Questions and answers
What are the findings of the report?
The findings of the report are that the revenue from ferry operators and major freight companies is not enough to construct and operate a privately funded ferry terminal at Clifford Bay. The government would be required to invest approximately half of the cost, and carry associated project risk, for the project to proceed.
The investigation also confirmed that with ongoing investment in infrastructure by Port Marlborough, Picton is fit for purpose as a ferry terminal for the foreseeable future.
What was the Ministry’s recommendation to the Minister?
The Ministry recommended not proceeding with the Clifford Bay development.
The Ministry has investigated whether Clifford Bay would work as a fully privately funded ferry terminal with minimal investment and risk to the government. The findings of the investigation did not meet this threshold, hence the recommendation from the project team.
Why is the Cabinet paper saying a total cost of $525 million when it was $422 million last time?
The $422 million cost estimate made in 2012 is still the current estimate. That estimate is expressed in 2012 dollars. $525 million is that same estimate expressed as future costs expected in each year of construction over the 2018-2022 period, and also includes the up-front development costs involved in gaining resource consent, land access, and procurement.
What is the benefit cost ratio (BCR) for the project?
The project has an expected Benefit Cost Ratio of 1.3.
Why is the BCR different to last time?
In 2012, the BCR was estimated to be 1.9. The main reasons for the reduction to 1.3 are that the capital expenditure requirements at Picton have reduced significantly, and cost savings to ferry operators from a move to Clifford Bay are significantly below the levels estimated in 2012.
Were wider economic benefits (WEBs) assessed as part of the investigation?
Yes. Wider economic benefits were also identified. The WEBs include agglomeration benefits (productivity improvements through the bringing together of economic activity) and competition effects not assessed in the cost benefit analysis.
The time savings on a trip between Wellington and Christchurch in this report are different to what was stated last year, why have they changed?
The investigation studied the road and rail journey time savings in more detail.
Isn’t increased government support for coastal shipping an obvious answer?
The government expects that coastal shipping market share growth will depend on the overall package of cost and service it provides to customers.
Has the Picton opposition to Clifford Bay helped make this decision?
The decision has been made based on the overall costs, benefits, and risks of Clifford Bay and the alternative of remaining at Picton.
What about freight demand — did it have an impact on the decision?
Yes, inter-island freight demand was a component of the investigation but when it was tested against Clifford Bay and the counterfactual (Picton), it did not materially alter the conclusion.
Did the speed restrictions on ferries through the Marlborough Sounds have an impact on the decision?
Yes it had some impact. The significant difference for ferry operators was the 30 minute saving per sailing if the terminal was at Clifford Bay rather than Picton. This is mainly a result of the shorter more direct route to Clifford Bay, but is also impacted by the requirement for ferries to steam slightly slower through the Marlborough Sounds.
How was the recent seismic activity considered in the investigation?
A preliminary view of how the ferry terminal and associated infrastructure could be constructed was prepared and this included a review of previous geotechnical work and the impact of the recent seismic activity.
New Zealand is a seismically active country. The recent events in the Cook Strait and the relatively minor damage incurred in Wellington and Marlborough demonstrate that modern structures are designed and constructed to a high standard of compliance taking performance requirements in earthquakes into account.
How much did the investigation cost?
Since the decision to undertake further investigation was announced in early November 2012 (and up until 30 September 2013) around $1.1 million has been spent on the comprehensive investigation. This cost includes the core commercial team, specialist consultants, specialist legal advisors and domestic travel.
What have you got to say to the people of Marlborough?
Thank you for your patience. Our hope is that the government’s decision provides some certainty for the future.