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As Dunedin renews, Ngāi Tahu moves

Dunedin is on the cusp of a construction and development boom, which just might coincide with investments from powerhouse South Island iwi Ngāi Tahu. David Williams reports in the first of two pieces looking at a city renewed.

For the past 20 years, South Island iwi Ngāi Tahu has invested its property development dollars in and around Christchurch and Queenstown, seeking high returns from those buoyant areas to invest back into tribal programmes.

That’s meant relatively little has flowed to other parts of the island, causing tensions with regional rūnanga in places like Invercargill, Hokitika, Kaikōura, and Dunedin-based Ōtākou.

That’s set to change as Ngāi Tahu embraces a regional investment strategy. For Dunedin, it couldn’t have come at a more perfect time.

There are ambitious plans to revitalise the city’s waterfront, with an array of striking new buildings. Dunedin’s council has earmarked $80 million to spruce up the central and northern parts of the city over the next decade. Aside from renewing underground infrastructure, there are plans for new pedestrian areas and cycleways, heritage restorations, and new paving, street furniture, lighting and public art.

But considering their domination of Dunedin’s economy, it’s no surprise the coming boom will be led by the education and health sectors. (According to the city council, Dunedin’s education and research sectors account for one in seven jobs in Otago and are worth $330m to the region’s economy.)

The university and polytechnic have expansion plans involving building work valued at hundreds of millions of dollars, stretched over many years.

The undoubted star of the show, though, is the new Dunedin Hospital, a $1.4 billion project that’s set to reshape part of the city centre. It’ll be the biggest construction project in Dunedin and the biggest hospital project the country has seen. Mayor Dave Cull says it’s hard to overestimate the significance of the project. “It will certainly have a major effect on the centre of Dunedin.”

Two decades of stimulation

All of this has caught the eye of Ngāi Tahu. Tahu Potiki, a former chief executive of Te Rūnanga o Ngāi Tahu who has sat on five South Island health boards, says: “If our estimations are correct we’re looking at a 20-year period of stimulation in the economy through build projects.”

Think about it. It’s not just about the new buildings. Businesses on the new hospital site will have to shift. Industrial firms on the waterfront have to find new premises. And the hundreds of construction workers and tradies flooding into Dunedin need houses. Unless you’re the university, relatively low rent means it hasn’t been a great investment to build a new commercial building in the central city for decades. Now, Ngāi Tahu, which has a right of first refusal when Crown land is disposed of, finds itself pricing up the cost of a new building in Dunedin.

It seems the perfect incubator for Ngāi Tahu’s new regional investment policy, which will also have an emphasis on people. “Let’s put a few million dollars at risk doing something which we’ve not done a lot of so far and learn from it,” Potiki, Ngāi Tahu’s Ōtākou representative, says. “If it looks great then there’s no doubt in my mind we’ll go to the next level.”

Dunedin spent most of past century stagnating or shrinking. Its urban population in 2013 – 112,000 people – was the same as in 1976. Only the university and the medical school kept it from being in full-scale decline. Many of the city’s office buildings still resemble bleak Soviet-era boxes.

In recent years, however, Dunedin’s gone from no-growth to low-growth. The population has increased each year for the past four years, and its relatively low house prices have started to rise. Median sale prices rocketed 38 percent in two years, from $311,000 in October 2016 to a record $430,500 last month. A series of concerts at the roofed Forsyth Barr Stadium have also pumped millions of tourist dollars into the city. The university has embarked on a $180 million construction spree, including new buildings for the dentistry school and animal research.

There would be few greater endorsements of Dunedin’s coming prosperity than a big push by Ngāi Tahu. And the new Dunedin Hospital might be the project that, more than any other, brings its investment waka into shore.

“This is the biggest opportunity we’ve [Dunedin has] had since 1861,” Potiki says, referring to the year gold was found in inland Otago, near Lawrence, at a place now known as Gabriel’s Gully.

Rick Herd, the chief executive of Dunedin-headquartered commercial construction company Naylor Love, strikes a similar theme. “I often say that it hasn’t had that boom since the goldrush.” (According to A.H. Reed’s book The Story of Otago, Dunedin was a thriving city in the mid-1880s, when Otago’s population hit 100,000. The next biggest province was Auckland, with about 73,000.)

“I want this to be a place where my children choose to make it their home for the rest of their lives as well.” – Dougal McGowan

How will Dunedin cope with the coming construction crunch? Where will the workers come from? How many are needed, and when? And no matter where the workers come from – whether from Dargaville or Manila – where will they live?

Before the idea of staging the hospital project emerged, Southern Partnership Group chairman Pete Hodgson – the eyes and ears for Health Minister David Clark – was predicting a four-and-a-half year peak of construction, requiring about 1050 workers. He and other city leaders want the city’s youth to be part of a “homegrown” solution, by taking advantage of increased trade training.

