Underinvestment could stifle Southland's true potential
"When we do ask for things [from the Government] it’s because we still want to produce for all of New Zealand.”
ANALYSIS: Southland has a good sort of problem on its hands - if that makes any sense.
At a small gathering on Tuesday, Great South offered up a 12-month year in review on its Beyond 2025 Southland Long-Term Plan.
It’s largely good reading, given some other regions’ obvious struggles at the moment.
Over 12 months Southland contributed a record $8.27 billion towards New Zealand’s GDP [Gross Domestic Product].
It makes Southland the third highest contributor - per capita - of any region in New Zealand. That equates to $80,148 towards New Zealand’s GDP for each Southlander in the region.
To throw another stat out there to showcase Southland’s economic importance, 12% of New Zealand’s pastoral products originate from the region.
“I hate this term, but it works; We punch above our weight,” Great South regional strategy general manager Bobbi Brown said.
“So, when we do ask for things [from the Government] it’s because we still want to produce for all of New Zealand.
“We want to look after the [Southland] people, but at the same time we have economic significance to the country.”
The Beyond 2025 Long-Term Plan was initially sparked by a threat of the potential closure of the smelter at Tiwai Point.
That would have seen the loss of about 1000 direct jobs and just as many indirectly for Southland. That’s been well documented.
Since that plan was put together there’s been confirmation the smelter will stay open for at least another 20 years.
At that same time, there’s been movement on other economic opportunities that should have those who care about Southland excited about the future.
The original Beyond 2025 document suggested a $1b aquaculture industry could be developed in Southland as part of a nation-wide $3b in aquaculture sales.
The estimate has since been scaled up. It’s now suggested it could be more like a $1.5b aquaculture contribution from Southland.
That will be made up of both ocean and land-based aquaculture opportunities.
Fonterra has also this year announced it will invest $150 million into building a new UHT cream plant at its Edendale site which will create between 60 and 80 new jobs for Southland.
The new plant will initially create upward of 50 million litres of UHT processing capacity with it to grow beyond 100 million litres by 2030.
Add to the mix the construction of datacentres in Southland and the Government’s target to double its exports, and Southland is well positioned.
But here’s where that potential problem looms. In fact, the problem is here.
With more economic opportunities comes the need for more investment.
Think housing, think schools, think roads, think doctors and dentists, think the people needed to fill the additional job vacancies that will be created.
To capitalise on the potential private investment coming into the region, it will require public investment across some, if not all, of those aforementioned areas.
But will that come?
While Southland contributes $8.27b to New Zealand’s GDP, and 12% of all pastoral exports, the region only makes up 2% of New Zealand’s population.
When the Government looks at investment on a per population basis Southland can, and does, get shuffled to the back of the queue.
Take roading as an example, Southland has a massive roading network for a very small population.
It’s been stated that a Southland District resident on average is responsible for the cost of 151 metres of road compared to 4m for every Aucklander.
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The Beyond 2025 year in review says underinvestment from New Zealand Transport Authority Waka Kotahi, particularly in Southland’s bridges, has created weight restrictions and bridge closures.
That in turn has prompted extra driving distances which is estimated to have added $18.5 costs to farmers, exporters, and rural communities in Southland.
That’s just using transport as an example as to why Government investment will be needed in Southland to best enable private investment.
“This exceptional [GDP] performance reflects the region’s ability to compete on the national stage, but the ongoing growth will depend on the right support,” the Beyond 2025 review says.
“While the plan offers a pathway to double exports and foster diversification, it must be backed by the complementary investment from the Government.
“Regulation and policy changes threaten to undermine these efforts, highlighting the need for stronger alignment between regional priorities and national strategies.”
The year 2024 was massive in setting up Southland’s future, but 2025 now looms as just as important as some of the economic diversification quests start to become a reality.
Only thing the south does not produce enough of is voters. You only get the oil when the wheel is squeaking and that happens when there are plenty of people like in the large centers.