Labour is conceding defeat on Auckland Light Rail before the election, with Cabinet failing to reach an agreement on either proposal.
An artist's impression of Auckland's Queen Street pedestrianised with light rail. Photo: Jasmax NZ
RNZ previously reported that the project was dead in the water, but until now the government's position has been that negotiations were ongoing.
In a statement, Minister of Transport Phil Twyford said Cabinet agreed to end the twin track process of the project, despite extensive cross-party consultation.
It will now be referred to the ministry for further work, with a decision left to be made until after the September general election, Twyford said.
He said two proposals, from NZ Infra - a joint venture of NZ Superannuation Fund and Canadian institutional investors CDPQ Infra - and Waka Kotahi NZ Transport Agency, were received.
"Either would have created hundreds of jobs and resulted in an Auckland metro that offered Aucklanders a 30 minute trip from the CBD to the Airport.
"The Ministry of Transport and the Treasury will also engage with NZ Infra and Waka Kotahi about how work done on this project can support the next phase."
Auckland light rail remains a project in the Auckland Transport Alignment Project (ATAP), he said.
Twyford said they had made good progress on ATAP with construction starting on several upgrades and projects, like the Eastern Busway, Matakana Link Road, Karangahape Road Cycleway, and the Constellation Bus Station upgrade.
"Auckland Light Rail will be New Zealand's most complex infrastructure project in decades and it's vital we get it right for future generations."
Twyford confirmed earlier this month his office had received an email on behalf of NZ First leader Winston Peters regarding light rail on 29 February, but said it was not in the public interest to reveal its contents.
RNZ has been told the email made clear NZ First's objections to the project, namely its cost and scale, as well as the potential involvement of the CDPQ.
Auckland Light Rail was a flagship Labour promise in the 2017 election. It is also part of the confidence and supply agreement between Labour and the Greens.
In a statement, Auckland Mayor Phil Goff said Aucklanders would be disappointed in the delay.
"It is frustrating that after three years, disagreement within the coalition has held this process up," Goff said.
"It's now less than 90 days until the general election and we expect the incoming government to act quickly and decisively to outline its proposal to get light rail built."
He said a decision on light rail was crucial to meet forecasted growth in the region as well as support housing intensification and ease congestion in the coming years.
The National Party has labelled the decision as another broken promise.
Its leader, Todd Muller, said the government talked big but delivered little.
"Auckland light rail was Jacinda Ardern's first campaign promise as Labour leader in 2017 and was meant to be up and running between the CBD to Mt Roskill by 2021. But nearly three years on, the project has gone backwards," Muller said.
The Ministry of Transport and the Treasury will work with both Auckland Council and Auckland Transport, as well as other agencies, to prepare options for the new government to consider.