New Zealand's planned Cook Strait ferry upgrade has been shelved by the coalition government due to cost blowouts.
On Wednesday, Finance Minister Nicola Willis announced she had knocked back a request for more money for the project from KiwiRail, the state-owned operator of the InterIslander ferries.
The decision leaves NZ without a plan to upgrade or replace the aging InterIslander ferries, which carry freight, vehicles and passengers between the North and South Islands.
"The government remains committed to a resilient safe and reliable Cook Strait connection, but the cost of this project has almost quadrupled since 2018 to approximately $3 billion," Ms Willis said.
Interislander operates three ships which make about 4000 sailings a year, carrying up to 800,000 passengers and 250,000 cars.
The replacement plan would have seen the diesel-fuelled fleet replaced with two larger, rail-enabled diesel-electric hybrid ferries.
Ms Willis said most of the cost blowout was associated with harbourside infrastructure at Wellington and Picton's ports.
To date, more than $NZ435 million ($A405 million), has been spent on the project.
She committed the government to operating publicly-owned ferries across the treacherous body of water.
"There are a number of options for ensuring that as those ferries reach the end of life, we can have ways of ensuring that ferry services are provided in the future," she said.
"I will be engaging Kiwirail and the government's own advisors over the coming weeks to work through those options."
Private operator Bluebridge provide competition to the state-owned KiwiRail-run service.
The ferry journey between the two islands remains a trip close to Kiwis' hearts, but the ferries used by KiwiRail have provided a near-constant stream of scandal in recent months.
In January, an engine fault caused the Kaitaki ferry to issue a mayday in Cook Strait, handing out lifejackets to the hundreds of passengers before it was tugged back to Wellington.
The same ship was sidelined for five weeks in autumn, causing mass cancellations and travel disruptions.
Last month, the Kaiarahi ship was sidelined after smashed into the Wellington wharf and ripping a hole in its hull.
