The $671 million dollar woman
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- Date published:
10:18 am, August 18th, 2025 - 23 comments
Categories: climate change, infrastructure, nicola willis, transport, winston peters -
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Today marks the final sailing of the Aratere which is being retired because it is no longer up to scratch. This will mean that rail freight will be affected. The Aratere was the only rail enabled ferry.
One would wonder how this could occur. After all the Aratere’s weaknesses had been known for a while and replacement ferries had been purchased and were under construction.
But this Government cancelled those contracts in what looks like a weak attempt to try and embarass the previous Government.
But at some cost.
There is this recent weird press release from the Government which is all spin and no substance. It celebrates the Government signing a $141 million settlement with Hyundai for the Government walking away from the deal. As $300 million was originally provisioned this is presented as some sort of win.
Winston Peters claims:
Doomsayers said cancelling the contract would cost the taxpayer the full $551 million contract value, but these are some of the same people who accepted Project iReX ballooning from $1.45 billion when approved in 2021 to Treasury warning it was on course to $4 billion in 2023 thanks to eyes-bigger-than-their-mouths ambitions and absentee management. Even their criticisms blew out.
“So the factual final settlement is net $144 million, not:
- $300 million as reported by RNZ, who said that ‘may not be enough to cover all the costs.’
- $300 million as headlined by The Post.
- $1.16 billion as stated by Labour Transport Spokesperson Tangi Utikere.
But the “factual final settlement” is not the total loss on the project. And we will have to see the final deal with Hyundai to work out how much more the new ferries are going to cost, and how inferior their quality is compared to the ferries that Labour had purchased.
And we have spent $671 million and have absolutely, precisely nothing to show for it.
Ganesh Nana has this wonderful tongue in cheek take on this. From his Facebook page:
Apologies, as I am not clever enough to have an MBA – I only have a mere economics degree and so am clearly way out of my depth here – so, I am happy to defer to those expert in the field …
So, can one *just one* of you *please* (yes, I’m desperate) explain how spending $671m so that we don’t have to spend $550m, on not buying ferries, that we are not now getting (but will still need to buy soon) constitutes a sound business decision?
As noted above, my economics degree only extends to benefit-cost ratios …
Benefits = not spending $550m.
Costs = spending $671m
+ $s on additional maintenance on ageing boats
+ $s cost of buying new boats in x(?) years time
+ $s cost of alternative transport in interim while waiting for new boats to be built)
+ opportunity cost of lost production due to fractured transport network (SH1)
+ opportunity cost of lost business investment deterred due to no confidence in future transport networks
+ opportunity cost of lost employment in future businesses
Admittedly there was a significant costs increase, one which Kiwirail did not advise the Government about until late in the piece. As I noted earlier some of the increase, an estimated 10%, was because of building inflation which was rampant at the time. The rest was primarily in the terminals programme which needed larger piles, stronger sea walls and greater structural rigidity that what was estimated in 2021.
Some of the increased cost was due to the need to meet higher seismic standards. 70 tonne piles that are 1.5 metres in diameter were now needed at Picton. This not only increased material costs but also required larger safety zones to ensure safety during construction.
The project still had a positive benefit cost ratio of 2.1. The overall return was estimated to be twice the amount to be spent.
So a lot of the extra cost was to strengthen terminals and make them more resilient to earthquakes and climate change. Presenting them as a waste is disingenuous in the extreme.
Munz thought the decision could cost us about a billion dollars. When the increased costs of the new ferries and the losses caused by inferior boats and interim disruption are factored in I suspect that estimate will be right.
And Nicola Willis will be to blame.
THANKYOU FOR YOUR ATTENTION TO THIS MATTER
And in the meantime we must all hope that one of the other two aging ferries doesn't break down in the middle of Cook Strait during a southerly!
The way all this is going NACT1 might yet cut emergency holes in the sides for oars? Which could then become permanent, powered by modern day galley slaves. Prisoners, Beneficiaries, Youths. (I am using satire : )
Shame on you. This government isn’t so cruel as you imagine.
I’m sure they would take job seekers and pay minimum wage.
With thanks not only to the ship itself, but to all the captains and dedicated staff and engineers and maintenance teams who helped keep her going through all the years. Your service to New Zealand is sure appreciated.
Absolutely ! Does kinda beg the question…what will all those "captains and dedicated staff and engineers and maintenance teams who helped keep her going" do in the future?
Maybe they will have plenty of overseas offers ? Just like our other valuable skilled people….
