New Bass Strait ferries herald new era, but it has not been plain sailing

Saga. Fiasco. Debacle. Calamity.

"The worst infrastructure stuff-up in Tasmania's history," according to the state's former opposition leader.

Few projects in the state's history have attracted as much derision and criticism as the Spirit of Tasmania replacement program, which has been marred by delays, cost blowouts and controversy since it was first announced in 2017.

But as Spirit of Tasmania IV and V set sail for their first official crossings of Bass Strait this evening, the government, state-owned ferry operator TT-Line and tourism operators across the state will be hoping they are bound for calmer waters.

Inaugural sailings 'start of a new era'

Luke Emmett can see the Spirit of Tasmania vessels pass in and out of Devonport from the caravan park he owns and operates at Mersey Bluff.

"They're just an icon for Tasmania really," Mr Emmett said.

"I've been here nine years now, and you don't get sick of watching them come and go."

Mr Emmett said he could not wait for the new Spirits to enter service.

"For us, it's obviously the start of a new era … just exciting times. They're a great-looking boat, coming into a fantastic state," he said. 

Spirit of Tasmania IV and V are replacing the 28-year-old Spirits I and II, which have been making the Bass Strait journey since 2002.

The new boats can carry 400 more passengers than their predecessors and have 60 per cent more vehicle space.

They also boast a range of upgraded amenities, including new pet-friendly cabins.

Crucially, they also have space for three times as many caravans and motorhomes than the older vessels.

"The old boats, they could only fit so many on there, and we were forever having calls from people saying that they couldn't get over here, and once they got over here, they couldn't get back," Mr Emmett said.

"This should alleviate a lot of that for people and give them a little more flexibility, with a bit of luck."

Tourism industry 'excited' and 'relieved'

Tourism Industry Council Tasmania chief executive Amy Hills said it had been a long journey, "but we have finally made it". 

"We're excited, we're relieved, and we're really … looking forward to having our new Spirits on their run and bringing visitors to Tasmania," Ms Hills said.

Reflecting on the past nine years since the Spirit replacement project was announced, Ms Hills said it had been an "up and down journey".

"A lot of those years were characterised as uncertainty, and it's really difficult for a visitor economy to have uncertainty,"

she said.

In 2020, economist Saul Eslake estimated the Tasmanian economy could lose $350 million for every year the new Spirits were not operational.

"It was lost opportunity, and so we've had a number of years where that opportunity hasn't presented itself … [but] we really are an industry that is positive by our nature, and so we dealt with what we were given," Ms Hills said.

"And we still had really positive numbers, and now we really are looking to what we can do with the future."

How did we get here?

The process to replace Spirit of Tasmania I and II started in 2017, when the Hodgman Liberal government announced plans to bring new ferries into service in 2021.

The following year, state-owned ferry operator TT-Line signed a deal with German shipbuilder FSG to build two new ships for $714 million.

But the project was delayed, and the contract was cancelled in early 2020 due to FSG's finances.

Later that year, TT-Line signed a memorandum of understanding with Finnish shipbuilder Rauma Marine Constructions (RMC) to build the two ferries for $850 million, delivering the first in 2022 and the second in 2023.

But the then-premier Peter Gutwein pulled out of the deal at the last minute and set up a taskforce to investigate whether an Australian company could build the ships instead.

That taskforce was unsuccessful, and nine months later the government went back to RMC.

But the initial construction slot was no longer available, and the delivery timeline was pushed out again to 2023 for the first vessel and 2024 for the second.

As construction of the new ships started in Finland, RMC was facing financial difficulties of its own amid a global inflation crisis, and TT-Line paid RMC an additional $81 million to ensure the ships could be finished.

Meanwhile, an even bigger issue was brewing back home.

The new, bigger ferries required a new, bigger berth at their home port in Devonport.

The new terminal facilities were originally scheduled to be finished in August 2024, in time for the new vessels, at a cost of $90 million.

But in June that year, TT-Line revealed the cost had blown out to $375 million, and the new berth wouldn't be ready until February 2027.

As it turned out, construction had not even started, despite the deadline only being two months away.

A high-stakes blame game ensued between the government, TT-Line and Tasmania's port authority, as the government was faced with the prospect of having two brand new ferries with nowhere to put them.

The saga ultimately cost the job of TT-Line chair Michael Grainger and that of the minister in charge, Michael Ferguson, who resigned from the infrastructure portfolio and eventually as deputy premier.

While the construction timeline of the new berth and terminal was eventually brought forward in time for this evening's inaugural sailings, the cost of the terminal and berth works has since blown out to $493 million.

Where are we now?

When the new ferries set sail tonight, they will do so five years later than initially promised, costing $700 million more than the original business case forecasted.

TT-Line will also carry a significant amount of debt.

TT-Line's forecast debt will peak at $1.1 billion this financial year, and the company is projected to remain in debt until at least 2052.

And until TT-Line finds a buyer for Spirits I and II, the Tasmanian taxpayer will be stung with their storage costs.