-owned enterprise and to push responsibility as far as they can away from this Cabinet, which is making decisions to undermine that resilient crossing that they are promising New Zealanders out one side of their mouth and undermining in the Cabinet room.

We know, and we have confirmed today—not only the Minister for State Owned Enterprises but the Minister of Transport have told this House that they have had the advice back from their ministerial advisory group, that they have had a discussion about it around the Cabinet table, and that they know what the recommendations of that ministerial advisory group are. They actually have a solution in their heads. They are sitting through this debate, refusing to tell New Zealanders how we will have a resilient Cook Strait connection, and are instead blaming the KiwiRail board, saying that they need to prioritise safety. Well, the KiwiRail board have been asking for an upgrade of their infrastructure, which is causing a lack of safety to the people who they provide this business for, and they have a Cabinet here who haven’t backed them. They have a Cabinet here who are pushing responsibility away for those infrastructure investments and have no plan B.

When Andy Foster comes to this House and he says, “Well, Tangi Utikere wants plan A.”, we just want anything. At this point, we would be grateful for a boat that could cross the Cook Strait and a Minister who was happy to be in charge of that. But, instead, they are here today and they are pushing responsibility as far away from themselves as they possibly can. We still don’t know if the contract has been formally cancelled for those $551 million boats, but KiwiRail is already out in the market trying to procure other boats. We don’t know if New Zealanders are not only on the hook for that $551 million contract or however many hundreds of millions it will cost to break it, and another hundreds of millions of dollars’ worth of some other project because Cabinet have decided to keep that information from New Zealanders and will not share it in this debate. They will not give us any clarity about the important decisions going forward which are in front of them.

So the questions as I see them are these: has the contract for the new Interislander ferries been terminated, and, if so, what is that penalty? We don’t have that information—that hasn’t been offered by the Government. We also don’t know if those Ministers have had those discussions and what options they are considering next. We have certainly heard from the ACT member that it is the ACT Party’s position, and probably the ACT Ministers’ around the Cabinet table, that they would sell it—either all of it or part of it. So New Zealanders should remember that that is also a decision which is being considered by this Government and we deserve answers on that—answers which have not been provided by Government Ministers in this debate. I see the Minister for State Owned Enterprises here, so I hope he will take a call and explain his position on everything the ACT member has raised earlier in this debate.

We also need to know whether this option to procure more ships is being explored at the same time as we are trying to exit that contract because this Government represents us in these international agreements with Hyundai Mipo. We ask whether New Zealand is on the hook for one contract while also entering into a second contract. We need to know what future generations of New Zealanders are being signed up to in terms of serious debt. There is so much more to discuss on this topic. I look forward to the Minister for State Owned Enterprises taking a call.

Thank you, Mr Speaker. This is an urgent debate on the grounding of the MV Aratere at 9.56 p.m. on Friday, 21 June, and the Government’s response to the issue. Now, the grounding—and we’ve heard a lot of speechifying on a whole range of other topics in relation to this, but what we’re talking about is the unfortunate grounding of a ship and whether or not some ferries might be coming in a couple of years’ time or afterwards is of interest, I suppose, and the broader question around ferries, but not specifically relevant to what happened on Friday, 21 June, and the safety of everybody involved.

There were 47 people on board; 39 crew and eight passengers. Obviously the primary reaction to this is relief that the situation didn’t happen in a more dangerous spot, and that it was resolved in this relatively—that it didn’t lead to a more dramatic disaster and heaven forbid any injuries. So we’re relieved that it was a freight-only sailing and that not many members of the public were on board.

We did also note the swift action of the emergency services in responding to ensure that people were safe and the actions led to the successful refloating of the ferry on the 22nd. I understand there was no water entering the vessel or oil going into the marine environment. So we were lucky. But obviously the primary issue in relation to this is that our safety infrastructure is working appropriately. So the absolute primary response of the Government in the broadest sense is that the Transport Accident Investigation Commission and Maritime New Zealand both have statutory functions to conduct inquiries and investigations into the circumstances and causes of marine accidents and incidents with a view to avoiding similar occurrences in the future.

Both of those agencies, the Transport Accident Investigation Commission and Maritime New Zealand, have confirmed their intention to inquire into or investigate the event in line with their statutory functions, and they are expected to take several months to continue. So in New Zealand, we mercifully have had very few serious accidents, but we’ve had a few over the years. Each time anything happens, there is a thorough inquiry into what happened and lessons are learnt and operators are expected to deal with that. So we recognise the importance of the Cook Strait connectivity.

Chlöe Swarbrick: What are you going to do about it?

