Auckland political leaders have rejected a new Government funding formula for the region's rail network, and are urging ministers to cough up money for electric trains.

Finance Minister Michael Cullen and former Transport Minister David Parker virtually ruled out a $500 million rail electrification project in a letter sent last week to the Auckland Regional Council and its transport authority subsidiary.

They said that although electrification could be "revisited", there would be no Government funding in the next three years, when efforts would be concentrated on a basic upgrade such as completing track duplication on the western line.

This meant electrification would not occur for at least eight years.

Their advice has alarmed regional council chairman Mike Lee, who wrote back saying his organisation could not accept a new funding formula which it believed left Auckland significantly worse off than Wellington.

The formula would see the Government paying for all track work but the region fully funding new stations and trains.

Mr Lee said this contrasted with an effective 80 per cent Government contribution to a rail upgrade in Wellington.

He has also warned Prime Minister Helen Clark that regional rates would need to rise 17 per cent for each of the next 10 years, rather than a maximum of 5 per cent to which his council is committed, to meet a rail capital shortfall.

Auckland City Mayor Dick Hubbard is appealing to the Government to wait for an electrification business case to be completed, but says it should consider environmental and urban intensification issues as well as pure economic factors.

He said the region was under pressure from the Government to discourage urban sprawl, but retaining diesel trains limited development.

The Auckland Regional Transport Authority had hoped to electrify the rail network by 2011 with shared funding from the regional council and the Government, and to start ordering new trains by the end of this year.

Although driven by a long-term desire to boost rail patronage to battle motorway congestion, the authority's ambitions have been spurred by the prospect of having to ferry around thousands of visitors during the 2011 Rugby World Cup.

Mr Lee said the Government had agreed to talks with the regional council on the funding formula, which was supposed to be in place by March 31.

But he said that unless it gave early support to electrification, an urgent need for new trains meant Aucklanders would be denied that option "in our lifetime" and be condemned to diesel units which would prove costlier and less efficient.