The New Zealand Government has allocated nearly $935m (NZD1.3bn) for the region’s rail development in Budget 2021.

The announcement was made by Transport Minister Michael Wood and State-Owned Enterprises Minister Dr David Clark, who said that the investment will result in job creation under the Covid-19 economic recovery plan.

Around $520m (NZD722.7m) will be invested to replace locomotives or wagons, $323m (NZD449.9m) to upgrade tracks and build supporting infrastructure, and $61.17m (NZD85m) to develop domestic rail workshops at Hillside in Dunedin.

Wood said: “By investing in rail workshops in Dunedin and Christchurch, we’re going to create around 445 good local jobs and help boost jobs in the civil engineering and construction sector through the wider supply chain.

“The new locomotives, wagons and critical track maintenance from the Budget will help us move more freight efficiently, reducing emissions and congestion. On average, every tonne of freight moved by rail produces at least 70% fewer carbon emissions compared with heavy road freight. This helps with New Zealand’s crucial transition to a low carbon economy.”

The budget also covers nearly $62.83m (NZD87.3m) for the maintenance of KiwiRail’s current assets, including locomotives and wagons, as well as ferries and IT.

Clark said: “The Hillside Workshops have been an important part of Dunedin’s history and economy for over 100 years and we’re building off the nearly $14.39m (NZD20m) investment we made in 2019 to re-establish them as a mechanical hub.

“Instead of buying ready-made wagons from overseas, this new facility will allow us to initially assemble around 1,500 wagons locally.”

To revitalise the rail industry, the government is planning to extend electrification from Papakura to Pukekohe, future-proof Auckland’s City Rail Link, double-track the rail line between Trentham and Upper Hutt, and reopen the Wairoa to Napier line.

Around 15 new electric trains will also be introduced on Auckland’s network, along with the addition of a third main line from Wiri to Quay Park.