Summarised by Centrist
Less than two weeks into her role as Finance Minister, Nicola Willis announced the cancellation of $750m in funding for the Interislander iReX project, citing dramatically escalating costs.
Documents reveal that officials from Treasury and the Ministry of Transport (MoT) had long harboured doubts about KiwiRail’s information and objectives, which played a significant role in the decision to scrap the project.
The mistrust of KiwiRail was rooted in concerns about the accuracy and reliability of the data provided, particularly regarding the benefits of rail-enabled ships.
Officials believed KiwiRail’s incentives were misaligned with delivering the most efficient Cook Strait crossing, focusing instead on optimising rail connections at the expense of rising landside costs.
This suspicion led to the recommendation that the new coalition government should cancel the additional funding and go back to the drawing board.
A briefing to ministers highlighted the urgency of making a decision to avoid increasing costs and break fees. Treasury and MoT advised reversing the previous government’s in-principle decision to increase funding, suggesting that KiwiRail should prepare a more cost-effective and commercially sustainable program.
Despite assurances from KiwiRail about the thoroughness of their information, officials remained sceptical.
The decision to cancel the funding without an alternative plan leaves the future of the Interislander service uncertain. Ministers have since formed an advisory group to explore viable options, but no clear solution has yet been identified.
