1 00:00:04,840 --> 00:00:05,320 Speaker 1: Kyoda. 2 00:00:05,440 --> 00:00:09,000 Speaker 2: I'm Georgina Campbell in for Chelsea Daniels and this is 3 00:00:09,240 --> 00:00:12,719 Speaker 2: the Front Page, a daily podcast presented by The New 4 00:00:12,800 --> 00:00:19,720 Speaker 2: Zealand Herald. The future of Kiwi row is at risk 5 00:00:19,880 --> 00:00:23,439 Speaker 2: of going off the rails. There has been an exodus 6 00:00:23,480 --> 00:00:26,880 Speaker 2: of directors from the board following the early retirement of 7 00:00:27,080 --> 00:00:31,440 Speaker 2: chairman David McLain, and the company has been under intense 8 00:00:31,600 --> 00:00:35,239 Speaker 2: scrutiny of how it's handled the cook straight faery business. 9 00:00:37,400 --> 00:00:40,240 Speaker 2: So what does the future hold for a state owned 10 00:00:40,400 --> 00:00:44,839 Speaker 2: enterprise responsible for a significant part of our transport network 11 00:00:45,360 --> 00:00:48,600 Speaker 2: and is there a way to get its fortunes back 12 00:00:48,680 --> 00:00:52,319 Speaker 2: on track. Today on the Front Page, we're joined by 13 00:00:52,320 --> 00:00:56,240 Speaker 2: a business desk Infrastructure editor Oliver Lewis to dive into 14 00:00:56,320 --> 00:01:04,800 Speaker 2: Kewi Rowl's problems. Ollie, who has resigned from the board 15 00:01:05,040 --> 00:01:07,160 Speaker 2: and what reasons did they give? 16 00:01:07,360 --> 00:01:10,240 Speaker 3: So we've got quite a few resignations now. David maclain 17 00:01:10,400 --> 00:01:14,360 Speaker 3: is obviously the big one. His resignation was announced shortly 18 00:01:14,360 --> 00:01:17,960 Speaker 3: after the ARTA Teddy grounded. It was two days later. 19 00:01:18,400 --> 00:01:20,399 Speaker 3: He was going to be leaving in October or his 20 00:01:20,480 --> 00:01:22,080 Speaker 3: term was up in October. That's been brought forward to 21 00:01:22,120 --> 00:01:24,199 Speaker 3: the very in of July. Then you had a double 22 00:01:24,280 --> 00:01:26,760 Speaker 3: kind of header of a man called Ed Simms, who's 23 00:01:26,800 --> 00:01:31,960 Speaker 3: an aviation expert, very well respected, and another person called 24 00:01:32,040 --> 00:01:35,120 Speaker 3: Rachel Plimmer who's a transport consultant. The most recent one 25 00:01:35,200 --> 00:01:38,200 Speaker 3: is Marion Street, who was a former labor minister and 26 00:01:38,640 --> 00:01:42,200 Speaker 3: kind of staunch trade unionist. So perhaps no surprises they 27 00:01:42,200 --> 00:01:44,840 Speaker 3: are given the current government and her desire to stay 28 00:01:44,880 --> 00:01:47,400 Speaker 3: on the board. So four down so far, would you. 29 00:01:47,400 --> 00:01:49,360 Speaker 2: Say that's a bit of an exodus. 30 00:01:49,520 --> 00:01:51,360 Speaker 3: I mean, personally, Georgia, I love to use the word 31 00:01:51,400 --> 00:01:53,960 Speaker 3: exodus in stories like this, and I think it's justified 32 00:01:54,000 --> 00:01:56,920 Speaker 3: to say that here and this is four in the 33 00:01:56,960 --> 00:01:59,360 Speaker 3: space of about a month. I think it's possible that 34 00:01:59,400 --> 00:02:02,880 Speaker 3: you might see the departures and changes so the board 35 00:02:02,880 --> 00:02:05,240 Speaker 3: when your refresh still doesn't appear to be complete. 36 00:02:05,280 --> 00:02:09,359 Speaker 2: I don't think what did David McClain say when he 37 00:02:09,440 --> 00:02:12,400 Speaker 2: resigned and was there anything that sort of pointed to 38 00:02:12,960 --> 00:02:16,040 Speaker 2: some tension, if you like, behind the scenes with the government. 39 00:02:16,120 --> 00:02:19,639 Speaker 3: Yeah, so his letter was quite circumspect. He led out 40 00:02:19,680 --> 00:02:23,080 Speaker 3: a number of achievements accomplishments that he felt the Board 41 00:02:23,080 --> 00:02:25,360 Speaker 3: and Carol had achieved whist he had been there. So 42 00:02:25,440 --> 00:02:28,119 Speaker 3: he picked up the role a fairly difficult time when 43 00:02:28,160 --> 00:02:32,000 Speaker 3: the previous ce Greg Miller had departed amidst a blitz 44 00:02:32,240 --> 00:02:35,600 Speaker 3: of kind of middle management resignations and discontent at the company. 45 00:02:36,080 --> 00:02:37,799 Speaker 1: So he appointed Peter Reedy. 46 00:02:38,080 --> 00:02:40,880 Speaker 3: That was one of his big accomplishments, and he pointed 47 00:02:40,919 --> 00:02:42,679 Speaker 3: to that and his letter that fact had resetted the 48 00:02:42,760 --> 00:02:47,280 Speaker 3: kind of managerial culture at Kibi Rail and had presided 49 00:02:47,320 --> 00:02:50,600 Speaker 3: over some kind of continuation in its infrastructure kind of strategy. 