Transport Minister Steven Joyce this morning confirmed the project would go ahead as one of the Government's roads of national significance.
Also announced was a NZ Transport Agency (NZTA) plan to upgrade SH1 between Wellington and Levin to reduce congestion, improve safety and support economic growth.
The upgraded route from Wellington Airport to Levin was expected to save drivers between 23 and 33 minutes during peak times and between 17 and 23 minutes during the day.
Mr Joyce said Transmission Gully had been debated for decades, but now a decision and funding plan had been made.
"The Government's decision to invest nearly $11 billion in new state highway infrastructure over the next 10 years will ensure funding is available for the gully project."
Tolling may be used to bring construction forward.
"The gully route is the best long-term option for the State Highway 1 road of national significance between Wellington and Levin in terms of route security, journey time savings and minimising impact both during construction and in the longer term," Mr Joyce said.
"Proponents of the coastal route generally support it because of perceived lower costs.
However the latest cost estimates show a similar cost profile between the two options with bypasses at Pukerua Bay, Plimmerton and Paremata being particularly costly because of the built-up nature of those areas, and the widening of Centennial Highway also being problematic."
Mr Joyce said an important factor in NZTA decision-making was the need to minimise the impact on existing communities.
"Transmission Gully will bring benefits to the coastal communities of Mana, Plimmerton, Pukerua Bay and Paekakariki through reduced community severance and traffic noise, as well as improved air quality."
Transmission Gully would also provide an improved east/west connection, with a better and more direct link to State Highway 58, the Hutt Valley and the Wairarapa.
The Gully option also provided an alternative route out of Wellington in the event of a major earthquake or other disaster.
"Progressing the Coastal Route would have meant putting all our eggs in one basket.
"Make no mistake, at about a billion dollars this is a very expensive project, so the project is likely to need both the government funding and tolling. The geography of the area means that there are no cheap or easy options."
NZPA
source: newshub archive
