KiwiRail puts up to $37.5m into Picton ferry works, but summer Cook Strait crossings stay tight

KiwiRail will spend up to $37.5 million of its own money on rail yard upgrades and automatic mooring equipment at Picton, Rail Minister Winston Peters announced on 16 October. The money goes on the new ferry terminal being built for the New Ferries project. Peters said it sits outside the government's funding.

None of it adds sailings or car deck space this summer. The work is for a terminal that isn't built yet. Until it is, the Interislander runs two ships, and KiwiRail's own advice to the minister says private vehicle and foot passengers will feel the pinch.

What the money buys

According to Peters' release, published on Scoop, KiwiRail plans to:

• improve the rail link between its wagon stabling yards and the wharf linkspan
• angle the arrival and departure lines so they can be longer
• lengthen the southern backshunt under the new Dublin Street overbridge
• buy auto-mooring units planned for Wellington for the Picton wharf

"Auto-mooring makes berthing ships faster, safer, and uses less fuel," Peters said. He said analysis showed the work could be done alongside planned construction without delaying the programme.

Peters linked the spending directly to the government's decision to keep KiwiRail as the Interislander's operator. "Selecting KiwiRail as the long-term operator of the Interislander has given the company confidence to invest its own funds in commercial assets, meaning the taxpayer is not paying a cent more than our $1.7 billion allocation but still achieves the benefit as the ultimate owner of KiwiRail," he said.

KiwiRail is state-owned. Its money is still public money, just not drawn from the project budget.

Peters said the government told KiwiRail and the ports in July that it would back them spending their own funds on commercial assets during construction, "so long as they pay for it and the works do not delay project completion". Inside Government's write-up quotes him saying the government kept the final say on any added scope, "as disciplined scope control is what was absent under the last Government".

The $1.7 billion is the government's share; the release does not give the programme's total cost. Inside Government's report doesn't quote KiwiRail.

Two ships until 2029

The pressure on passengers goes back to the Aratere. The NZ Herald complained to the Ombudsman in October 2025, and the investigation led KiwiRail to release four documents it had withheld. KiwiRail blamed a "mix-up" for first handing over a version with too much blacked out.

The documents show that retiring the Aratere early cut the Interislander fleet by a third. It was also the only ship that could roll loaded rail wagons on and off. The ship had to go so its Picton berth could be demolished for the new ferry infrastructure, the Herald reported. Retiring it in 2025 avoided a $12m dry dock in Singapore and was forecast to bring a $7m net benefit over two years. Renamed Vega, it has left New Zealand for India to be scrapped.

A KiwiRail briefing to Peters warned the retirement "will create a four-year gap in rail-enabled ferry operations to 2029". It also said: "Private vehicle and foot passengers will face capacity pressures particularly during the summer peak." The reason is that KiwiRail puts rail freight and commercial vehicle customers first.

A KiwiRail spokesman told the Herald that losing the ship meant "less flexibility at peak times". He said that "over the last 12 months our reliability to sail, excluding weather is over 99%".

What travellers should do

Anyone taking a car across Cook Strait between December and February should book now rather than closer to the date. Because freight gets priority, car space goes first. Foot passengers were warned too.

Build some slack into the trip. With two ships, a cancelled sailing leaves fewer later crossings to move people onto, so tight connections at either end are a risk. Rental car drop-offs, onward ferries to the Sounds and flights out of Wellington are the obvious ones. Leave the day after the crossing free.