Construction will begin on Wellington's controversial Transmission Gully project in the second half of next year and a preferred bidder for the project will be named in February.
The 27 kilometre section of the Wellington Northern Corridor is expected to be open for traffic by 2020, the Prime Minister told a Wellington business audience today.
John Key said Wellington, as the biggest centre in the lower North Island, is a crucial transport hub, linking the North and South Islands, and linking with regions to the north like Horowhenua, Manawatu and Whanganui.
Cabinet approved Transmission Gully to be a public-private partnership in November last year, resource consents have been granted, and two consortiums were short-listed in April this year.
Mr Key said the Government is investing heavily in Wellington's infrastructure, ranging from the Wellington Northern Corridor from Levin to Wellington Airport through to improving commuter rail.
"The recent earthquakes have boosted the already-strong case to upgrade routes into and out of the region so it can better cope with such events," he said.
The latest estimate of the cost of the Wellington Northern Corridor - of which Transmission Gully is a part - is expected to be about $2.5 billion.
Mr Key said the corridor will "vastly improve" the daily commute and for people living up the coast, the hospital, airport and CBD will be up to 40 minutes closer.
"In effect it will shrink distances across region - with all the benefits that flow from that," Mr Key said.
The transport corridor is expected to create thousands of new construction jobs.
But the Greens say the project is a waste of money because traffic volumes on the route are declining.
"Building a $3 billion duplicate motorway on a route with declining traffic volumes is an enormous waste of public money," said transport spokesperson Julie Anne Genter.
"Even on the Government's own, highly optimistic, traffic forecasts, the Transmission Gully PPP will cost the taxpayer $15 per vehicle trip for quarter of a century. That's a huge subsidy from taxpayers for a select group of drivers."