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The announcement is part of the party’s Southern Transport Package, which will be announced today, the Otago Daily Times can reveal.
If elected in October, the party would fund up to $300,000 through the NZ Transport Agency for a trial of the service, working with the Dunedin City Council and KiwiRail. It would also fund $100,000 for a feasibility study.
If the feasibility study was robust and warranted further investigation, permanent options would be explored.
National transport spokesman Chris Bishop said a Dunedin to Mosgiel route made sense as it offered the community more options for their commute.
"The business case has to stack up, but if it is successful we would want to see it as a permanent fixture in the city."
The study, costing $75,000 and using Dunedin Railways assets, was estimated to take six to eight weeks.
The Rail & Maritime Transport Union had pitched a $250,000 trial, which council transport general manager Jeanine Benson described at the time as "robust".
National’s Taieri candidate Liam Kernaghan said his party’s proposal was a win-win.
"It not only has the potential to save 51 jobs at Dunedin Railways, but means we can become a 21st-century city with commuter rail available for people in Mosgiel and Dunedin.
"Critical to supporting growth in our region is having multiple transport options. By comparison to other major New Zealand cities we are behind the eight ball here."
Supporting the Hillside workshop was a priority, and the opportunity to have commuter rail in Dunedin presented opportunities for Hillside and its workforce, he said.
The workshop has once again become a political talking point, after New Zealand First leader Winston Peters last week said further investment was needed to bring back the "skills, and expertise required to assemble rail wagons here in New Zealand".
The workshop was closed in 2012 by the then-National government, before receiving nearly $20 million from the Provincial Growth Fund in 2019 to upgrade the two main workshop buildings and overhaul the mechanical plant.