Prime Minister Jacinda Ardern has announced an $85 million Government injection for Queenstown's fragile Covid-hit economy.

Ardern, in Queenstown with Tourism Minister Kelvin Davis, announced the Government would contribute $35 million to the Queenstown Town Centre project and $50m to stage one of the Queenstown Arterials project.

The announcement comes after months of complaining from Queenstown residents and business leaders, who have accused the Government of overlooking the resort town.

The Government said its partnership with Queenstown on the two projects would unlock around $300 million of projects in the township and create about 320 direct jobs.

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"The projects we're announcing support for today will help ensure the construction sector does not suffer the same negative consequences as the tourism sector.

"This is vitally important because the sector is the second largest contributor to Queenstown Lakes' economic growth, employing about 4,300 people, or approximately 14% of all jobs."

Queenstown Lakes mayor Jim Boult said he was "delighted" with the announcement.

"It's something that we have been working towards for many months and they are both projects that we have had a desire to do for years.

"I am very pleased that the Government has heard our plea."

Boult said the funding was also the catalyst to unlock other projects "which will follow".

"This is a major step in the right direction for our district at this time."

Ardern said before Covid-19 the district's GDP was about $3 billion and the local economy was growing at more than twice the rate of the national economy.

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"This stunning town is an internationally renowned tourism attraction and unfortunately the local economy is experiencing a major downturn as a result of Covid-19."

The funding towards the arterials project would cover the full cost of the first stage and Ardern said the project was a strong candidate to be fast tracked under the Covid-19 Recovery (Fast Track Consenting) Bill which would allow it to get under way within 12 months.

The town centre streetscape project was a $57 million project in total, with the Queenstown Lakes District Council contributing $22 million.

Construction on the project is expected to be under way within three months and take about a year to complete.

The work would include street-scaping works, cycle and walkways, and was expected to create about 130 jobs.

The two projects would unlock the ability to develop a new town centre public transport hub costing $25 million, creating about 100 further jobs.

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"The council expects the construction phase of this project will take about 18 to 20 months and estimates about 190 jobs will be supported during Stage One.

"Both of these projects help to unlock Project Manawa, a joint investment from Queenstown Lakes District Council and Ngāi Tahu Property, which would see new civil buildings, civic amenities and commercial development at the edge of the arterial road at a cost of approximately $120m.

"In Budget 2020 we set aside $3 billion to support infrastructure projects and today's funding is the first to be announced from this allocation.

"Many sectors and communities are facing uncertainty in a Covid-19 environment and we want to ensure that Government is helping preserve jobs, create new ones and protecting our economy the best we can," Ardern said.

The projects came to the Government's attention as being shovel ready and able to redeploy affected workers.

They were submitted through the Infrastructure Reference Group (IRG) process and were identified as front runners to support the district's economic and social recovery, Ardern said.

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