Confirming the new investment ahead of Thursday’s postponed state budget, Treasurer Tom Koutsantonis said the Government would mandate that “as many local jobs and contractors as possible are utilised during the project”, with a Registration of Interest for tenders to be called this week, ahead of work scheduled to start by year’s end.

The move kicks off – albeit modestly – the State Government’s investment in its mooted AdeLINK blueprint, to which federal Labor leader Bill Shorten committed $500 million of the estimated $3 billion total during the recent election campaign.

Koutsantonis said the project “links the old Royal Adelaide Hospital to the new [RAH]” and “if the election goes the way I hope it goes there could be a further half a billion dollars” for further work.

Premier Jay Weatherill said in a statement the proposed network was “one of our state’s most exciting infrastructure projects”.

Weatherill said the existing tram extension and new fleet had “revitalised South Australia” and “piece by piece we will rebuild Adelaide’s tram network”.

“People love using trams,” he said.

“[This] will play a major role in further developing our modern, vibrant and liveable city… Stage One not only provides a new transport option for people travelling to the city’s East End for work, study, shopping, sight-seeing or socialising – it will also create an new east-to-west CBD transport link.”

Weatherill said the extension would “also help to reactivate vacant sites, including key buildings along North Terrace”.

InDaily revealed last month the Premier had met with building owners along the boulevard in a bid to develop a plan to revitalise the neglected south side of North Terrace.

Transport Minister Stephen Mullighan said the service would be able “to carry up to 1000 passengers each hour”.

He said he was “pretty confident we’ve got enough road space on North Tce” to accommodate the upgrade, but that a dedicated tram lane would be part of traffic management study.

The one kilometre of new track will see trams turn right from King William Road and deliver commuters to a stop outside the Old Royal Adelaide Hospital, with other stops providing university access.

The Government said the extension formed a step towards a proposed city loop, with future stages also planned to extend further through Kent Town to the eastern suburbs.

“This is a route choice that keeps all our options open,” said Weatherill.

“There’s strong demand to expand this network [so] this is a bit of a no brainer, this choice.”

He said the service would remain free.

Infrastructure Australia recently listed the AdeLINK network as a priority project, with unfunded long-term proposals to extend the light rail service along The Parade, as well as to Henley Square, Mitcham and Port Adelaide, among others.

“The State Government is committed to building a vibrant, modern Adelaide with world-class services,” Koutsantonis said.

“We are also committed to investing in public transport infrastructure to encourage more people to catch buses, trains and trams.”

Adelaide City Council is chipping in an additional $5 million for “streetscape improvements” and building the destination East End tram stop.

Lord Mayor Martin Haese said the project would “help the future of the old Royal Adelaide Hospital site” while supporting the East End.

“This project will connect some of North Terrace’s most prominent institutions, including the State Library, South Australian Museum, Art Gallery, Anzac Centenary Memorial Walk, University of Adelaide, University of South Australia and the Adelaide Botanic Garden,” he said.

The announcement ahead of Thursday’s budget puts the spotlight firmly on the Government’s plans for the old RAH site, a decision considered vital for the economic lifeblood of the east end.

SA’s Urban Development Institute of Australia executive director Pat Gerace welcomed today’s announcement, saying the new route was “a welcome ingredient to the ultimate success of the [old RAH] site”.

“[Trams] are more than just another way to travel… because they aren’t easily changed, they give the private sector certainty in making investment,” he said.

“It’s clear that the old argument about trams of ‘should we or shouldn’t we’ is dead – it’s now more about where they go to get maximum urban uplift.”