Funding for a trial of the Auckland-to-Hamilton passenger rail service has been given a green light.
The Transport Agency board has approved the case, which means work can start on designing infrastructure and fitting out trains to carry up to 200 passengers, for a five year trial beginning in March 2020.
The money will also be used reinstate a maintenance base at Te Rapa, build a new station at the Base in North Hamilton and upgrade the Huntly station.
Transport Minister Phil Twyford said the service included stops in Hamilton at Frankton and Rotokauri, before terminating at the Papakura interchange in Auckland.
"We know more and more people are commuting between Hamilton and Auckland, and introducing this trial service will give them a choice in how they do that.
"The government is committed to investing close to $4 billion in public transport, rapid transit and metro rail across New Zealand. This trial service will demonstrate how investing in public transport can help manage growth and shape our towns and cities," Mr Twyford said.
In the future, stops could be added in Te Kauwhata, Pokeno and Tuakau.
The cost of the project over the first six years is $78.2m.
The government, through the Transport Agency will contribute $68.4m and local authorities Waikato Regional Council, Hamilton City Council and Waikato District Council $9.8m.
Once the two-return-trips-a-day service starts running, costs are estimated at nearly $6m a year.
The NZTA subsidy will account for 75 percent of the cost and the remainder will be paid for by local ratepayers and from fares.
Waikato Regional Council chairman Alan Livingston said national investment in the service signalled a commitment to improving transport for people in Waikato's growth areas.
Hamilton mayor Andrew King said the rail service would be a key part in managing congestion as the city and the region grew.
Waikato Regional Transport Committee chairman Hugh Vercoe said the service would be a fantastic first step that would make a huge difference to congestion and, more importantly, the lives of many people.
The train service will start with four carriages which can carry 150 passengers each way.
Transport Minister Phil Twyford said as demand grew the service would be expanded to five carriages carrying up to 200 passengers.
National Party transport spokesperson Paul Goldsmith said the decision to fund the train is a clear example of the government's wasteful spending and poor priorities.
He said putting 150 people a day on a diesel train was not going to make any meaningful impression on Auckland's congested Southern Motorway.