Details of the Government's $1 billion KiwiRail boost have emerged, including the replacement of old engines and container wagons.
Part of the funding package will go towards purchasing more than 100 locomotives (train engines), 900 new container wagons and replacing old and outdated stock.
Deputy Prime Minister and New Zealand First leader Winston Peters said on Tuesday rail had been neglected for too long and that it's time rail got "back on track".
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"We're addressing the last three decades of under-investment in our rail system and enabling growth that will ensure rail is sustainable."
Peters said 50-year-old locomotives in the South Island are set to be replaced, which he said will mean "more reliable services and less maintenance costs".
He said the replacement of 900 flat-top container wagons with new, larger ones in New Zealand's "busiest corridors" will grant state-owned KiwiRail the ability to be a "more competitive freight service".
But the spend-up on rail hasn't gone down well with Simon Bridges, leader of the National Party, who labelled it a "bottomless pit".
"In transport, I see a rail announcement today - that's a bottomless pit. It's not really achieving anything," Bridges said before his Caucus meeting on Tuesday.
Peters made the announcement early Tuesday morning alongside Finance Minister Grant Robertson, Transport Minister Phil Twyford and Associate Transport Minister Shane Jones.
Pointing to traffic congestion in Auckland, Twyford said: "It's important to reassure New Zealanders that we are investing in tracks, bridges, tunnels, signals and control systems around the country".
But he's been criticised by National's Transport spokesperson Paul Goldsmith who said at select committee last week that Twyford was too focused on public transport and not enough investment was going into roads.
Jones said the value of rail to the economy carrying freight alone is over $350 million per year.
Breakdown of KiwiRail boost
$375m over two years
This will be spent on replacing rolling stock at the end of its life, and to upgrade maintenance facilities, including the aforementioned replacement of the container wagons.
The old wagons could be re-purposed and used for forestry, predominantly in the North Island where harvests are expected to increase, a Government press release said.
KiwiRail said it expects to select a supplier for the new container wagons and place an order for them later this year. The delivery of the new wagons is earmarked for late 2020.
The money will also fund 48 long-haul locomotives predominantly in the South Island, 52 short-haul ones across the country, and a small number of electric short-haul ones.
Upgrades will also be made at Hutt and Christchurch maintenance facilities.
$331m over two years
This will go towards investment in tracks, bridges, tunnels and signals - including work required on the Kaimai Tunnel, upgrades to the train control system, and general track renewals.
It will also fund handling equipment mainly at Westfield/Southdown in Auckland, as well as mechanical renewals for existing stock.
A new freight reservation, booking and tracking system for customer use has also been flagged, which will include real-time tracking of goods.
$35m to upgrade ferries
The three aging ferries used by Interislander will be replaced "over the next few years".
$300m for PGF
KiwiRail is "considering a range of rail projects" to be funded through the Provincial growth Fund (PGF), overseen by Regional Economic Minister Shane Jones.
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