That line would eat up most of the Budget's allocation to regional rail and would be the first step to establishing Northport as a strong regional port – one that could be capable of receiving the car imports currently landed at Auckland.
KiwiRail CEO Greg Miller said the Budget "builds a solid foundation for the future of rail in New Zealand".
He called the level of investment "outstanding" and "a clear recognition of the value rail can add to New Zealand's transport system".
Miller said: "We know that rail, with 66 per cent fewer emissions per tonne of freight carried than trucks, has a key role to play in reducing New Zealand's transport emissions, relieving congestion on our roads, improving road safety and connecting our communities."
However, National's transport spokesperson, Paul Goldsmith, said, "It's hard to believe the key initiative in 'Transforming our economy' is further subsidies for rail. Meantime, since coming in the Government has stopped a dozen or so major transport projects and started no new ones. Frustrated commuters will saddened at the Government's perverse priorities."
Brett O'Riley, chief executive of the Employers and Manufacturers Association, described the funding as being "largely to fix things up". He didn't think there would be much dispute about the need to do that, but noted there has been no announcement yet on how Auckland freight will be impacted.
A spokesperson for Ports of Auckland said it wasn't possible to comment without knowing how the money would be spent.
Transport Minister Phil Twyford called the funding for rail the first step in rebuilding "the backbone of a sustainable 21st-century transport network".
He said a long-term national rail plan would be developed later this year.
"Our goal is to have a stronger rail network that sees more freight moved by rail and fewer heavy trucks on our roads, as well as better public transport options to give commuters choice."
The Budget also confirmed the Government would meet its half share of the extra $1 billion of costs expected for completion of the City Rail Link. This follows Auckland Council's commitment of a similar amount and was anticipated.