What’s Driving The Renaissance Of The South?

The South Island’s scenery is stunning. Exotic flora, fauna and topography inspire artists and tourists alike. Tourism New Zealand’s “100% Pure” marketing campaign is so successful overseas that there is talk of capping the annual visitor flow to Milford Sound. In February visitor numbers were up six percent on the same time last year. The tourism sector is now worth around $4.8 billion year and according to the Observer/Guardian 2002 travel poll in London, New Zealand is Britain’s top travel destination with Fiordland national park and Queenstown the major drawcards.

This rosy picture isn’t limited to happy travellers, however. The South Island leads the North in economic growth generally, not to mention sporting endeavours like rugby. Southland, for instance, notched up another two percent economic activity gain in the first quarter this year. The region has seen six successive quarters of growth, the most sustained boom in 16 years. Improving farm incomes have boosted farm values, tractor registrations, consumer confidence, dwelling approvals, commercial building consents and house sales in the region.

On the downside there is lack of skilled workers and staff shortages (particularly engineers and builders) in the southern region which is limiting local businesses and impeding future economic growth. Then again, Venture Southland and the Clutha District Council Economic Development Board are part of new government initiative to boost regional economic growth through immigration. Nine regions expressed interest in the scheme but only Wellington and Southland were chosen to adopt the pilot programme. The initiative, developed in association with the Immigration Service, will target specific regions and skill set needs.

Venture Southland’s marketing manager Matt Hoskins sees targeted migration as key component in the region’s bid to solve its skill shortage.

“Although Southland hasn’t performed well in the past, partly due to its isolated position, the situation has changed over the past two or three years. We can offer distinct opportunity down here. We have cultural mix driven by opportunity, the low dollar, high commodity prices and regional initiatives like free Southern Institute of Technology (SIT) course fees. There has been shift in attitude towards Southland, people are sitting up and taking notice of the region’s recent economic turnaround and this will be further fuelled by migration.”

Education
Education is obviously factor in boosting the economic strength of Southland’s next door neighbour, Otago. More than 20,000 Kiwi and international students flock to the city each year, drawn by the region’s reputation for academic and research excellence.

Dunedin’s University of Otago is the main draw (with an estimated annual economic impact on the city of $685 million). But the Otago Polytechnic and the Dunedin College of Education also attract their share of students.

Last year Otago’s job and GDP growth outstripped the national average. It is the first time that Dunedin has out-performed the national average since Business and Economic Research (BERL) started its annual survey in 1994. The report concludes that “if sustained, this performance could signal resurgent Dunedin economy”. What’s driving this turnaround?

The mood in Dunedin is upbeat. Developments in areas such as biotechnology (hailed as the frontier of scientific discovery), television graphics and fashion have captured the imagination of venture capitalists. Dunedin City Council recently established an Economic Development Advisory Board, comprising local business people to work alongside the council’s Economic Development Unit (EDU).

“Economic development is the major issue facing Dunedin and Otago. This Board provides another avenue for us to work directly in partnership with industry and the people who actually drive economic development,” says Peter Brown, city marketing and development general manager.

The Dunedin-based biotechnology cluster group BioSouth is on roll. The group generates wealth for the region from commercialisation of biotechnology-related research. Research is led by the University of Otago’s Centre for Innovation and crown research institutes. The university’s Centre for Innovation’s $8.5-million laboratory and research suites provide high profile facility for corporate and academic cultures to work together. It houses approximately 24 research suites for food science, biotech and pharmaceutical-based research.

Seven biotech companies have been established in Dunedin in the past two years because of this research – A2 Corporation, Blis Technologies, CG Surgical, Global Technologies (NZ), Botry-Zen, Pharma-zen Pacific Edge and Abacus Biotech.

More start-ups are expected this year. Scientific developments include human and ruminant gene mapping, cancer research, vaccine development, aquaculture and nutriceuticals.

BioSouth succeeds because the right combination of ingredients exists in Dunedin according to its chairman Max Shepherd.
“Internationally acknowledged academic ability at Invermay, the university and small city make it easy to do business. Everyone knows each other. There’s also an abundance of natural products here and vigorous entrepreneurial culture.”

One of BioSouth’s companies, Botry-Zen, is involved in forming new companies and joint ventures in America, Europe, Australia, South Africa and Asia for its natural biological product for the grape-wasting disease, botrytis.

Over-subscribed
The product was developed by HortResearch in association with New Zealand winegrowers. Zenith Technology, also based in Dunedin, commercialises the product and has recently caught the attention of major US viticulture corporation, which is keen to be the main distributor in the US and wants to take an equity stake. Botry-Zen recently returned about $115 million in over-subscriptions for $5 million invite-only share offer before listing on the Stock Exchange in February.

Dunedin is pushing the boundaries in other directions too, cementing new found reputation as an edgy and innovative fashion centre after its third annual fashion show in April. The show attracted media and buyers from Australia and further afield. Last year textile, clothing, footwear and leather manufacturing contributed $18 million to Dunedin’s economy.

In recent Australian Harper’s Bazaar ‘Hip List 2002 – The Hot 100,’ Dunedin received global billing as #17. The city was described as “New Zealand’s new fashion frontier… the city is very dark and gothic and sort of brooding. People have compared it to the Belgian designers – definitely fresh.”

The film industry is another South Island success story. Multimedia graphics and software innovator Ian Taylor, has created steadily growing string of internationally successful enterprises and the region’s exposure from filming much of the epic, The Lord of the Rings in the region has boosted the economy in various ways. It has, for instance, lured more tourists to South Island locations (like Paradise) eager to witness Rings’ magical scenery.

While this is all good news Otago faces problems similar to those of other South Island regions. John Christie, chief executive at the Otago Chamber of Commerce and Industry, sees the problem as matching jobs with the available skills base. “The shortages in our labour force are slowing down additional growth opportunities in some sectors.” Their solution is three pronged. “The first is an immigration policy that attracts the right skills; the second is to educate the future workforce about existing opportunities and thirdly, businesses must provide on-the-job training in partnership with the community,” says Christie.

Technology
Tourism and technology dominate Canterbury’s economy. The International Antarctic Centre in Christchurch attracts large numbers of visitors and the range of experiences centred on Antarctic experience

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