New Zealand Government (Beehive)
Common sense back at the helm
[Speech delivered 12:30pm, Friday 17 July 2026, Legislative Council Chamber, Parliament, Wellington]
Thank you all for being here today.
We’d like to acknowledge Ferry Holdings, KiwiRail, CentrePort, Port Marlborough, the local councils in Marlborough and Wellington, and officials who have worked to get this programme to this point. We further acknowledge the unions, Interislander customers, iwi, and advocacy groups for freight, infrastructure and tourism.
Specific thanks are due to Ferry Holdings. Chris Mackenzie, Heather Simpson, Greg Lowe, Katherine Rich, and Captain Iain MacLeod, together with their chief executive Sandip Ranchod and his team. They have delivered.
We will take questions after the speech, and representatives of the various groups gathered today will be available for comment afterwards, if they wish.
Today, we are making two important announcements.
First, KiwiRail will operate New Zealand’s two new Cook Strait rail ferries. Second, KiwiRail will pay commercial fees to the ports and Ferry Holdings for the infrastructure and assets that make this service possible.
Together, these decisions secure a practical, affordable, and enduring ferry service across Cook Strait. They preserve rail across the Strait, support freight and passenger resilience, and set up the country for the next generation of service.
As background, iReX was a mess.
The politics around this programme has been immense. After the 2023 election, the cancellation of Project iReX became an example of what this Government was elected to fix.
It had departed far from the simple ferry purchase and wharf upgrade we established in 2020: two rail ferries, necessary infrastructure, and a reasonable budget.
By December 2023, it had blown out to $3.1 billion according to KiwiRail, while Treasury had already warned the previous Government it was on course for $4 billion.
That happened because the project became over-scoped, over-complicated, and untethered from the practical job that needed to be done.
The then Ministers simply furrowed their brows, but then topped it up anyway. And the public was told next to nothing.
They allocated another $750 million ‘in principle’, which was not disclosed to anybody in the pre-election update. Worse, because it was only half the funding KiwiRail requested, this was a cynical decision to snooker the KiwiRail board – enough that meant they could not cancel the project and embarrass the Government, but not enough to proceed.
And all of this prevaricating happened over 12 months of build time. New Zealand experienced an extreme taxpayer blowout and the certainty of a Tasmanian-devil mistake: ferries with the wrong hull construction, arriving with nowhere to berth.
That would have happened here under iReX. Unfinished infrastructure, with ferries idling in the Wellington harbour for years.
They made it our problem. Well, we have fixed their problem.
There is real-world, good honest ballast in our approach: build what is needed, not what is desired. Do what works, not what dazzles. Trust the experts, not the yes-men.
If they aren’t prepared to endorse our solution, then it will show they have learned nothing.
Indeed, we appointed the experts and have got on with it.
In March 2025, Cabinet agreed to purchase rail ferries supported by new marine infrastructure in Picton and modified marine infrastructure in Wellington.
In November 2025, following a three-stage commercial tender process, Ferry Holdings entered a fixed-price contract for two new rail ferries to arrive in 2029.
These ferries are being built by Guangzhou Shipyard International, the same shipyard building for the United Kingdom, Germany and Italy currently.
We also announced that the taxpayer will spend no more than $1.7 billion, and we reconfirm that today. For the benefit of the “misleading and inaccurate” Andrea Vance at The Post, that means we are still within budget. That also means this programme remains $2.3 billion cheaper than the project we inherited.
The first announcement: KiwiRail will operate the ferries.
In its various guises from New Zealand Railways, to TranzRail, to Toll, and now KiwiRail, it has managed the Interislander for 64 years. In our book, experience counts.
KiwiRail also operates rail freight services on the critical route between Auckland and Christchurch. We want the system to work as a whole, and splitting it up would be anathema to that outcome.
This is also a company now witnessing a turnaround. Reliability is up. Earnings are up. Revenue is up.
Pending final audit, KiwiRail has achieved its $160 million earnings target to 30 June 2026, and Interislander reliability now sits at 98 percent. This is a vast improvement on 81 percent in 2021 and 83 percent in 2022.
KiwiRail will be the operator for the 30-year life of the assets. To keep them on their toes, that arrangement will be reviewed in 2039, after the first ten years.
The second announcement: KiwiRail will pay fees to the ports and Ferry Holdings.
This is no gift. In exchange for being the operator, KiwiRail will pay commercially priced port fees.
CentrePort will earn a reasonable profit on its $100 million contribution for assets CentrePort will own. Port Marlborough will earn a reasonable profit on its $110 million contribution for assets Port Marlborough will own.
Because more complex new infrastructure is being built in Picton, with $373 million to be paid by Ferry Holdings, we are establishing a special purpose vehicle to co-own assets between Port Marlborough and Ferry Holdings.
That means the taxpayer will receive the benefit of every cent of its investment in infrastructure.
This would not have been possible under iReX. Recovering $3 billion in investment would have led to vast increases in Interislander fares, making the business uncompetitive, or leading to one of the largest write-offs in history.
KiwiRail will also pay Ferry Holdings to lease the ferries and will be required to build up a reserve over the next 30 years so it can directly purchase new ferries in 2059.
This is not just a deal to secure the Strait for another generation. It secures it for the next two generations.
For KiwiRail’s workers, that means a steady future awaits you. For freighters and families using the Cook Strait, that means we have put your interests first.
While no commercial entity can detail exactly the share of fares the port fees will reflect, we can say they will be similar to what is paid today.