Well, like I say, the proper investigatory agencies are looking into what caused this particular trap and how it’s going to be dealt with. Then of course KiwiRail and their board are directly responsible for the safety of those ships.

The question then sort of lends itself to the question: “Well, what’s going to happen in terms of the replacement of ageing ferries?” Well, of course, as has been well canvassed, one of the reasons why this Government is having to deal with an horrendous financial and fiscal situation is that the previous Government was out of control in its spending, and no more simple example of that was the fact that the replacement of ferries blew out from $700 million to over $3 billion. It was in relation to the larger size of the ferries, the rail enablement, and all the work that needed to be done on the two port sites.

We, as any responsible Government and every New Zealander would expect the responsible Government to do, stopped that because it was unsustainable. We’ve gone back and we’re getting advice on alternatives. One of the very simpler alternatives is not to build—not to take on much larger ferries that require different port infrastructure, but, actually, to get ferries that fit in within the current port infrastructure so that we do not have to spend so much money on what is an important event. So we’re very focused on making sure that the investigation is done properly, firstly. Secondly, we’ve got some decent process in place in order to provide replacements.

The member’s time has expired.

Kia ora, Mr Speaker. Thank you to the Minister for taking a call. I think it’s really important that as the Minister for State Owned Enterprises, he does front up. It’s important to recognise that the Minister of Transport and the Minister for State Owned Enterprises are responsible. This is happening on their watch.

I do want to say, though, that there’s been some pretty feisty debate here, but this is too important to be politicking about. That was a really significant event when that vessel ran aground. It ran aground for reasons that we don’t yet know, but if it happened elsewhere, it would have been catastrophic. If it had happened with a passenger ferry in Tory Channel or at Barrett Reef, there could conceivably have been massive loss of life. That’s the risk we’re facing. That is why this Parliament and that Government needs to get it right.

When we see what they’ve done, there’s a word that’s been bandied about in respect of the iReX ferries: they’ve “repudiated” them. Now, it’s an interesting word to use—you don’t see it very often. Here’s what it means: we’re refusing them; we’re unilaterally declining to take them. Now, what I read into that is that the Government is now in a dispute resolution process, trying to find out how much they have to pay in damages for illegally breaking their contract. Now, that’s going to be very expensive. There is a real risk here about our commercial reputation. New Zealand, as a sovereign nation, has a very good reputation for not breaking our promises. We’ve just broken a $550 million promise with a major commercial player in the marine and wider heavy industry sector. The Hyundai Dockyard is not going to rush to build us our new vessels.

Now, look, I do want to be clear: I was the former Minister for State Owned Enterprises; iReX was very, very difficult. It’s accurate to say that the costs blew out—they did. But I’m convinced that pulling the rug on that contract is not the best thing for New Zealand, because that stretch of water, that most difficult stretch of water, is a lifeline connection to the South Island. I can tell you that South Islanders are feeling left out, left behind, and ignored by a Government that says, “It’s all too hard. We’ll kick that can down the road. We’ll take some advice.”

There was a solution there. It was a lasting, long-term solution. I accept it was a solution that needed cost control. The documents that are now in the public domain will show that I as Minister for State Owned Enterprises, the Minister of Finance, and the Minister of Transport were continually putting disciplines around KiwiRail, both in cost savings and to make sure that they were using their own balance sheet to fund what was possible. But what we heard was a proposal which brought our ferry system into the 21st century, that was rail-enabled so that we can utilise our rail network to its best capacity, that had vessels that were low carbon, highly efficient, and extremely seaworthy, and port-side infrastructure that wasn’t aging and falling apart but earthquake resilient. That’s where a lot of the money was going: in Wellington port that would stand up to a major event.

What we’ve got now is a Government that has thrown its hands up—and I’ve seen the figures. I’ve got a pretty good take on the fact that these new ferries—smaller ferries, three of them—are going to be $300 million each. So that’s the best part of a billion dollars already. Getting out of the contract’s another 200 million. And the ports still need upgrading, and will be we left with an outdated roll-on, roll-off system that is not a strong, safe, and resilient connection.

So I do say to this Government, let’s work hard on this. Let’s not just dismiss it because it was expensive and the last Government’s idea. Let’s look carefully at the real options, and let’s not under-invest in our infrastructure. Let’s make sure we have a genuinely strong connection between our islands, which is genuinely safe, because the risks of not doing it are too great.