50 00:02:51,240 --> 00:02:54,040 Speaker 3: And of his reasons, we have a full accounting for those, 51 00:02:54,240 --> 00:02:56,080 Speaker 3: and I think it's probably fair to say that there 52 00:02:56,120 --> 00:02:59,840 Speaker 3: would be some tension with Nikola Willis and Paul Goldsmith. 53 00:03:00,520 --> 00:03:04,560 Speaker 3: There was some curious language used in terms of the releases. 54 00:03:04,600 --> 00:03:08,920 Speaker 3: I think that McClain noted in his explanation for why 55 00:03:08,960 --> 00:03:11,960 Speaker 3: he was leaving that had bought his announcement forward because 56 00:03:11,960 --> 00:03:14,240 Speaker 3: he undertood that the ministers were essentially getting the drop 57 00:03:14,280 --> 00:03:17,000 Speaker 3: on him and doing it first. There's been no kind 58 00:03:17,000 --> 00:03:19,560 Speaker 3: of public comments about there being a bad or a 59 00:03:19,639 --> 00:03:21,560 Speaker 3: tense relationship, but I think it's fair to say that 60 00:03:21,680 --> 00:03:24,440 Speaker 3: ministers we're not entirely confident in the board and Kerell 61 00:03:24,520 --> 00:03:26,840 Speaker 3: at the time under his leadership, and he felt that 62 00:03:26,880 --> 00:03:29,560 Speaker 3: perhaps he hadn't mentreated well either, so it ended on 63 00:03:30,000 --> 00:03:31,359 Speaker 3: fairly kind of blunt terms. 64 00:03:31,520 --> 00:03:35,920 Speaker 2: I think we know that Finance Minister Nicola Willis expressed 65 00:03:36,120 --> 00:03:40,440 Speaker 2: displeasure with the board in the weeks before David McLain 66 00:03:40,760 --> 00:03:46,080 Speaker 2: handed and Nosius of his early retirement. She was specifically 67 00:03:46,200 --> 00:03:52,280 Speaker 2: unhappy about spending on consultants. Can you explain why Willis 68 00:03:52,400 --> 00:03:53,440 Speaker 2: was so annoyed? 69 00:03:53,640 --> 00:03:57,560 Speaker 3: So, yeah, it's laid out under McLain and ready Qirell 70 00:03:57,640 --> 00:04:01,880 Speaker 3: has commissioned this kind of strategic transformation plan. So they 71 00:04:01,920 --> 00:04:04,720 Speaker 3: want to kind of reset the business, focus on where 72 00:04:04,720 --> 00:04:07,480 Speaker 3: they can make money, what is perhaps not profitable, and 73 00:04:07,520 --> 00:04:10,840 Speaker 3: look to kind of streamline their operations. To do that, 74 00:04:10,880 --> 00:04:14,320 Speaker 3: they bought in that great name of the consultant world, 75 00:04:14,640 --> 00:04:17,680 Speaker 3: mackenzie and Company to get in there and produce a 76 00:04:17,720 --> 00:04:20,400 Speaker 3: transformation plan for them. So we don't one hundred percent 77 00:04:20,480 --> 00:04:22,600 Speaker 3: know this because Key Rails refuse to release the figures 78 00:04:22,640 --> 00:04:25,400 Speaker 3: based on commercial sensivity causes, which I think is not 79 00:04:25,920 --> 00:04:28,880 Speaker 3: actually that kosher in this case. But what has been 80 00:04:28,880 --> 00:04:32,160 Speaker 3: reported is that that report costs about eight million dollars, 81 00:04:32,520 --> 00:04:35,159 Speaker 3: which is a very high cost for a bit of 82 00:04:35,200 --> 00:04:39,040 Speaker 3: work like that. So Willis was very taken aback in 83 00:04:39,080 --> 00:04:42,560 Speaker 3: her public comments I think to you and made a 84 00:04:42,600 --> 00:04:45,279 Speaker 3: number of assessments that she felt that it was work 85 00:04:45,320 --> 00:04:47,479 Speaker 3: that the company could have done itself and that the 86 00:04:47,520 --> 00:04:50,320 Speaker 3: cost wasn't justifiable. So that was seen as a bit 87 00:04:50,320 --> 00:04:52,960 Speaker 3: of a shot across the bout. Although I think q 88 00:04:53,160 --> 00:04:56,120 Speaker 3: Rail's position is that that eight million could be recouped 89 00:04:56,400 --> 00:04:58,800 Speaker 3: purely through the savings identified by the report. 90 00:05:00,880 --> 00:05:04,240 Speaker 4: Outgoing board chair David McLean says it's the board's expectation 91 00:05:04,360 --> 00:05:07,480 Speaker 4: that Keevy rowl lifts its commercial performance and so requires 92 00:05:07,520 --> 00:05:11,200 Speaker 4: a business transformation, and mckinsley had the right experience on 93 00:05:11,320 --> 00:05:14,000 Speaker 4: how to advise them on how to do that. However, 94 00:05:14,160 --> 00:05:17,840 Speaker 4: that has been openly criticized by the Finance Minister, who 95 00:05:17,960 --> 00:05:21,760 Speaker 4: questioned why an extremely well paid executive weren't the right 96 00:05:21,880 --> 00:05:26,080 Speaker 4: people to ensure that the business was running efficiently. 