We thank Sue Tindal, KiwiRail’s chair, for advocating her company’s position in a manner that respects the fiscal reality this Government faces.
These agreements set the basis for main works contracts to be entered later this year.
Ferry Holdings, Port Marlborough, CentrePort and KiwiRail have already brought construction partners in through early contractor involvement, engineering and design, demolition, and to build staging zones.
For example, KiwiRail is well underway already having appointed the builder for the Dublin Street overbridge in Picton, CentrePort has built a staging zone for loading gear and equipment onto the barge, and Port Marlborough is demolishing the old rail wharf for the new one to replace it.
We welcome their construction partners – HEB and Vinci in Picton and Brian Perry Civil in Wellington – but this comes with a message: this ship already has a master. You will be their expert crew following orders, and if seas ever get rough, we expect all hands on deck.
And we know this is a desirable job for your sector too. These are meaty contracts in the hundreds of millions, with good programme life to give meaningful work to construction workers and to make use of your plant and equipment.
You will look back on this project with pride.
Of course, this programme is not without risk, but unlike the last lot we are grown-ups who deal with risk.
There will be no cost-plus construction contracts. Construction firms can expect to make a reasonable profit, with incentives to be on-time and on-budget. But the scope is set.
Ferry Holdings retains the major rights in controlling the programme, while working closely with KiwiRail, CentrePort, and Port Marlborough to sequence work around their operations and construction programmes.
The port agreements mean CentrePort, Port Marlborough, and KiwiRail all stand to gain from on-time, on-budget delivery. Each party has a healthy contingency built into its funding caps, and the project is funded to manage normal infrastructure risk.
Likewise, if they want to pay for additional works using their own money, then so long as it does not delay our delivery then that is their business. As a shareholder of KiwiRail, we retain the right to approve any additional scope paid for by KiwiRail, and will only do so where there is evidence of incremental commercial return.
That is how infrastructure should be done in this country. Commercial deals where, yes, everyone stands to gain but equally, all parties carry risk.
You are not looking at a repeat of Transmission Gully, where the lowest bidder gets the contract then litigates their way to higher pricing.
You are not looking at the wastrels who spent $228 million on Auckland light rail without a single metre of track built either.
You are looking at the people who put taxpayers first, who deal respectfully with council-owned ports to get a good deal for ratepayers, and who keep the conversation focused on the only question that matters: ‘does New Zealand need this?’ If yes, do it. If no, stop.
As a result, we have served freighters and families, taxpayers and ratepayers, and we have preserved rail.
Now, let us look to the future with positive recognition of the past.
The Interislander has crossed Cook Strait since 1962. It was established as a rail ferry service on the recommendation of Parliament in 1958.
That was a time when leaders in this country understood something very simple: New Zealand is an island nation. And a country that cannot connect its own islands is a country that has forgotten the basics.
The first ferry was named Aramoana, meaning sea-path, and every rail ferry since has carried that “Ara” prefix. We respect that tradition, and in particular the role that iwi and Māori railway workers played in their naming.
Sixty-four years on, these ferries have come to represent New Zealand itself. They are more than the connector of our people and our goods, they are part of our tourism offer to the world.
And as such, in honour of the Cook Strait itself, of New Zealand’s history, and in recognition of the service these ferries will provide for generations to come, Ferry Holdings has legally registered the following names:
The first ferry will be named Kupe.
The second ferry will be named Cook.
These are proper names. Historic names. New Zealand names.
They are names that speak to our maritime inheritance, to exploration, to courage, to seamanship, and to the long story of how this country came to be.
Kupe and Cook each left an indelible mark on these islands, and on Cook Strait in particular. Their relevance to this waterway is not some abstract theory. It is obvious. It is historical. It is real.
Kupe named Mātiu Island. Cook named the Queen Charlotte Sound.
New Zealand’s islands were settled by two great seafaring traditions: Polynesian first, European second. And these names honour that history.
Of course, in between them were the Dutch in 1642 – but they did not make landing. Our ferries will.
Now, we know exactly what will happen. The snivelling wokesters will work themselves into a lather over the name Cook, while offering only passing approval for Kupe. That is how shallow this has become.
It is fashionable now in certain circles to treat Captain Cook as nothing more than a symbol to be condemned, cancelled, and cast out. A harbinger of colonisation, they say. A figure of division, they say. A relic to be erased.
Well, we say this: a mature country does not run from its history. A serious country does not vandalise its memory to satisfy the latest fashion in whinger politics.
Because New Zealand’s history is not simple. It is not tidy. It is not a slogan on a placard. It is deep, difficult, proud, painful, ambitious, and unfinished.
We will not pretend one part of our history exists and another does not. And we will not allow a noisy minority to dictate what the rest of this country is allowed to remember.
These names – Kupe and Cook – reflect New Zealand as it actually is: a country shaped by the sea, by settlement, by risk, by enterprise, and by people who crossed dangerous waters in search of a future.
They also mark a new chapter for the proud men and women of the Interislander, who have kept this country moving across Cook Strait for decades.
So let others sneer. Let them lecture. We are getting on with the job.
We are naming these ferries for the history that made us, for the people who serve us, and for the country we are still building.
And we are saving them $2.3 billion, while getting the rail ferries and infrastructure New Zealanders expect.
Because, once again, we are charting the practical course on new tides, with new vessels, and with common sense back at the helm.
Thank you.