Dougal McGowan, Otago Chamber of Commerce’s chief executive, is chairing a workforce development group, which is in its infancy. It’s trying to raise $80,000 to employ a coordinator, who can help answer questions like how Dunedin people can be trained in construction and associated trades, and how can the city attract new workers with families and make it attractive enough for them to stay.

The hospital project’s a once-in-a-generation opportunity, McGowan says. “I want this to be a place where my children choose to make it their home for the rest of their lives as well, rather than deciding that they have to go somewhere else for their career or whatever.”

Otago Polytechnic is exploring ways to support the rebuild, deputy chief executive Jo Brady says, including more pre-trade carpentry courses in Dunedin, and boosting its ITAB-managed apprenticeship programme.

(While there appears to be a lot of goodwill and coordination in Dunedin, it’ll be interesting to see how many businesses and organisations are attending meetings for fear of missing out and lose interest later.)

One firm that’s keen to be involved in building the new Dunedin Hospital is Naylor Love. While it’s nominally headquartered in Dunedin, its five other regional offices are larger than its Dunedin arm and chief executive Rick Herd is based in Christchurch.

Herd says the hospital’s a “very, very big project”. He estimates about half to two-thirds of the $1.4 billion budget will be the build cost. Depending on how the contracts are cut and diced, they might be awarded in manageable chunks. Herd says it’s too early to talk about whether additional labour – including sub-trades, need to come from around New Zealand or overseas.

“It depends very much on what’s happening in the rest of the market over the next two years. If this project starts in two-and-a-half-years’ time, and things have gone quiet in Christchurch and, say, Auckland, or Queenstown, it gives companies like ours quite a bit of capacity to bring quite a bit of Labour out of those regions.”

Dunedin definitely needs more houses, Herd says. Cheaper, temporary worker accommodation – like that being used on some Queenstown building sites – could be the answer, he says. There are problems, Herd agrees, but he’s relaxed. “It’s two years before we’re expecting to see a request for proposals. We’ve got quite a bit of time to plan around this.”

Cultural coming of age

Dunedin Mayor Dave Cull is on the hospital’s local advisory group. The city council’s district plan went out earlier this month for acceptance or appeal. He says it allows more dense building in some areas and rezones other areas residential, allowing for 1200 new houses.

Accommodating growth isn’t the only thing Dunedin’s leaders need to think about, Cull says. “I think the challenge will be to maintain the character of the city but at the same time acknowledge that we are growing, we’re developing, and to steer it in positive ways, for the benefit of the community.”

Part of Dunedin’s changing character could be a cultural coming of age.

This very Scottish, Presbyterian city might find itself embracing Ngāi Tahu’s stamp on new developments, much like post-quake Christchurch has – think Te Pae, Christchurch’s $475 million convention centre, and, across the road, the new central library, Tūranga.

Potiki, the Te Rūnanga o Ngāi Tahu representative, who is named after his tribe’s founder, says in the past Ngāi Tahu’s investments had performed well commercially, but less so socially. Sure, these days its tourism companies are better at displaying the tribe’s culture and characteristics, but they don’t provide enough jobs for its people. Despite its fisheries settlement, the tribe’s small port fishing fleet has been gutted, Potiki says. “We’ve somehow managed to manage our assets in a way that has seen these guys go out of business. That’s not right.”

The new regional model gives Ngāi Tahu a chance to make smart investments that provide a good commercial return, of course, but also a good return for its people.

What if a $10 million Dunedin project got an eight percent return, and trained 30 Ngāi Tahu or young Māori people, put $2 million through local subcontractors, and 40 percent of them were Ngāi Tahu, and the commercial building had a Māori name and design influences. Houses built for construction workers could be converted later into social housing or retirement homes.

“The return and the satisfaction for your average Ngāi Tahu person is much greater than if they just heard, oh great, we made 14 percent,” Potiki says. “What we did is we made Ngāi Tahu outcomes – your cousin got a job, your other cousin had a whole lot of work, and there’s been downstream effects for that. When you go into town now you see the flashest, newest building in town with Ngāi Tahu written all over it.

He adds: “That’s an outcome.”

On November 15, 1861, within a few months of gold being found near Lawrence, the Otago Daily Times published its first edition. In it, part-owner Julius Vogel, who would later become Premier of New Zealand, wrote sentiments to readers that ring true today. “If they will wisely avail themselves of the resources which a bountiful Providence has placed at their command; if they avoid the dangers of excessive doubtfulness and of reckless confidence; if they will add to discriminating judgment the auxiliaries of energy, perseverance and industry there is not limit to the success which may crown their career.”

Today, Ngāi Tahu is urging Dunedin’s leaders to look to the next century-and-a-half. Potiki: “The exciting thing is with that right discussion they can be doing something incredibly creative that might hold the city together for the next 150 years. That’s the sort of timeframe; that’s the platform we’ve got at the moment. We really do have that opportunity.”

Next: One hospital to rule them all: Dunedin's cornerstone development