97 00:05:28,360 --> 00:05:29,400 Speaker 1: And quite funny two events. 98 00:05:29,440 --> 00:05:32,120 Speaker 3: Actually, Treasury is now listing ads for new board members 99 00:05:32,240 --> 00:05:35,600 Speaker 3: and one of the calling cards they're pointing to is 100 00:05:35,640 --> 00:05:36,680 Speaker 3: the fact that if you get to be a new 101 00:05:36,680 --> 00:05:39,120 Speaker 3: board director, you get to put into action these kind 102 00:05:39,160 --> 00:05:42,680 Speaker 3: of mackenzie sanctioned transformation plans. So they're obviously pretty pleased 103 00:05:42,800 --> 00:05:43,320 Speaker 3: they like it. 104 00:05:43,520 --> 00:05:45,559 Speaker 2: I thought the same thing. I thought that was really 105 00:05:45,600 --> 00:05:49,159 Speaker 2: interesting that you had Nikola Willis criticizing the spend on 106 00:05:49,400 --> 00:05:53,560 Speaker 2: consultants and then Treasury kind of advertising it as something 107 00:05:53,680 --> 00:05:58,160 Speaker 2: that might be appealing to potential future board members. Look, 108 00:05:58,240 --> 00:06:02,440 Speaker 2: what is the government looking at doing with QI rail? 109 00:06:02,800 --> 00:06:06,560 Speaker 2: You know, they're clearly unhappy. Have they given any indication 110 00:06:06,680 --> 00:06:09,839 Speaker 2: of what their priorities are for the state owned enterprise? 111 00:06:10,080 --> 00:06:13,240 Speaker 3: There is a bit of a pausitive detail at the moment. 112 00:06:13,320 --> 00:06:15,640 Speaker 3: So there are two key reports that are with ministers 113 00:06:15,680 --> 00:06:18,320 Speaker 3: and have been for the last several weeks. One of 114 00:06:18,320 --> 00:06:22,640 Speaker 3: those is the Ministerial Advisory Group Report, which was put 115 00:06:22,640 --> 00:06:25,360 Speaker 3: together to kind of provide advice on what the next 116 00:06:25,400 --> 00:06:28,120 Speaker 3: step should be for the Terrelander and the ship procurement, 117 00:06:28,760 --> 00:06:30,880 Speaker 3: and the Ministry of Transports also provided its kind of 118 00:06:31,000 --> 00:06:33,960 Speaker 3: long term view of what it thinks the requirements should 119 00:06:34,000 --> 00:06:37,320 Speaker 3: be for the cookstraight in terms of key Rail's involvement 120 00:06:37,600 --> 00:06:41,440 Speaker 3: in that or not. What it strongly sounds like is 121 00:06:41,520 --> 00:06:44,800 Speaker 3: that a recommendation has come through that mag report that 122 00:06:44,880 --> 00:06:49,240 Speaker 3: the Interilander component of the business perhaps shouldn't necessarily sit 123 00:06:49,279 --> 00:06:51,600 Speaker 3: with q Rail in the future. And what I have 124 00:06:51,720 --> 00:06:55,040 Speaker 3: heard anyway, is that ministers are considering stapp a schedule 125 00:06:55,120 --> 00:06:57,680 Speaker 3: for a company which is slightly different from a state 126 00:06:57,760 --> 00:07:01,839 Speaker 3: on enterprise, to procure new vessels and then potentially to 127 00:07:01,920 --> 00:07:06,280 Speaker 3: also operate them once they arrive in two, three, four years. 128 00:07:06,560 --> 00:07:08,080 Speaker 3: So there's a lot of smoke signals. And if they 129 00:07:08,080 --> 00:07:09,479 Speaker 3: agrees to go through a bit, it sounds like the 130 00:07:09,480 --> 00:07:14,240 Speaker 3: government may be moving towards trying to reposition the entirelander 131 00:07:14,240 --> 00:07:16,480 Speaker 3: and remove from Kerral and that would be a very 132 00:07:16,560 --> 00:07:17,400 Speaker 3: major scept. 133 00:07:17,200 --> 00:07:20,680 Speaker 2: If that did happen, and obviously this is speculation at 134 00:07:20,680 --> 00:07:25,480 Speaker 2: this point. Would that mean that Interrelander is essentially privatized? 135 00:07:25,840 --> 00:07:26,640 Speaker 1: Not quite. 136 00:07:26,640 --> 00:07:26,720 Speaker 2: So. 137 00:07:26,800 --> 00:07:29,920 Speaker 3: The importance of that Schedule four a company is that, 138 00:07:30,200 --> 00:07:32,080 Speaker 3: unlike a state or an enterprise which is a hundred 139 00:07:32,200 --> 00:07:34,200 Speaker 3: owned by the state, if you set up a Schedule 140 00:07:34,240 --> 00:07:36,920 Speaker 3: four a framework, it means that the government can sail 141 00:07:37,000 --> 00:07:39,360 Speaker 3: down it's shareholding, but it can only sail down to 142 00:07:39,440 --> 00:07:42,400 Speaker 3: about fifty one percent, so it always maintains a majority share. 