"Three months out from the election the Government has decided to inject money into regional New Zealand," he said.
"Labour's plans to boost regional development through manufacturing and forestry show Labour is committed to regional development."
Mr Coffey said he did not believe the route would go ahead any sooner than originally predicted by the New Zealand Transport Agency.
"And any decision has got to involve those hapu that will be affected. Our whanau have been talking about this since my grandparents' time.
"The project has paralysed those hapu who have been waiting for this thing to happen for a long time."
Mr Coffey said he was not anti-progress, but did not believe the route would go ahead any faster than planned, even with increased funding.
Waiariki MP Te Ururoa Flavell said the NZTA and district council had learned valuable lessons in recent years with regard to consultation with iwi and the REA: "We will have to see where the discussion leads.
"So often the lack of consultation with those affected falls short of the mark for all sorts of reasons," he said.
"But, in the end I suspect the timelines will stay the same because it's better to get it right, rather than encounter more angst later on.
"I've noticed a positive attitude from all parties to get this resolved," he said.
Rotorua mayor Steve Chadwick said this was an exciting funding boost that underlined central-government confidence in the region's future economic development.
"We know there's a need to look at a transport solution for the city and region that meets our collective aspirations and direction," she said. "Through setting this funding, Government has indicated we have an opportunity to gain further financial support once we've investigated, found and agreed on the right option for Rotorua," Mrs Chadwick said.
Rotorua MP Todd McClay said there was plenty to do before a decision could be made.
"It is important that concerns of hapu and iwi are fully taken into account," Mr McClay said.
"This funding gives us options to continue this dialogue and fully consider the significant opportunities that opening up the eastern side of Rotorua can offer many groups."
Late last year the New Zealand Transport Agency said no work would begin on the route until between 2020 and 2025.