The Government has confirmed that the cost of the City Rail Link has blown out to between $2.8 billion and $3.4 billion.

Associate Finance minister Steve Joyce and Transport Minister confirmed the figrue, which was published by the Herald today.

Until now, the cost of the 3.4km underground rail tunnel between Britomart and Mt Eden has been put at $2.5 billion, although Auckland Transport has said the final cost will be dependent on tenders for remaining contracts.

In a statement, the two ministers said the Government and Auckland Council had today signed a Heads of Agreement, under which the Crown will fund 50 per cent of the
City Rail Link.


The total cost of the project is estimated to be between $2.8 billion and $3.4 billion, and the Crown will make its 50 per cent funding progressively available once a Sponsors' Agreement is in place, the statement said.

"In January this year, the Prime Minister announced the Government would accelerate delivery of the CRL to help address Auckland's transport issues. This agreement is an important milestone in the project and it underlines the Government's commitment to keeping Auckland moving," Joyce said.

"The Heads of Agreement sets out in-principle commitments from Government and Auckland Council, and contains broader funding, governance and risk management arrangements.

"The Heads of Agreement also outlines arrangements for establishing an independent Special Purpose Entity to deliver the CRL, working with Auckland Transport, KiwiRail and others as necessary."

A more detailed Sponsors' Agreement will be developed in the coming months to give effect to the Crown's and council's commitments.

The Government will start to make the Crown funding available once this is in place - which may be as early as 2017.

It is understood the Government insisted overnight that a dollar figure be made public today when it signed the heads of agreement with Auckland Council.

NEWSTALK ZB: Bernard Orsman of the NZ Herald speaks to Leighton Smith

Yesterday, the Government and council had planned to leave out a dollar figure on the project until tenders are let for the remaining contracts.

In June, Prime Minister John Key predicted the rail link will "almost certainly cost more than they thought".

Once complete, the CRL will be one of New Zealand's largest-ever transport projects. The 3.4km underground train line will run from Britomart station in downtown Auckland through the CBD to connect with the existing western line at Mt Eden station.

"CRL is one of Auckland's top transport priorities It will double the capacity of the metro rail network and provide significant travel time savings for commuters, particularly those travelling from fast-growing western suburbs," Bridges said,

"The Government's commitment to the CRL has been driven by strong growth in rail patronage in recent years and the need to provide investment certainty for large-scale property developments around Auckland's CBD, including around the new and improved stations at Aotea Square, Karangahape Road and Mt Eden.

"The investment in City Rail Link reflects the Government's strong commitment to meeting Auckland's transport needs, with improvements to the transport network focused on accommodating the growing population as well as supporting ongoing economic growth," Bridges said.

Auckland Mayoral candidate Phil Goff said he is concerned at the increasing cost estimates emerging for the construction of the City Rail Link.

"The original estimates by Auckland Transport, New Zealand Transport Agency and Treasury put the price at $2.5 billion. They are now saying the cost may be as high as $3.4 billion," said Goff.

"New Zealand taxpayers and Auckland ratepayers are owed an explanation for why local and central agencies may have underestimated the costs. We also need answers around the reliability of their new estimates and whether these can be depended on.

"People understand that the City Rail Link is a necessary part of stopping congestion on Auckland roads becoming gridlocked. Rail is a key part of that with patronage increasing by 22 percent a year. The CRL will double rail capacity and improve travel time.

"However, if the price continues to escalate it puts more pressure on Auckland ratepayers. We need assurances that the project will be delivered on time and within budget," said Goff.