The Government is moving ahead with a second Mt Victoria tunnel for Wellington and light rail running from the central railway station to Island Bay as its "preferred choice".

Upgrades will also be made to improve traffic flow at the Basin Reserve, which involves the extension of the Arras Tunnel.

The package is estimated to cost $7.4 billion in 2030 dollars.

New Zealand Herald Wellington issues reporter Georgina Campbell breaks down the announcement with Nick Mills. 

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