Councils in Auckland and Wellington need to pay more for the rail services they use, Transport Minister Steven Joyce says.
People need to understand how hard it was to turn around state-owned KiwiRail, he said.
"If we're going to do that then actually every stakeholder will have to make a contribution that equates to what they're getting out of it and in the case of Auckland and Wellington region and the metros, quite frankly they don't pay the track access charges that would be required to maintain and renew the tracks."
Internationally local government subsidises rail ticket prices to help keep people off the roads and lessen congestion, Mr Joyce told Radio New Zealand.
"That's what I'm saying to them (councils), if you want these services you actually have to pay the actual cost.
"You've basically got a bunch of people saying we sort of pay enough, and we're not quite sure what we pay, but it's enough and you should go and find the money somewhere else."
The shortfall in Auckland and Wellington was $20 million annually. The government, through the New Zealand Transport Agency, paid 60% of that, Mr Joyce said.
"In the case of Wellington, for example, people say, quite rightly, the service isn't good enough, why should we pay more?
"I completely agree with them but at the same time for years and years in Wellington the regional councils and New Zealand Transport agency that support these passenger rail services have not wanted to pay anymore for the cost of actually maintaining and improving the tracks.
"Everybody loves it (rail), nobody wants to pay."
Mr Joyce said he was confident there would be progress on the issue despite Auckland Regional Council chairman Mike Lee's comments that Aucklanders had already paid their way.
"Mike is a passionate rail advocate but he often losses his cheque book on the way to coming to the discussions," Mr Joyce said.