143 00:07:42,880 --> 00:07:45,280 Speaker 3: But it just gives you flexibility if you're the government, 144 00:07:45,600 --> 00:07:49,120 Speaker 3: to potentially seek some outside investors as well, which may 145 00:07:49,240 --> 00:07:50,920 Speaker 3: or may not be a good thing, depending on your 146 00:07:51,000 --> 00:07:54,560 Speaker 3: view of private operators, but potentially it could induce some 147 00:07:54,600 --> 00:07:57,720 Speaker 3: commercial discipline into a staate own company like inter Islander, 148 00:07:58,040 --> 00:07:59,280 Speaker 3: as well as a bit more capital. 149 00:08:00,080 --> 00:08:01,240 Speaker 1: Not a full scale privatization. 150 00:08:01,240 --> 00:08:03,600 Speaker 3: I don't think anyone's talking about that, but definitely you 151 00:08:03,600 --> 00:08:05,880 Speaker 3: could see the ownership max change over time. 152 00:08:06,000 --> 00:08:09,000 Speaker 2: And what are some of the other options that Ministry 153 00:08:09,040 --> 00:08:13,120 Speaker 2: of Transport officials have been looking at when they're considering 154 00:08:13,160 --> 00:08:14,360 Speaker 2: the future of entire islander. 155 00:08:14,560 --> 00:08:16,040 Speaker 1: Yeah, it's a bit tricky with those ones. 156 00:08:16,080 --> 00:08:19,960 Speaker 3: So we know that they undertook extensive engagement with Bluebridge, 157 00:08:19,960 --> 00:08:23,400 Speaker 3: obviously the only other competitor on that Cook Straight route. 158 00:08:23,920 --> 00:08:25,960 Speaker 3: There was some kind of indication that they'd ask them 159 00:08:26,000 --> 00:08:29,000 Speaker 3: around what was their capacity to scale up in the 160 00:08:29,040 --> 00:08:31,880 Speaker 3: event that Keyral kind of exited the market suddenly. I 161 00:08:31,920 --> 00:08:34,920 Speaker 3: think realistically any kind of work into the future of 162 00:08:34,960 --> 00:08:37,680 Speaker 3: that crossing would have looked at landside infrastructure as well. 163 00:08:37,760 --> 00:08:39,400 Speaker 1: So how do for. 164 00:08:39,360 --> 00:08:42,280 Speaker 3: Instance, center Port and Wellington Port Marbel impact and how 165 00:08:42,320 --> 00:08:44,760 Speaker 3: do they work together with those groups as well as 166 00:08:44,840 --> 00:08:47,160 Speaker 3: key Rail and the Interlander and Bluebridge to try and 167 00:08:47,200 --> 00:08:50,360 Speaker 3: get some better facilities on both sides. Unfortunately, it's all 168 00:08:50,520 --> 00:08:55,920 Speaker 3: very shrouded in mystery. As you know, getting any information 169 00:08:56,000 --> 00:08:59,120 Speaker 3: out about this process has been very, very tricky. It's 170 00:08:59,160 --> 00:09:02,800 Speaker 3: often been rejected the grounds of commercial sensitivity, and we 171 00:09:02,920 --> 00:09:04,559 Speaker 3: just haven't had that flow of information. So there's a 172 00:09:04,559 --> 00:09:07,080 Speaker 3: lot of speculation but not many facts at the moment. 173 00:09:18,320 --> 00:09:21,120 Speaker 2: What does Kimi raw have to say about the idea 174 00:09:21,400 --> 00:09:25,120 Speaker 2: of its entrel under business potentially being taken off it. 175 00:09:25,360 --> 00:09:29,160 Speaker 3: I think they'd be rather annoyed, to be fair, Today 176 00:09:29,480 --> 00:09:33,080 Speaker 3: Kirel obviously operates the Israelan Is one of its business units, 177 00:09:33,120 --> 00:09:37,040 Speaker 3: alongside kind of freight rail and its Great Journeys kind 178 00:09:37,040 --> 00:09:39,880 Speaker 3: of section. It does make money, from my understanding, and 179 00:09:39,960 --> 00:09:42,360 Speaker 3: you can see that in the annual reports. But they've 180 00:09:42,360 --> 00:09:45,559 Speaker 3: been quite open in public comments that they are operating 181 00:09:45,559 --> 00:09:48,439 Speaker 3: the business now, they have no plans to cease operating 182 00:09:48,760 --> 00:09:51,760 Speaker 3: the business and they want to keep doing that. Although 183 00:09:51,840 --> 00:09:54,240 Speaker 3: that's a slight change of tune from when they were 184 00:09:54,240 --> 00:09:57,400 Speaker 3: negotiating over the I Rex shipbuild when there was some 185 00:09:57,480 --> 00:10:00,520 Speaker 3: kind of brinksmanship where Hera was suggesting pat they would 186 00:10:00,600 --> 00:10:03,280 Speaker 3: exit the market themselves if they didn't have reliable ships. 187 00:10:03,880 --> 00:10:05,880 Speaker 3: But I think it's fair to say that they definitely 188 00:10:05,920 --> 00:10:09,240 Speaker 3: want to retain that business and it would impact them 189 00:10:09,240 --> 00:10:11,240 Speaker 3: materially if it was taken out of their hands. 