Auckland's City Rail Link will be finished a year late and cost an extra $1 billion.

Inflation, Covid-19 and associated lockdowns and staffing are being blamed for a 25 percent increase in costs.

Construction of the rail project's stations and supporting rail infrastructure is now likely to be completed by the end of 2025.

City Rail Link Limited (CRL) has requested an extra $1.074b in funding, bringing the total cost to an estimated $5.493b.

The previous estimate of $4.419b was approved by the council and government in May 2019.

Following the end of the construction programme in November 2025, CRL will hand over the infrastructure to KiwiRail and Auckland Transport, which will carry out additional work required to open the CRL to its first passengers.

Construction had been due to finish late next year.

CRL chief executive Sean Sweeney said in a statement the extra funding and delays were primarily due to the Covid-19 pandemic; time lost on site and the knock on effect on the supply chain, resourcing, materials, and labour costs.

"People need to remember that in Auckland we endured two level four lockdowns, a further 280 days of restricted working conditions (Covid traffic light system) and we lost 3.2 million hours through illness among staff, with 800-plus workers infected."

CRL chief executive Sean Sweeney says the pandemic was the primary reason for delays. Photo: STUFF / Ryan Anderson

Auckland Council said the increase meant tough choices in its 10-year budget, as it also dealt with weather-related costs.

Initial estimates of the council's operational response to the floods and cyclone, and returning assets to their previous service levels, are between $900 million and $1.2b.

The council said it could cover the increased capital requirement from CRL and weather costs within existing debt limits, and can consider a mix of funding options through its 10-year Budget 2024-2034.

Its governing body will consider the City Rail Link funding request when it meets next week.

New Zealand's first underground metro rail network has already seen rising costs. In April 2019, it rose by $1b from the previous $3.4b estimate made in 2014.

An estimated 54,000 passengers an hour will use CRL stations at peak times.

Twin 3.4km tunnels will connect Britomart with Mount Eden Station on the western line, and two new underground stations, Karanga-a-Hape and Midtown, were being built.

Auckland Airport share sale

Auckland Council said its financial strategy set a limit for debt not to exceed 290 percent of operating revenues.

The proposed Annual Budget 2023/2024 indicated, after taking into account debt reduction from the sale of Auckland International Airport shares, that the ratio out to 2030/2031 would track below 220 percent.

Auckland Council has considered whether it should sell its stake in the airport.

Initial financial modelling suggested that even without the proposed airport share sale debt and revenue would remain within limits but could make its operating position difficult from the 2024/2025 financial year.

Funding options included reducing or deferring other capital spending, further sale of assets, service reductions or rates increases.

It might also explore changes to funding arrangements with the government, including new revenue tools and the possible use of future 'better-off' funding as part of the Three Waters reform programme.

Auckland Ratepayers' Alliance spokesperson Josh Van Veen said the City Rail Link costs would stretch Auckland Council finances to breaking point, and councillors must choose between big rate increases or the sale of non-strategic assets.

In a statement, Van Veen said the council was already in trouble with a $295m budget hole.

"In December, Mayor Brown proposed a $130m savings package that will reduce council expenditure by 1.7 percent and keep rate increases below inflation. The proposal included the sale of shares in Auckland International Airport.

"While many councillors have argued against the sale of airport shares on philosophical grounds, today's announcement from CRL Limited brings home the bleak reality. Unless the council's $2b stake in the airport is sold, the Governing Body will have no choice but to impose big double-digit rate increases that will punish low-income households and worsen the cost-of-living crisis."