"But but… iTs aLl LaBoUrS FaUlT” — Nicola Willis.
Of all the stupid, short-sighted, knee-jerk idiocy this government claims as "policy," this has to rank as the absolute worst.
Not only have they trashed relations with a key partner in South Korea and wasted $671 million to deliver absolutely nothing, they’ve deliberately sabotaged one of our most critical pieces of national infrastructure.
And for what? To replace it with a half-baked plan to spend even more money on less capable ferries. Which may or may not arrive before the current fleet breaks down or sinks to the bottom of Cook Strait.
How the coalition can even attempt to claim this as a “win” is beyond me. They must really think the electorate is stupid.
Enough in the electorate believed they could magic up some good times from a cost of living crunch, austerity policies and scarcity kicking in all over the globe so here we are.
Why not blame labour, works quite well when your media poodles bark along with you whilst Willis carries on throwing others under her austerity bus.
Winston's skated away from deserved criticism on this omnishambles IMO having signed the Hyundai deal during the Ardern era then watched Willis shred it.
Accountability ? wasteful spending ? They're taking the piss into the bargain lining pockets where possible which is now showing up in Health board costs, Crown boards, re-positioning health/education services.
Congrats to the coalition, didn't need a second term to beat the departure record set by John Key as he was flogging off our power generators.
Maybe, but enacting speed-wrecking policies is a competitive sport among CoC MPs – their legacy will be a masterclass in how to blame others for poor policy outcomes.
100% This was a very stupid decision, full of hubris. Agree with Ad, Thank you for your service.
obligatory…
Well sure but if they get re-elected, Willis and Winston will be on the bow of the first one like and ageing Leonardo DiCaprio and Kate Winslett.
Like the City Rail Link, they are the parties that now own the deal and they will take the credit for it.
On RNZ's political panel this morning, host Kathryn Ryan commented that "…cancelling the iReX project cost $144 million I think is the figure I've got in front of me…".
https://www.rnz.co.nz/national/programmes/ninetonoon/audio/2019000392/political-commentators-tim-hurdle-and-lianne-dalziel
Ryan's comments give the impression that was the final figure, while RNZ's report on 15th August provides more detail.
"A final $144m payment to previous contractor Hyundai brought the total project costs to $671 million".
https://www.rnz.co.nz/news/political/570125/minister-for-rail-winston-peters-on-the-671m-scrapped-ferry-fiasco
Clearly, focussing on the lower figure is an attempt to minimise the economic impact so far, of Nicola Willis' malicious and irrational decision.
Yes, even Winston Peters said "$144 million final payment." on TV1 News.
We’re told New Zealand is a
Business. What would you do in business if you’re key resource was down for 4 years? Lease for the interim.
If I were the CEO of a business that arbitrarily killed a critical piece of infrastructure just because the last guy set it up; then told the board I had a more expensive plan that would do less in four years’ time: I wouldn’t just be thrown out on my ear.
I’d be defenestrated so fast the people of Prague would be envious.
Thirty years of regret looming.
As you forgot to mention the cost of maintenance for the roads because of the extra trucks on the road over the 4 years, there will have to a downgrade in mark from your accountancy and economics teacher. Feel the burn half back.
Willis accounting …
671 Million – Mere Bagatelle – just 1% when compared to the 66 BILLION flushed by the last government.
Are you really unaware of past events and the amounts spent by other governments?
Or the governments claims that they were the ones that would not waste any money?
I’m always interested in the raving of an idiot trying to be ‘funny’. Perhaps you should read the actual criticism levelled by the Treasury. Which wasn’t about 66 billion – most of which was spent on the immediate response to Covid-19, and that the Treasury agreed with in their post-evaluation.
The criticism was on the much smaller response involved in keeping the economy stable after the vaccines arrived and were dispersed through the population.
https://www.stuff.co.nz/politics/360784463/66-billion-covid-spend-treasury-asks-if-government-went-too-far
I am of course assuming that you can still read (haven’t seen you for a while), and that your head hasn’t speared so far up your stupid bigoted arse that you can get beyond just parroting slogans. Your ‘wit’ certainly hasn’t gotten any better.
https://thestandard.org.nz/covid-19-and-climate-change/#comment-1708386
CoC MPs shamelessly blame others for their own failings – it's govt by the sorted, for the sorted, and sorted do not care. The CoC is a machine for the relentless upwards redistribution of wealth, and they are speed-wrecking Aotearoa New Zealand – imho.
Heh – “Ferry Flensers” – onya Nicky No Boats. She’s saving so much money.