That is a curious rewriting of history by the former Minister, the Hon Dr Duncan Webb. Here are the facts: the Government came to office—actually, even before the Government took office, briefings were provided to incoming Ministers about the iReX project. The situation was extremely alarming. Ministers had to confront the reality that a project that started life as a sensible ferry investment—which we all agree is a good idea, for the reasons the member outlines: the freight connection and passenger connection between the North and South Islands. We had to confront a situation where a project that started life as sensible, at least on the face of it, had grown to the point where the Crown was up for the thick end of $3 billion, possibly more.

As it transpired, as Ministers dug into the detail—a thing that, I might add, the previous Government clearly had not done—it was not just two big new ferries; the consequence of that decision meant that the Crown was up for a massive amount of money on the land-side infrastructure to support those ferries. So members opposite are wilfully deluding themselves when they pretend that the Government had any other option but to repudiate the contract with Hyundai, because no one had done the hard work about the land-side infrastructure costs required. What’s more, there are real questions about whether the size of the ferries purchased by KiwiRail, or intended to be purchased, could traverse the Cook Strait—in particular, the Tory Channel.

Now, I’m not a shareholding Minister in relation to this—I’m not an expert on it—but those are the facts as they appear to be. So members might want to rewrite history and say they did a good job of getting into the detail; the reality is they didn’t—the reality is they simply did not—and the new Government, or newish Government, has had to confront fiscal reality. That is why we have made the decision we have done. We’re committed to ferries across the Cook Strait. It’s very important for the reasons Dr Duncan Webb mentions, but the Government is not up for a blank cheque. I am someone who is a believer in the ferry service across the Cook Strait, but the proposition that has been put to the Crown is simply not acceptable, and that is why the Government has made the decisions we have made.

Thank you, Mr Speaker. Just after 10 o’clock on Friday night, I received a phone call from the Maritime New Zealand official based in Nelson, who covers the top of the South—Holly Payne—to tell me that the Aratere Interislander had run aground just after leaving the port of Marlborough. During that phone call, it became clear that Holly needed to get herself to Picton, and so we made the decision to drive over the hill across State Highway 6 through to Picton, where we proceeded to speak with some of the KiwiRail staff based at the terminal about what had happened.

Over the coming nearly 24 hours, we spent time talking to KiwiRail staff and we also spent time with the crew and the passengers who had been on the ship when it went aground. As other members have noted today, there will be an inquiry, there will be multiple inquiries into what happened. But what is clear to me, and what is clear to the people across Te Tau Ihu, the top of the South, is that the Government’s decision to cancel the contract for the new ferries was the wrong one.

People are incredibly, incredibly frustrated that we now have an Interislander service that is at risk. This is a really serious matter, and, for me, it’s very personal. My grandfather Edgar Boyack was the Minister’s adviser on the Wahine inquiry. He was the most senior nautical advisor at the time during that inquiry. One of the things that inquiry found was the need to have tugs that were able to haul stricken ships to safety, and we got those. Those tugs were replaced between 2009 and 2014 with more powerful tugs, but, unfortunately, they’re not actually able to safely take a ship out of open water and to safety.

There are a number of things that we need to get right to ensure that we have a safe and sustainable and resilient Interislander service going forward. The people of the South Island, and particularly the people at the top of the South, rely on the service. We rely on it for tourism. The service brings people to our region who travel around, attend events, and spend money in our region. We also rely on it to bring goods back and forth between the North Island and South Island, and whenever the ferries are out of action, our small businesses in Nelson often face delays at getting goods that they are able to sell through their retail shops. It’s a very real and pressing issue.

We actually had a great deal on those ferries—$551 million for ferries—and members on the Government benches continue to push the false assertion that those ferries wouldn’t have been able to traverse the Tory Channel. That is not correct. Those ferries were being custom-built specifically to be able to navigate the perils. Those ferries would have been delivered from next year, operational from 2026, and the people of the South Island want to know what the Government’s plan is. The Government has continued to spend time in a blame game. Meanwhile, all the people of the South Island want is to know what the plan is.

We currently only have one ferry in operation. The Kaiarahi is under maintenance, and who knows what is going to happen to the Aratere. It is incredibly frustrating for us to watch Government Ministers fly in, fly out, play blame games, and not actually listen to the people of the South Island about the need for this service to be operational, for it to be safe, and for it to be sustainable.

I want to finish by acknowledging the crew, the many crew who I spoke to who were so professional during what was a very frightening incident that could have led to a large maritime disaster. They deserve better, the passengers who travel on these ships deserve better, and we in the South Island deserve better from this Government. We need to stop with the heckling and the blame games and have a proper plan so that we can actually get across the strait safely and resiliently.

The debate having concluded, the motion lapsed.