The government has confirmed support for Auckland's city rail link, but it will delay construction of the project by five years.
Prime Minister John Key told media this afternoon the government wants the project to begin in 2020; the Auckland Council wants construction to begin in 2015-16.
"The advice we've had is that a 2020 start date is more in line with the likely best use of that," Mr Key says.
"We think it reflects more accurately the demand flow that will come for the rail link."
He says it's not realistic for Aucklanders to pay for the project themselves, although he has not said whether the government will pay for half of the construction cost as Auckland Council wants.
Mr Key has not ruled out using proceeds from state asset sales to help pay for the link. He says bottlenecks in Auckland lead to higher costs for all New Zealanders.
"The reality is that Auckland is experiencing a lot of internal and external migration so ultimately we need to build more infrastructure."
Auckland mayor Len Brown says the government’s agreement to fund the City Rail Link represents a major step forward for Auckland.
“The government has now given us a huge challenge to respond to. Along with the electrification of rail, the CRL will be the biggest advance in Auckland transport since the Harbour Bridge.
“Building the CRL is my number one priority as mayor. It will be a vital piece of infrastructure for Auckland’s economy, and will enable us to better meet the challenges of a growing city."
The CRL will double the capacity of the existing rail network and slash travel times, he says.
“Removing the cul-de-sac at Britomart will enable our city’s rail network to move at least twice as many passengers as we do now. Travel times from the west and south will be slashed by up to half an hour.
“The economic benefits should not be understated. We expect the working population of Auckland’s city centre to double by 2041. This will lead to gains in productivity that will more than double the city centre’s economy.
“In this context, being able to move people into and around the city more easily is critical to recognizing our economic potential. And it’s critical to our ability to remain internationally competitive for jobs and investment.”
Councillor Cameron Brewer says the council now needs to get its alternative funding sources for the project sorted.
“The government probably needs to lock down its contribution in dollar terms, as the project costs have reportedly gone up six fold in the past eight years.
"It’s now time to put a line in the sand. We’ve got to make sure the costs don’t keep running away for the likes of taxpayers and Aucklanders.
“Already this 3km tunnelling project is set to cost nearly $1 million a metre. That’s $10,000 a cm or $1000 a mm.
"Auckland and taxpayers now need to get some cost certainty and containment."
The government is expected to confirm taxpayer support for Auckland's city rail link, despite its earlier criticism of the project.
But the project will be delayed five years to start in 2020.
This follows a TV3 story today claiming the government would invest billions of dollars – not only for the rail link – but for a transport plan billed as a massive stepchange for Auckland city transport.
The CRL is a 3.5km tunnel which would connect Auckland central's Britomart station to the Western line at Mt Eden. Its route would mostly be under Albert St.
Auckland Council wants the government to pay for half the project, which is expected to cost $2.86 billion ($2.4 billion in today's terms).
However, the government has waited for an official review of the project by the Ministry of Transport before making its decision.
Transport Minister Gerry Brownlee says the government would make an announcement relating to the project this Friday.
"The government is going to make, through the prime minister, announcements around a number of issues on Friday in Auckland."
Asked by reporters if this was a change of heart by the government, he replied: "It's not a U-turn, it's a loop."
Mr Key is speaking to the Auckland Chamber of Commerce, which supports the rail link, on Friday at midday.
Mr Brownlee has previously told Parliament the rail link would have a "minimal" effect on traffic congestion in Auckland.
He has also questioned claims by the City Centre Future Access Study that traffic will massively increase in Auckland's CBD by 2041, saying projections of increases in the number of workers in the CBD were too optimistic.
An international researcher has warned taxpayers would be on the hook for any cost overruns from the project if the government committed funding to it.