The 2020 budget allocated $400 million towards replacing the Cook Strait ferries which provide a crucial connection between the North and South islands.
The money is just the first tranche of cash for a project expected to cost more than $1 billion.
KiwiRail, which is the parent company of Interislander, hope to have two new ships in service by 2025.
Kiwirail chief executive Greg Miller told David Reid much of the cash will be spent on resizing the ferry terminals to accommodate the bigger vessels.
