The double-track underground line will run from Britomart Station in Auckland's CBD to the existing western line in Mt Eden.
It is expected to double the capacity of the Auckland Metro Rail network and cut travel times for commuters. Rail patronage in Auckland is increasing by around 22 per cent a year.
Another $450 million has been invested in the state-owned rail company Kiwirail in the Budget, which will be allocated over the next two years.
There are few specific details about how the money will be spent, but Bridges said it would go towards making rail infrastructure and systems more reliable and resilient. The Government wanted the rail network to be on a longer-term, sustainable footing, he said.
Budget 2017 also includes nearly $100 million for Wellington's metro rail network, which would mostly go towards replacing poles and wires for trains on the Hutt Valley, Melling and Johnsonville rail lines.
As already announced, $812m will go into rebuilding State Highway One north and south of Kaikoura, which was covered by land slips in the November quake.
Aucklanders unlikely to be happy - Greens
Aucklanders are the biggest losers in today's Budget, with nothing new that will fix transport and housing problems in the city, the Green Party said today.
"National is either ignoring Auckland or they're cynically holding back funding to offer later on as an election bribe," said Green Party Auckland issues spokesperson Julie Anne Genter.
"There is nothing in this Budget for the thousands of Aucklanders this afternoon on crowded buses and trains, sitting in gridlock, on their way home to the house that swallows up most of their income.
"The Government agreed to fund half the City Rail Link way back in September 2016. The cash in the Budget today is nothing new and it's still only a third of the Government's share of the cost for the City Rail Link.
"National has squandered the opportunity to enable Auckland Council to raise revenue with new funding tools for the $4 billion of projects the city desperately needs to keep up with population growth.
"It'll still be 30 years before Auckland gets decent rail to the airport, and there's no word today on much-needed trains to the North Shore.
"Rather than the transformative housing plan Auckland needs, National has forecast years of high rents and more homeless people requiring emergency housing.
"The much-needed rise in student accommodation payments is a joke when you look closer. Where in Auckland can a student get a decent place to live for just $60 a week?
"Anyone who thought having a new Finance Minister who is an Aucklander might mean National finally embraces the best solutions for the city will be disappointed today," Ms Genter said.
Taxpayers' Union executive director Jordan Williams said the Budget continues with the tradition of hundreds of millions of dollars diverted to Kiwirail but an apparent abandonment of the Government's "Turn Around Plan" to get Kiwirail on a fiscally sustainable path.
"Every year since this Government was elected, it has allocated more money to 'turn around' Kiwirail's financial sustainability. Investing in quality infrastructure, capital and metropolitan passenger transport services is one thing - but Kiwirail just can't seem to operate its core business under its own steam."
"Once again the Government is kicking the can down the road and avoiding taking necessary decisions. Instead of the rationalisation of rail services, which Treasury officials have been recommending for years, this Government continues a hopeless 'throw money at it and hope' approach to New Zealand's rail," Williams said.
