A Taxpayers’ Union-Curia poll suggests New Zealanders are divided over whether the Government should sell the Interislander Cook Strait ferry service to a private operator.

Of the respondents, 43% supported a sale, 38% were opposed and 19% were unsure. The poll was based on a sample size of 1000 people and has a margin of error of 3.1%.

The poll, which was conducted last week, comes as the future of Interislander hangs in the balance.

Interislander is owned by KiwiRail which is a State-Owned Enterprise (SOE) and ultimately accountable to shareholding ministers.

The Government canned a previous plan to replace Interislander’s ageing fleet with two mega ferries soon after it came to power. This was following a $1.47 billion budget blowout driven by the cost of portside infrastructure.

A Ministerial Advisory Group has now advised the Government behind closed doors on alternative replacement options.

Meanwhile, Ministry of Transport officials have been investigating how the market might respond to the hypothetical exit of KiwiRail from Interislander.

A document outlining the scope of this investigation said the cancellation of KiwiRail’s mega ferries leads to the possibility the SOE may not be best placed to provide an inter-island service in the future.

It said market forces have been relied on to provide a resilient Cook Strait connection in recent times. KiwiRail, as a SOE is required to run commercially.

However, the experience with KiwiRail’s mega ferry project suggests it may need a government subsidy to operate ferry services, the document said.

“This means there is a risk KiwiRail may exit the interisland business without one.

“Therefore we need to explore the market dynamics underpinning inter-island services, to understand whether the current arrangements (including ownership and governance of KiwiRail’s ferry services) are optimal.

“This work would also inform whether any subsidy is required, if supported by a robust value for money analysis, and to whom and how this subsidy could apply.”

Officials have assessed the ability of StraitNZ, which owns rival operator Bluebridge, or other potential operators to provide more capacity across Cook Strait in the hypothetical event of KiwiRail’s exit.

Ministry of Transport officials have looked into whether Bluebridge could provide more capacity across Cook Strait. Photo / Mark Mitchell

They have evaluated the minimum level of service required across Cook Strait to meet the needs of New Zealand’s transport system and support the economy.

In other documents, officials have said the Interislander business could be separated into another SOE or sold via a trade sale.

“KiwiRail would be expected to contract with this business to provide freight services across the Cook Strait, but how this is achieved would be left as a commercial decision between parties.”

Transport Minister Simeon Brown said recently that ministers have been “highly unimpressed” with KiwiRail’s approach to maintenance. Shareholding ministers have also raised “serious questions” about KiwiRail’s financial outlook and its safety record, while two more members have resigned from the SOE’s board.

Recent major incidents involving the ferries include Kaitaki’s mayday call last year and the Aratere running aground last month.

Taxpayers’ Union campaigns manager Connor Molloy said KiwiRail has demonstrated it is too functionally and financially incompetent to run an efficient ferry service.

“With a private operator already successfully operating a second ferry service without taxpayer backing, there’s no reason that the Interislander should remain in public ownership”, Molloy said.

“Selling the Interislander would ensure that the service runs efficiently and reliably with a private owner having strong incentives to keep up with regular maintenance and renewals. It would also mean that taxpayers aren’t on the hook paying for Ministers’ and bureaucrats’ ideological projects that make no financial sense.”

KiwiRail chief executive Peter Reidy has previously said the SOE remained committed to operating the Interislander service.

“We have run the service for over 60 years, and we want to continue to run it for another 60 as part of an integrated rail network supporting New Zealand businesses, passengers and our visiting tourists.

Reidy said the organisation had “really stepped up” its approach to safety and maintenance under his watch.

Apart from the Kaitaki and Aratere incidents, Interislander’s recent performance has been strong, he said.

Interislander had 99 per cent reliability and 92 per cent safe, on-time performance to schedule, from December to April.

Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.