Key Points:

Serious doubt has engulfed Auckland's Waterview motorway tunnels project - the vital last link in the western ring route - after a cost blowout to between $2.77 billion and $3.16 billion.

The Government has ordered an urgent review of route options after the Treasury and Ministry of Transport added financing costs of more than $500 million and an upgrade of the nearby Northwestern Motorway for $240 million to the main project.

Previous estimates of $1.89 billion for two-lane tunnels each way along the 4.5km Waterview route or $2.14 billion for three-lane links - as sought by the Automobile Association and business groups - did not include any of those costs. The new estimates are $2.77 billion for a 3.2km pair of two-lane tunnels and $3.16 billion for three lanes in each direction.

Transport Minister Steven Joyce announced yesterday that he had given officials until April to review all options for a connection of State Highway 20 to the Northwestern at Waterview, including a potentially disruptive surface route through Mt Albert and previously discarded "cut and cover" proposals.

The former Transit NZ [now part of the Transport Agency] favoured bored tunnels to limit environmental disruption from digging through volcanic rocks beneath the sensitive Oakley Creek and reducing social dislocation from the destruction of about 500 homes.

That compares with about 160 homes - mainly owned by Housing NZ - to be cleared from tunnel portal sites.

Mr Joyce was unable to predict a completion date for Auckland's 42km western ring route, saying officials regarded a 2015 target of the previous Labour Administration as "aspirational". But he insisted the Government remained committed to completing the route.

"We've got to have some form of Waterview connection," he told the Weekend Herald.

"We can't just bring SH20 to a stop, where it's currently going to stop somewhere behind the Richardson Rd shops and leave it there," he said in reference to the 4km Mt Roskill motorway extension from Hillsborough nearing completion for $201 million. He acknowledged there may be some savings on financing costs of the project, on which officials assumed an interest rate of 8 per cent. But that wouldn't change the cost of the project dramatically."

His main concern was the $3.16 billion cost of three-lane tunnels, as he was "not comfortable" with the idea of building two-lane structures with no ability to enlarge them for future traffic demand.

A business case prepared by officials last year said a modest benefit-cost ratio for the project of $1.15 for every dollar invested was because the high price of tunnelling relative to surface roads "largely offsets the significant benefits of building the Waterview Connection".

"We note that the Waterview Connection is six to nine times as expensive as a comparable length of motorway at the Mt Roskill SH20 extension."

The officials dismissed road tolls to pay for the tunnels, saying a $2 charge supporting $410 million of debt would reduce the benefit-cost ratio by forcing traffic on to alternative roads.

And without tolls, value for money for a public private partnership to build and operate the tunnels would be "relatively small".

But the cost of tunnels would increase the Government's debt by almost 1 per cent of GDP, meaning delays for other projects.

The Government review was welcomed by Federated Farmers, which is lobbying for money for the tunnels to go into water irrigation schemes.

"The tunnels would be a choke on traffic, and a choke on the economy," said chief executive Conor English.

But the AA and Council for Infrastructure Development are urging the Government to consider wider benefits of completing the ring route, noting that every year of delay will deprive the economy of more than $800 million.

Labour's transport spokesman, Darren Hughes, said the Government should press on with the tunnels rather than risk long delays and massive community disruption by trying to build a surface motorway through as-yet undesignated land.

"Auckland desperately needs this road."