The government's decision to cancel the iReX Interislander project has come as a shock to mana whenua.

Finance minister Nicola Willis this week said the government had rejected KiwiRail's request for nearly $1.5 billion for the Interislander replacement project, which was meant to include two new rail-enabled ferries as well as terminals and associated works in Picton and Wellington.

As a result of the decision, the KiwiRail board said it would wind down the project and review its plans for the Cook Strait connection.

Te Ātiawa o te Waka-a-Māui Trust chair, Rachael Hāte said it was a heavy blow for the community.

Hāte said the iwi was disappointed a more proactive and pragmatic approach had not been taken as past governments had neglected to future-proof the service.

She said the iwi had been working with KiwiRail on iReX – which would have required a $3b budget had the latest funding request been acceted – as part of a governance and advisory group for many years.

The hit will be felt further throughout the community as potential loss of employment sets in, she said.

The iwi’s financial report in June said the project would take three to four years to complete and generate 300 jobs in the local area.

“Our rohe, people and community have navigated through extreme events before, and this is no different,” Hāte said.

The frailty of the connection, essentially as an extension of State Highway 1, has been highlighted in recent years by several breakdowns, including a ferry that issued an SOS after losing power in all engines.

The chair said despite the upset, the iwi will continue to care for the thousands of manuhiri (visitors) who pass through its region every year who use the ferry service.

Te Ātiawa o te Waka-a-Māui had been working with KiwiRail, Port Marlborough, the Marlborough district council and Waka Kotahi NZ transport agency to ensure the new terminal design would reflect and celebrate its identity and connections to the whenua (land) and moana (sea).