190 00:10:11,480 --> 00:10:15,960 Speaker 2: Yeah, they've certainly doubled down on it, I think, sort 191 00:10:15,960 --> 00:10:19,600 Speaker 2: of saying that following this Mackenzie work, they actually want 192 00:10:19,679 --> 00:10:24,079 Speaker 2: to increase their capacity on Cookstrait, which is quite a 193 00:10:24,160 --> 00:10:27,360 Speaker 2: stark contrast to the government saying well, we're looking at 194 00:10:27,400 --> 00:10:30,640 Speaker 2: actually taking into island or off you. Do you have 195 00:10:30,720 --> 00:10:34,200 Speaker 2: any insight into how that would affect kirbe Row's business though, 196 00:10:34,240 --> 00:10:36,640 Speaker 2: if it didn't have control of those fairies. 197 00:10:36,880 --> 00:10:40,000 Speaker 3: Yeah, only things that have been said in the heat 198 00:10:40,120 --> 00:10:42,880 Speaker 3: of trying to convince ministers to part with hundreds of 199 00:10:42,880 --> 00:10:45,160 Speaker 3: millions of dollars, So it's unclear whether or not that's 200 00:10:45,200 --> 00:10:48,280 Speaker 3: totally believable. But there was some suggestion that if there 201 00:10:48,280 --> 00:10:51,160 Speaker 3: weren't rail fairies and KIRO didn't have that component of 202 00:10:51,160 --> 00:10:53,920 Speaker 3: a crossing, that that would start to undermine the viability 203 00:10:53,960 --> 00:10:57,200 Speaker 3: of the South Island rail network and potentially you'd see 204 00:10:57,240 --> 00:10:59,839 Speaker 3: KIRA or retrench either out of the island or to 205 00:10:59,880 --> 00:11:03,280 Speaker 3: get or to only one key line. They would certainly 206 00:11:03,360 --> 00:11:07,160 Speaker 3: make it harder for them to grow rail freight I 207 00:11:07,200 --> 00:11:09,840 Speaker 3: think across the strait if they had no control over 208 00:11:09,920 --> 00:11:13,280 Speaker 3: the business that was connecting those two islands. It's tricky actually, 209 00:11:13,320 --> 00:11:15,680 Speaker 3: because the other thing that would happen is that you 210 00:11:15,679 --> 00:11:19,120 Speaker 3: would have essentially two separate rail networks as opposed to 211 00:11:19,200 --> 00:11:22,280 Speaker 3: one interconnected one. So you'd have to think quite hard 212 00:11:22,320 --> 00:11:24,959 Speaker 3: about the logistics of how many locos you had in 213 00:11:25,000 --> 00:11:27,040 Speaker 3: one island versus the other, for instance, and how you 214 00:11:27,120 --> 00:11:30,280 Speaker 3: kind of kept both of those separate rail networks running optimally. 215 00:11:30,920 --> 00:11:32,480 Speaker 3: It's a little bit hard to say at the moment 216 00:11:32,520 --> 00:11:34,600 Speaker 3: about the impacts of their business, but there would definitely 217 00:11:34,640 --> 00:11:39,439 Speaker 3: be harder for them to operate a cohesive national rail service. 218 00:11:39,480 --> 00:11:43,240 Speaker 2: I think, irrespective of whether Kibi Rail is running into 219 00:11:43,280 --> 00:11:47,360 Speaker 2: islander or not, that fleet of three aging firies needs 220 00:11:47,400 --> 00:11:50,720 Speaker 2: to be replaced, you know. The government's effectively canceled that 221 00:11:50,840 --> 00:11:54,160 Speaker 2: plan to replace the Interntato fleet with two mega firies. 222 00:11:56,120 --> 00:11:59,360 Speaker 5: The concern will be as if this aging fleet leads 223 00:11:59,360 --> 00:12:02,720 Speaker 5: to further disruption in the coming years. This is a 224 00:12:02,880 --> 00:12:06,720 Speaker 5: huge transit link linking the South Island and the North Island. 225 00:12:06,840 --> 00:12:10,560 Speaker 5: It's an extension of State Highway one, and the decisions 226 00:12:10,600 --> 00:12:14,200 Speaker 5: made will have huge implications for the tourism sector and 227 00:12:14,240 --> 00:12:18,640 Speaker 5: for the nationwide economy. 228 00:12:18,679 --> 00:12:21,480 Speaker 2: When will we hear what the new plan is. 229 00:12:22,120 --> 00:12:23,760 Speaker 3: I think many many people would love to know that 230 00:12:23,800 --> 00:12:26,680 Speaker 3: as well. There's been some suggestions that it's being held 231 00:12:26,760 --> 00:12:30,480 Speaker 3: up by coalition politics. Perhaps not everyone in the government 232 00:12:30,559 --> 00:12:32,640 Speaker 3: is on board with this idea of a schedule for 233 00:12:32,760 --> 00:12:36,320 Speaker 3: a company, or if they're not, that there's details to 234 00:12:36,400 --> 00:12:38,720 Speaker 3: kind of iron out. But yeah, we haven't really had 235 00:12:38,760 --> 00:12:41,640 Speaker 3: any clear stare. I think Nicola Willis told the Nelson 236 00:12:41,920 --> 00:12:45,760 Speaker 3: Chamber of Commerce not too long ago to expect announcements 237 00:12:45,840 --> 00:12:48,360 Speaker 3: relatively soon around the future of the fleet. But again, 238 00:12:48,760 --> 00:12:51,280 Speaker 3: it's just so tricky to peer behind the curtain on 239 00:12:51,280 --> 00:12:53,480 Speaker 3: this one that there's just no visibility about when we 240 00:12:53,520 --> 00:12:55,199 Speaker 3: should expect an announcement. 