More than half a billion dollars has now been spent on an axed project that was meant to deliver two Cook Strait mega ferries. Photo: RNZ/ Rachel Thomas
More than half a billion dollars has been spent on an axed project that was meant to deliver two Cook Strait mega ferries.
The iReX project, announced by the previous Labour government, was expected to replace the current ageing Interislander fleet with two hybrid, rail-enabled mega ferries by 2026.
But at the end of 2023, Finance Minister Nicola Willis pulled the plug on the ferry plan due to spiralling costs associated with port-based infrastructure.
Since then, Rail Minister Winston Peters has revealed plans to introduce two smaller rail-enabled ferries by 2029, with a plan to send less on ports.
KiwiRail confirmed that in December 2023 $484 million had been spent on iReX.
But costs have continued to be sunk into the project.
The rail company has confirmed to RNZ that to date it has cost the taxpayer $507.3 million.
The costs included spending on the procurement and design of the replacement ferries, terminals design and consenting, enabling and early construction work.
The money also related to wind down expenses for settlements with key contractors and reinstatement works for Picton and Wellington terminals.
To date $39.1m of iReX costs have been spent on investments at the Picton port, which included a new terminal and walkways, a new mechanical depot and increased capacity of the facilities culvert.
None of these costs include the contract break fees after the government ended the deal with Hyundai to build the iReX ferries.
RNZ reported in March that $300m of contingency funding has been set aside for the break fees, but that cost could end up being higher.
On Wednesday, Peters told RNZ the infrastructure already built in Picton during the iRex project would be reused as part of the Coalition's new ferry plan.
"For example, that includes $39m for a terminal building which they built but were going to knock down and replace with a Taj Mahal in Picton, and other infrastructure like a new culvert and mechanical depot. Those are just three examples."
Peters said by 2023 iReX had blown out to $3.1 billion if KiwiRail were to be believed, while he stated the Treasury warned the previous government it was on track to reach $4b.
"You have asked if we are concerned about costs to date. The answer is yes, and that's why we cancelled the project, but we are also saving the taxpayer billions by cancelling iReX and delivering maximum reuse at minimum cost."
He told RNZ Labour had claimed the total cancellation of the project would cost $1.1b.
"That would require one to believe that a ferry contract valued at $551m would have a break fee of $651m.
"It will be much lower than the contract value given no ship was built so even their cancellation costs have blown out."
Labour Party transport spokesperson Tangi Utikere told RNZ additional costs associated with the cancellation of iReX would cost $1.16b when including the cancellation of the deal and ongoing maintenance of the current ferries.
He said the decision to cancel iReX was reckless.
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