Aucklanders could yet pay tolls to fund the $2.5 billion City Rail Link, but the Government remains lukewarm about the idea.
Prime Minister John Key outlined a plan to make an early start on main works for the rail link at his State of the Nation address today in Auckland.
Strong growth in rail patronage and the need to provide certainty for other CBD developments were behind the decision.
"The reality is the central rail link is going ahead," Mr Key said.
The Prime Minister firmed up the Government's commitment to the project and pledged the taxpayer would pay about half the total cost.
He said the Government had not ruled out allowing the council to toll motorists to help fund its share of the project.
"If council wants to further tax or charge Aucklanders we are lukewarm to that because in the end it reduces the available disposable income of Aucklanders and makes Auckland as a place to do business a little more expensive," Mr Key said.
"We haven't ruled those things out but we have said they would absolutely need to justify them."
Last year, a small majority of Aucklanders supported tolls to fund transport projects during consultation on a long-term budget, but the Government blocked the idea, which requires legislation.
Mr Key said the council had to go through its processes to work out how to come up with its share; how much it will fund through rates, debt and how it manages its balance sheet. Asset sales are one option.
A contract between the Government and council is being negotiated setting out how project costs will be shared, timing of payments and how the rail link will be owned and managed.
Mayor Len Brown described Government's announcement to firm up its commitment and formalise a funding commitment from 2020 as a "great day for Auckland".
Rail patronage, Mr Brown said, was growing at 9000 extra train trips a day. Britomart, which can handle 20 trains an hour, will become a through station handling 48 trains an hour.
The announcement will allow construction of the main underground tunnelling work to begin at the Mount Eden end in 2018. In May this year, work will begin on a cut and cover tunnel from Britomart and up Albert St as far as Wyndham St. The project is due for completion in 2023.
Mr Brown said Aucklanders had a big discussion last year about tolls and it was important to keep the discussion live.
"Aucklanders are saying that they would be interested in this as a way of seriously funding transport going forward rather than sitting on carpark motorways," he said.
Political reaction to the announcement was mixed.
Labour leader Andrew Little said the announcement will be a relief for Auckland's frustrated commuters, saying Mr Key's "five-year-late" commitment shows the short-term thinking of his Government.
Green Party transport spokeswoman Julie Anne Genter said Mr Key's backtracking on it's long held position of a 2020 start date for main works removed the last remaining obstacle -- the National Government.
Labour MP and mayoral candidate Phil Goff said the Government should consider the project as the same as a "road of national significance", which the Government funds in full.
Victoria Crone, a right-leaning mayoral candidate, said it was good to see the Government coming to the table on the rail link and other projects, but managing the delivery of these major projects without blowouts, delays and disruptions is going to be critical.
National's MP for Auckland Central, Nikki Kaye, said the announcement was great news for the community and provided a huge boost for potential new jobs and growth in Auckland.
"The CRL is a vital artery in Auckland's rail network. The new, 3.4km underground link will double the capacity of the network, and significantly reduce commuter times," she said.
Youth lobby group Generation Zero said the announcement was a massive step forward for Auckland.
Spokesperson Leroy Beckett said it would end uncertainty over funding and bring forward billions of dollars worth of public and private investment in Auckland's city centre and beyond.
The City Rail Link will unlock the entire transport system, allowing five minute frequencies on existing rail line and provide the capacity to extend the rail network to the airport and North Shore, he said.