241 00:12:54,920 --> 00:12:58,440 Speaker 2: Any idea about what kind of ships might be under 242 00:12:58,600 --> 00:12:59,600 Speaker 2: consideration or. 243 00:12:59,600 --> 00:13:01,679 Speaker 3: In the Yeah, so we're pretty sure about this one. 244 00:13:01,760 --> 00:13:04,800 Speaker 3: So it sounds very much like The Swedish company called 245 00:13:04,920 --> 00:13:08,440 Speaker 3: Stena Roro produces a type of ship called the E Flexer, 246 00:13:08,679 --> 00:13:11,480 Speaker 3: so it's not a rail enabled ship, it's a passenger 247 00:13:11,559 --> 00:13:13,320 Speaker 3: and freight only vessels. 248 00:13:13,480 --> 00:13:14,360 Speaker 1: They're very popular. 249 00:13:14,559 --> 00:13:18,000 Speaker 3: They've produced ten so far with another fifteen under order, 250 00:13:18,360 --> 00:13:21,040 Speaker 3: and the reason that people like them is that essentially 251 00:13:21,120 --> 00:13:24,719 Speaker 3: it's a standardized design. You can tweak it slightly to 252 00:13:24,760 --> 00:13:28,640 Speaker 3: accommodate different customer preferences. They actually did pitch for the 253 00:13:29,080 --> 00:13:32,479 Speaker 3: i Rex kind of mega fury contract, but Stena was unsuccessful. 254 00:13:32,520 --> 00:13:34,640 Speaker 3: They didn't get that. I understand that there might be 255 00:13:34,679 --> 00:13:38,000 Speaker 3: some concern within Kira around whether or not the stener 256 00:13:38,000 --> 00:13:41,000 Speaker 3: e flexes are suitable for the cook straight in terms 257 00:13:41,000 --> 00:13:42,560 Speaker 3: of their ability to kind of deal with a rough 258 00:13:42,600 --> 00:13:46,360 Speaker 3: body of water, but they certainly sound like a relatively 259 00:13:46,360 --> 00:13:49,720 Speaker 3: affordable option. I think the ministerial Viazoo group was quite 260 00:13:49,720 --> 00:13:51,040 Speaker 3: into them as a concept. 261 00:13:51,320 --> 00:13:55,120 Speaker 2: All of the potential options that I've heard of, none 262 00:13:55,120 --> 00:13:58,599 Speaker 2: of them are rail enabled. Do you think that the 263 00:13:58,640 --> 00:14:01,839 Speaker 2: government is not keen on rail enablement. 264 00:14:02,040 --> 00:14:04,280 Speaker 3: Yeah, I think that's pretty safe to say that any 265 00:14:04,320 --> 00:14:07,480 Speaker 3: new fairies won't be rail enabled. The government's made it 266 00:14:07,480 --> 00:14:10,800 Speaker 3: pretty clear that it doesn't view that as necessary. There's 267 00:14:10,800 --> 00:14:12,480 Speaker 3: a lot of contenture around this, but it's kind of 268 00:14:12,480 --> 00:14:14,480 Speaker 3: pointed to the fact that it doesn't think that they 269 00:14:14,480 --> 00:14:18,199 Speaker 3: are in common usage anymore around the world. To that point, 270 00:14:18,640 --> 00:14:20,640 Speaker 3: people tell me, well, actually, the reason that it's the 271 00:14:20,680 --> 00:14:22,840 Speaker 3: case is that in other advanced stations we've got a 272 00:14:22,880 --> 00:14:25,040 Speaker 3: segregated rail network. It's actually a lot easy to build 273 00:14:25,040 --> 00:14:28,160 Speaker 3: tunnels and bridges to kind of connect those sections, whereas 274 00:14:28,160 --> 00:14:29,880 Speaker 3: in New Zealand, I think the idea of kind of 275 00:14:29,920 --> 00:14:32,360 Speaker 3: tunneling under the cook straight, whilst appealing to some, would 276 00:14:32,400 --> 00:14:33,720 Speaker 3: be a bit of a full's Errand. 277 00:14:33,720 --> 00:14:36,560 Speaker 2: The government also has a bit of luck here in 278 00:14:36,640 --> 00:14:41,000 Speaker 2: terms of time. It has more time than was initially 279 00:14:41,240 --> 00:14:45,360 Speaker 2: thought in terms of how much longer the current fleet 280 00:14:45,480 --> 00:14:49,040 Speaker 2: can keep going for there's been some new advice suggesting 281 00:14:49,080 --> 00:14:52,840 Speaker 2: that the current ferries can keep running until twenty twenty nine. 282 00:14:53,280 --> 00:14:55,400 Speaker 2: Can you tell us a little bit more about what 283 00:14:55,440 --> 00:14:56,800 Speaker 2: their advice said. 284 00:14:57,080 --> 00:14:59,880 Speaker 3: Yes, so that's from DNV. I'm not going to train 285 00:14:59,880 --> 00:15:02,440 Speaker 3: and pronounce the name properly, because I will I almost 286 00:15:02,440 --> 00:15:04,880 Speaker 3: pronounce it. But they are a very well respected