The Government has announced an additional $121 million of funding for an upgrade of the rail network.
From 1 October, KiwiRail and Ontrack will operate under the banner of the New Zealand Railways Corporation.
KiwiRail provides the rolling stock and Ontrack maintains the infrastructure.
Finance Minister Michael Cullen said the money is in addition to $80 million announced in July for an overhaul of the Tranzscenic services.
Dr Cullen said the $121 million is for the current financial year and is the first stage of a five-year programme.
He said rail transport is expected to rise sharply with a recent study predicting freight will increase by 75% in the next 25 years.