Rotorua MP Todd McClay says a $12 million funding package to include Rotorua's proposed Eastern Arterial Route will be used for further investigation, design and consenting.

A map of part of the Rotorua Eastern Arterial (REA).

He says these are the final steps before construction can begin.

The announcement was made by Prime Minister John Key and Minister of Transport Gerry Brownlee in Wellington today.

"Rotorua has waited more than 20 years for this road and today's announcement is one of the final stages in the process towards its build," says Todd, who believes the proposed arterial route is about economic development and jobs.

"It opens up Rotorua's eastern suburbs to future development by businesses, industry and iwi.

"In particular it enables businesses to come to Rotorua to take advantage of available land and a skilled workforce right on the doorstep of New Zealand's busiest port at Tauranga."

Todd says importantly, it will work hand-in-hand with the government's $450 million investment into the Tauranga arterial and improve the link between Rotorua's economy and the port.

"That investment reduces return journey times between our city and the port by around 24 minutes.

"This means the growing forestry and wood processing industries along with other Rotorua businesses can be more productive, grow and create more jobs."

According to Todd, the Eastern Arterial Route would also increase efficiency, reduce travel times, and improve safety for drivers through Rotorua.

'The Port of Tauranga is now short of land for development and what is available is extremely expensive.

"Businesses will have the opportunity to invest in Rotorua and benefit from reduced journey times and costs to get their goods to the port. This is a win-win for local people."

Todd says it's important that concerns of hapu and iwi are fully taken into account and for this reason, he is committing to working with Rotorua District Council and local iwi to seek agreement on a number of outstanding issues in relation to the Eastern Arterial Route.

"This funding gives us options to continue this dialogue and fully consider the significant opportunities that opening up the eastern side of Rotorua can offer many groups."

Prime Minister John Key today announced $212 million from the Future Investment Fund for a package of 14 regionally-important state highway projects, and improving access to Rotorua is part of this.

'The Eastern Arterial Route fairly balances the needs of Rotorua people and businesses while future-proofing infrastructure for our local economy," says Todd.

"This road is important for the future of Rotorua and the economic growth and welfare of the wider Bay of Plenty region."