kind 287 00:15:04,880 --> 00:15:08,280 Speaker 3: of global certification company that Kiral has contracted to come 288 00:15:08,320 --> 00:15:10,880 Speaker 3: in and take a look at their maintenance practices and 289 00:15:10,920 --> 00:15:14,480 Speaker 3: regime on the antrail and the ferries. What was quite 290 00:15:14,520 --> 00:15:16,920 Speaker 3: interesting to me was that Kirol decided to kind of 291 00:15:16,920 --> 00:15:19,800 Speaker 3: proactively release a summary of that advice from d and V. 292 00:15:20,200 --> 00:15:23,560 Speaker 3: I think was last week, and the advice was very 293 00:15:23,600 --> 00:15:27,720 Speaker 3: flattering to them. Essentially, DNV had found that maintenance practices 294 00:15:27,800 --> 00:15:30,760 Speaker 3: were quite good on the existing fleet, that the whole 295 00:15:30,840 --> 00:15:34,200 Speaker 3: age of most of the ships was significantly younger than 296 00:15:34,440 --> 00:15:36,480 Speaker 3: the actual kind of physical edge of the boats, and 297 00:15:36,520 --> 00:15:39,560 Speaker 3: that they believed that with a proper maintenance regime they 298 00:15:39,600 --> 00:15:43,200 Speaker 3: could safely and reliably be operated through to twenty twenty nine, 299 00:15:43,440 --> 00:15:45,880 Speaker 3: albeit at a slightly high cost. So I think it's 300 00:15:45,880 --> 00:15:49,200 Speaker 3: about twenty nine million dollars a year currently that Kirell 301 00:15:49,240 --> 00:15:51,720 Speaker 3: spends on the three vessels. That's expected to go up 302 00:15:51,720 --> 00:15:55,040 Speaker 3: to about thirty six million under this kind of enhanced 303 00:15:55,040 --> 00:15:57,480 Speaker 3: maintenance plan to keep them going. What's quite funny to 304 00:15:57,520 --> 00:16:00,520 Speaker 3: me about that is that Kirel had previously been telling 305 00:16:00,520 --> 00:16:02,480 Speaker 3: ministers and government through its business case for the i 306 00:16:02,600 --> 00:16:05,720 Speaker 3: REX project that actually maintenance cost would be something like 307 00:16:05,760 --> 00:16:08,560 Speaker 3: sixty five million a year. So we appear to have 308 00:16:08,560 --> 00:16:12,240 Speaker 3: found some significant saving somewhere, which is always very welcome 309 00:16:12,440 --> 00:16:13,880 Speaker 3: in type fiscal convironments. 310 00:16:14,000 --> 00:16:18,120 Speaker 2: The fairies are not kb Rowl's only problem. They've also 311 00:16:18,200 --> 00:16:20,960 Speaker 2: got the state of our rail network to look after, 312 00:16:21,160 --> 00:16:25,360 Speaker 2: and there have been ongoing issues with failures leading to 313 00:16:25,840 --> 00:16:30,600 Speaker 2: network wide cancelations. How is kivy Raul dealing with those problems? 314 00:16:30,760 --> 00:16:31,000 Speaker 1: Yeah? 315 00:16:31,040 --> 00:16:33,080 Speaker 3: I actually took the train the first time on a 316 00:16:33,080 --> 00:16:36,240 Speaker 3: weekend in Auckland yesterday and Longhold. It actually worked. It 317 00:16:36,280 --> 00:16:38,960 Speaker 3: was very reliable, and I was quite pleased because there 318 00:16:38,960 --> 00:16:41,640 Speaker 3: has been, as you say, extensive disruption on that Auckland network. 319 00:16:41,800 --> 00:16:44,280 Speaker 3: Kirio definitely has a very hard task ahead of it 320 00:16:44,560 --> 00:16:48,480 Speaker 3: to bring these very very aging networks back up to 321 00:16:49,080 --> 00:16:52,400 Speaker 3: a serviceable standard, especially in Auckland because you've got this 322 00:16:52,560 --> 00:16:55,800 Speaker 3: multi billion, five billion dollar investment into the city rail Link, 323 00:16:56,040 --> 00:16:58,280 Speaker 3: which is it kind of jeopardy or at risk of 324 00:16:58,360 --> 00:17:01,880 Speaker 3: being undermined if the overall network isn't good enough by 325 00:17:01,880 --> 00:17:04,920 Speaker 3: the time it opens. There was a positive signal from 326 00:17:04,960 --> 00:17:07,040 Speaker 3: the government and the budget this year they put aside, 327 00:17:07,040 --> 00:17:08,800 Speaker 3: i think things about like four hundred and forty million 328 00:17:09,520 --> 00:17:12,040 Speaker 3: for rail and the big focus of that was to 329 00:17:12,240 --> 00:17:16,240 Speaker 3: improve networks in Auckland and Wellington. So there's a very 330 00:17:16,240 --> 00:17:19,120 Speaker 3: clear message and focus coming through from this government, which 331 00:17:19,160 --> 00:17:21,639 Speaker 3: is that it values rail as part of a wider 332 00:17:21,640 --> 00:17:24,840 Speaker 3: ecosystem where it makes sense, and it's drawn the line 333 00:17:24,960 --> 00:17:28,560 Speaker 3: at where rail makes sense primarily on a key freight corridors, 334 00:17:28,560 --> 00:17:32,720 Speaker 3: but also on those two metropolitan networks. So not such 335 00:17:32,760 --> 00:17:34,680 Speaker 3: a bad thing for rail lovers. I'm sure they would 336 00:17:34,720 --> 00:17:37,800 Speaker 3: like more, but key rail has a mandate to deliver 337 00:17:37,840 --> 00:17:40,800 Speaker 3: a lot more maintenance and renewals and improvements over the 338 00:17:40,840 --> 00:17:42,560 Speaker 3: next few years in our big cities. 