The government has not released an updated figure on the cost of the project and would not confirm the possibility of a city-wide levy and rating zone.

But Treasurer Andrew Barr said homes in the rail corridor were expected to increase 25 per cent in value with the new train line.

The Canberra Times understands it is this value increase the government will try to "capture" through measures that could include a new rates zone in the Flemington Road and Northbourne Avenue corridor, where the first stage of the rail line will run.

It is also believed to be working up options for a levy, which could be extended to the 125,000 households across the territory to raise sufficient funds. But one of the problems with charging Tuggeranong residents such a levy is the possibility their property values would fall as Canberra's housing demand is sucked up by development in the Northbourne corridor.

“Value capture” is at the core of the government’s thinking to fund Capital Metro. A rail line is expected to boost the value of land and homes up to 1 km either side of the rail line, although a rating zone could be applied to a tighter area, say 400 metres each side. Overseas experience suggests increases in value of anywhere between 5 per cent and 30 per cent for homes near rail lines, although there is also the risk that nearby properties could lose value (a concept known as “worsenment” in planning circles, as opposed to “betterment”).

The government will also capture higher land values by selling buildings and land on Northbourne Avenue.

Other options could require developers to take on the cost of developing the public areas around new ventures and the cost of upgrading water and sewerage, selling “air rights” to any links between buildings, and a scheme known as “tax increment financing”, which involves the government offering subsidised loans for developments in the rail corridor.

All of these options have been mooted, but little detail has been released on the Capital Metro project, which the government has committed to start building by 2016 – a deal it made to secure the support of Greens minister Shane Rattenbury.

Asked whether the government was considering a levy, Mr Barr responded, "Capital Metro is not just a rail project, it is a transformational urban renewal project ...

"There are numerous ways that light rail projects are procured and funded around the world. We are yet to determine the funding and procurement model for Capital Metro and it is appropriate that all options are considered."

The Liberal Opposition brought on a debate about the project in the ACT Assembly on Wednesday, and Leader Jeremy Hanson insisted it did not stack up. It was being driven by Mr Rattenbury and Environment Minister Simon Corbell, who were on “some form of green crusade”, Mr Hanson said, but in reality there was little or no difference from an environmental perspective between light rail and buses. “What it does is give a grand appearance that Simon Corbell and Shane Rattenbury are making some huge difference,” Mr Hanson said, describing light rail as a “feel good” project and akin to the ban on plastic bags.

The cost, an “extraordinary” $614 million, was equivalent to $4500 a household, he said, with better ways to spend that kind of money.

“This is not the time when we should be going out and borrowing hundreds and hundreds of millions of dollars.”

ACT Treasurer Andrew Barr will travel to Hong Kong in June where he will court lenders as part of what looks to be the territory’s biggest borrowing program since self-government. Arguing that Canberra is well placed to borrow, with the lowest debt levels of any jurisdiction, Mr Barr is borrowing to fund a range of big infrastructure projects and in the process shield the territory economy from a federal king hit.

Asked about a levy and rating zone, Greens minister Shane Rattenbury said, "At the right time the government will start to have those conversations but no decisions have been taken on the financial aspect."