The Green Party is blaming the government's "grandiose motorway projects" for the loss of 158 jobs at KiwiRail.
The number of jobs to be cut has been rolled back from a proposal to axe around 220 positions, with KiwiRail to start meeting with staff on Monday over the restructure of the infrastructure and engineering division.
Green Party transport spokeswoman Julie Anne Genter says the government's under-funding of rail and "wasting billions on extravagant highway projects" is squarely to blame.
"New Zealand businesses benefit from rail. Exporters benefit from rail. Road users benefit from rail. The country could also be using the revitalisation of rail to create valuable green jobs," she said.
"Most countries are now investing substantially in their rail networks because of the obvious economic benefits, especially as oil prices are expected to double in the next decade."
The Rail and Maritime Transport Union (RMTU) agrees the job cuts are the result of government policy failures.
"We have an opportunity to create employment and build a world class integrated transport system using rail, and instead we're running it into the ground," RMTU general secretary Wayne Butson says.
He says the job cuts mean vital work won't get done or will be delayed, and that will compromise safety and performance.
"We'll see more temporary speed restrictions in place and a greater potential for derailments and other critical incidents, with customers and staff paying the true cost of the cuts."