339 00:17:42,400 --> 00:17:46,040 Speaker 2: Getting the crystal ball out. What do you think will 340 00:17:46,160 --> 00:17:48,919 Speaker 2: happen with KPI rail in the long term. 341 00:17:49,000 --> 00:17:51,399 Speaker 3: It's a great question because sometimes it does feel like 342 00:17:51,520 --> 00:17:54,320 Speaker 3: it's the kind of whipping boy of state owned enterprises 343 00:17:54,560 --> 00:17:56,040 Speaker 3: in New Zealand, particularly at the moment because it has 344 00:17:56,119 --> 00:17:58,919 Speaker 3: had such a terrible run with the plans around the Terimo. 345 00:17:58,960 --> 00:18:00,200 Speaker 1: I think that's a bit of a crunch point. 346 00:18:00,280 --> 00:18:03,080 Speaker 3: So if the government were to remove that business from 347 00:18:03,160 --> 00:18:05,240 Speaker 3: QI Rail, I think that would be seen as a 348 00:18:05,280 --> 00:18:08,560 Speaker 3: real blow in terms of their competence, but also their 349 00:18:08,600 --> 00:18:12,200 Speaker 3: ability to deliver on other promises. It wouldn't surprise me 350 00:18:12,240 --> 00:18:14,240 Speaker 3: if the government does set up the schedule for a 351 00:18:14,280 --> 00:18:17,320 Speaker 3: company to procure the fairies. But I think any decision 352 00:18:17,359 --> 00:18:19,280 Speaker 3: around taking the service off q ROW I kind of 353 00:18:19,320 --> 00:18:21,720 Speaker 3: feel like that's an election issue. So again, it wouldn't 354 00:18:21,720 --> 00:18:24,000 Speaker 3: sppose me if this becomes an election kind of campaign 355 00:18:24,119 --> 00:18:26,280 Speaker 3: or promise in the next couple of years where the 356 00:18:26,280 --> 00:18:29,040 Speaker 3: government says we want to kind of reconfigure key Rail 357 00:18:29,560 --> 00:18:33,200 Speaker 3: to focus on basics and delivering profitability on its freight services. 358 00:18:33,880 --> 00:18:35,720 Speaker 3: Here's our propositions in the New Zealand public which to 359 00:18:35,760 --> 00:18:37,560 Speaker 3: set up a new operator which may or may not 360 00:18:37,600 --> 00:18:40,560 Speaker 3: be capitalized by private interests to do that, ultimately, it 361 00:18:40,600 --> 00:18:43,360 Speaker 3: depends on the politics. You've got New Zealand first, which 362 00:18:43,480 --> 00:18:46,360 Speaker 3: was previously a massive rail advocate under the last government, 363 00:18:46,640 --> 00:18:49,360 Speaker 3: have been very surprisingly quiet on the state of key rail. 364 00:18:49,480 --> 00:18:52,680 Speaker 3: I think this term it's possible that they will rediscover 365 00:18:52,720 --> 00:18:55,119 Speaker 3: their love for rail, but they do need a kind 366 00:18:55,119 --> 00:18:56,919 Speaker 3: of political champion, I think for them to have a 367 00:18:57,040 --> 00:18:59,399 Speaker 3: very safe future. And they also need to prove that 368 00:18:59,440 --> 00:19:01,800 Speaker 3: they're competent and that they can actually make a return 369 00:19:01,840 --> 00:19:04,480 Speaker 3: on the capital deployed by the government. So they really 370 00:19:04,480 --> 00:19:06,320 Speaker 3: do need to demonstrate over the next couple of years 371 00:19:06,359 --> 00:19:09,680 Speaker 3: that they can focus on their knitting and get better 372 00:19:09,720 --> 00:19:11,959 Speaker 3: returns to their shareholder, which is the government. 373 00:19:12,240 --> 00:19:18,359 Speaker 2: Thanks so much for joining us, Ollie. That's it for 374 00:19:18,440 --> 00:19:21,640 Speaker 2: this episode of The Front Page. You can read more 375 00:19:21,720 --> 00:19:26,520 Speaker 2: about today's stories and extensive news coverage at inzidherld dot 376 00:19:26,560 --> 00:19:30,359 Speaker 2: co dot nzid. The Front Page is produced by Ethan 377 00:19:30,440 --> 00:19:35,359 Speaker 2: Sills and sound engineer Patti Fox. I'm Georgina Campbell. Subscribe 378 00:19:35,400 --> 00:19:38,840 Speaker 2: to the front page on iHeartRadio or wherever you get 379 00:19:38,880 --> 00:19:43,440 Speaker 2: your podcasts, and tune in tomorrow for another look behind 380 00:19:43,520 --> 00:19:44,240 Speaker 2: the headlines.