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Mr Twyford was in Dunedin to visit the Hillside engineering workshop and inspect the city's expanding network of public and active transport facilities.
That included the city's new $8million central city separated cycleways, the $1.4million walking and cycling bridge over the Leith and the new $5.4million bus hub in Great King St.
Mr Twyford was impressed by what he saw and said such projects were "critically important" as Dunedin grew.
"It's critically important, because if you have a transport system that only relies on roads, and you've got population growth happening, then the inevitable consequence of that is peak-hour congestion.
"So the trick really - and this applies in cities big and small - is to have public transport alongside roads and motorways."
And, as well as stacking up economically, such cycleway projects helped make the city more liveable - encouraging more people to visit or move to the city, he said.
"People want cities that are liveable, and cities that are cyclable and walkable are liveable."
Mr Twyford also met staff from the Dunedin City Council, Otago Regional Council and NZ Transport Agency in Dunedin to hear about their work on the projects, and emerged impressed.
"I think the councils and NZTA here clearly work together closely and very well ... They are well ahead of the game in terms of thinking through how you build a modern urban transport system."
The Government was also ramping up spending on the rail network, having announced an extra $1billion for KiwiRail in this year's Budget, to help pay for new trains, ferries and regional lines.
Mr Twyford said that would mean more work for KiwiRail staff at Dunedin's Hillside engineering workshop, maintaining and repairing rolling stock.
"Hillside, which has been such an important part of Dunedin's history, is now going to be an important part of its future."