Southland can not live in the past, but what is the future?

Friday, 17 July 2020

Economist Cameron Bagrie says there’s a couple of paths Southland can now take.

One leads to a dramatic downward spiral, the other involves some creative thinking and good execution from those in charge.

Rio Tinto announced last week it plans to close its smelter near Bluff.

That closure has always been on the cards, but the actual announcement provided a jolt to Southlanders as they contemplate what the province might look like without a business that employs 1000 people, and a further 1000-plus indirectly.

**READ MORE:

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* Former Tiwai aluminium smelter boss 'angry' no deal done

**

Parent company Rio Tinto says New Zealand Aluminium Smelters contributes about $406 million into the Southland economy, 6.5 percent of Southland’s GDP.

Bagrie painted a bleak picture when asked to describe what could happen if the Tiwai Point smelter closed next year without any alternative industries available in Southland to pick up the slack.

“The scenario that would worry me is that you get into pretty strong de-population. You lose people on mass, they go elsewhere where there are opportunities.’’

He pointed to the new hospital in Dunedin as one example of those opportunities which could suck skilled workers out of Southland.

“Once you start to de-populate and lose people you can pretty quickly get into a vicious spiral. You end up with fewer people in the region, so that’s less money being spent in the region, less demand for housing, property prices go down.’’

Bagrie felt aquaculture provided some wonderful opportunities for the province, but he warns Southlanders not to hang their future on just that.

“The region is going to need to pull on a few levers and not just rely on a one-trick pony like aquaculture.

“It’s going to help fill the hole, but it’s not going to fill the hole.'’

While Bagrie has identified a gloomy path, he suggested looking for another path with a much more positive approach.

“There’s also that old adage, ‘never waste a crisis’, well Southland has got one. Let’s shake the tree and try to make the place a dam sight better in five-10 years down the track,’’ he said.

Bagrie, who has been an economist for 20 years, including over 11 years as ANZ’s chief economist, identifies three important aspects to ensuring Southland did not head down the wrong path.

Those being; a sense of urgency, some creative thinking, and having people in critical positions that execute on ideas.

“There is an abundance of new cheap energy down south, can we think about making that an advantage for production style activities out of the deep south?’’

Despite the smelter closure being flagged in the past, Bagrie understands the nervousness in Southland now the reality of the closure has come to the surface.

There are few people in Invercargill who don’t have a vested in the Tiwai Point smelter, and more importantly how Southland’s economy responds.

Whether it is as a smelter employee, as a house owner, or the other businesses operating in the city.

Long-time Invercargill car dealer Tom Kilkelly remains optimistic for both his business and the region.

Kilkelly, who owns four car yards in Invercargill which employ 13 staff, said the Tiwai announcement on top of the Covid-19 pandemic was both sad and disappointing.

Kilkelly’s business sold between 600 and 700 cars a year, with Tiwai workers among the buyers during the past four decades.

‘’Whether it’s direct or indirect, obviously the smelter people do help our business,’’ he said.

‘’If our economy is good, our business is good.’’

Other industries would move in, he said, while Kilkelly noted worker shortages at Southland meat plants and in the agriculture sector may present some jobs for Tiwai workers.

Invercargill mayor Sir Tim Shadbolt conceded no-one knew what the long-term future might hold.

“We have never experienced a year like this and you feel overwhelmed.”

Despite all the negative effects they needed to look at the positives, he said.

While not on the same scale as the smelter closure, Dunedin has had to deal with a similar setback through the Cadbury closure in the heart of the city.

Mayor Aaron Hawkins said Dunedin businesses, Work & Income, the Chamber of Commerce, and council staff banded together to support workers after the Cadbury closure.

“It was a shock because making chocolate had been such a big part of the local landscape for so long; much the same way as aluminium is in Invercargill.”

Hawkins said he learned that the Dunedin community was willing to rise to the challenge.

“The best demonstration of this was the crowdfunding campaign that raised millions to keep chocolate production going, which eventually turned into an expansion of small local company Ocho.”

Christchurch is another South Island city that has been presented with its challenges during the past decade or so on the back of the earthquakes.

Christchurch City Councillor James Gough urged Southlanders to get together and start brainstorming for its future.

The three biggest lessons Gough said he had learned were the importance of finding opportunities, collaborating with the community, and being prepared for anything.

“You can’t get bogged down by the negativity,” he said. “You owe it to yourself and your community to seize opportunities because there will always be opportunities.”

The Christchurch City Council hosted a ‘Share an Idea’ event soon after the quakes where local businesses and community organisations could brainstorm what the future of the city should look like.

Fellow Christchurch City Councillor Yani Johanson hoped for more collaboration between South Island regions to help them through difficult periods.

Johanson envisioned a future where South Island councils would support each other instead of competing for resources.

Southland leaders have previously identified the need to diversify its economy when in 2015 the Mayoral Forum initiated work to be done on a Southland Regional Development Strategy [SoRDS].

The strategy was released in 2017 which set a goal of growing the region’s population by 10,000.

Great South chairman Ian Collier said the SoRDS strategy remained relevant today.

“We don’t plan to shift our focus too much, we just need to keep our ears and eyes open and be working with shareholders in the community and central Government,’’ Collier said.

Aquaculture was one of the industries identified from SoRDS which is still viewed as a potential growth area for Southland.

The Southland Aquaculture Working Party wants the Government to pass special legislation for open-ocean salmon farming.

Other industries that have been touted over the years include the Oat industry and the potential to do something with the high-quality silica deposits in the south.

The space tracking industry at Awarua is also one to watch in the future as more work continues to secure more overseas clients for its services.

Whatever the answers, what we do know is the people of Southland has plenty of work ahead of it to thrive in the future.