The Government has agreed to fund the rebuild of the Wellington region's rail network as the regional council considered rate rises to fund its share of the project.
Under the deal the Government "agreed in principle" to fund $88 million to complete the renewal of the rest of the signallingand traction on the network while the Greater Wellington Regional Council (GWRC) agreed to refurbish the 43 30-year-old Ganz Mavag trains at a cost of $80 million.
Transport Minister Steven Joyce said both the Government and GWRC were determined to bring Wellington's metro service up to a high standard.
"The Wellington rail network has been a considerable and ongoing source of frustration for many commuters," Mr Joyce said.
"This package, coupled with the previous investments from Government and the Council, including the new Matangi units, will transform the service into a modern reliable public transport option," he said.
GWRC will get a subsidy from the New Zealand Transport Agency, but chairwoman Fran Wilde said the council would also be considering a rate rise of 2.6 per cent to pay for the rail upgrade and a further 1.98 per cent for "general activities".
The council would make a final decision on the rise after public consultation in June.
"This proposed package would be paid for over several years and would give ratepayers full ownership of all the region's metro trains and all the stations apart from Wellington Station," Ms Wilde said.
The ownership of Wellington Station would not be transferred because it was not just used as railway station and because it was subject to an option to purchase under the Treaty of Waitangi, a KiwiRail spokeswoman said.
Ms Wilde said that although $550 million had already been spent on rail improvements, significantly more work was still needed.
"This work will now be able to be planned with secured funding."
The Green Party welcomed the contribution the Government was making to the upgrade and said it was welcome news for commuters hit by rising petrol prices.
"The more we invest in trains and buses, the more resilient our economy will be to oil price shocks," Green Party transport spokesman Gareth Hughes said.
