Jamie Morton

Jamie Morton is science reporter at the NZ Herald.

Two cities, one vision - boom times ahead

Tauranga and Hamilton are two of New Zealand's fastest growing cities - and they've been doing so together. Natalie Akoorie and Jamie Morton look at the cities' strengths, weaknesses and shared ambitions.

The lure of Mt Maunganui and Tauranga are so strong many Auckland businesses are relocating. Photo / APN
The lure of Mt Maunganui and Tauranga are so strong many Auckland businesses are relocating. Photo / APN

Cows and kiwifruit, balloons and beaches, ports at land and ports to sea. There are obvious differences between what might be seen as Auckland's two little brothers, Hamilton and Tauranga, but then there's much more they have in common and it's more than just champion rugby and netball teams.

The cities' leaders have told the Herald how, instead of going head to head, a step towards cross-regional collaboration is bearing fruit.

Transport, education and local economies have particularly benefited; the head of the Western Bay of Plenty's economic development agency, Priority One, now says it would be a "pointless, pathetic exercise" if the cities decided to take the opposite approach.

Both centres, which have experienced rapid growth over the past decade, are also in a prime position to feed off Auckland's boom.

Being just 127km down the Waikato Expressway, Hamilton has a particular strategic advantage.

Among Hamilton's other considerable strengths are its tertiary hospital, uni-versity and strong commercial indus-try.

It's the main centre in Waikato, the fourth largest regional economy in New Zealand after Auckland, Wellington and Christchurch, and is now the third fastest-growing area behind Auckland and Pukekohe.

With a population of 148,000 it is also seen as the inter-regional base for services to far-flung North Island locations such as Taranaki and Gisborne.

Hamilton is a logical hub for distribution throughout the central and northern North Island because it is in the middle of the country's two biggest ports, Auckland and Tauranga, and located close to Rotorua.

Fonterra already has an inland port in the city and Tainui Group Holdings is planning a multibillion-dollar inland port on the eastern outskirts fringe of the city, creating 14,000 jobs when it is complete in 2040.

Job cuts - and opportunities
But it's not all good news.
AgResearch last month announced it would relocate 180 jobs from Hamilton, New Zealand Post is to do the same with 129 jobs, and a 4.5-star hotel planned by SkyCity for Hamilton has been put on hold.

Over the Kaimai Ranges, Tauranga's infrastructure and attractively priced industrial property offers an enticing base for business.

Around 30 businesses, many of them from Auckland, are looking to set up in the city, adding to business growth that shot up by 36 per cent between 2002 and 2006 alone.

An effort to bring more companies to Tauranga, labelled the Tauranga Business Case, further promises the potential of a priority roll-out of ultrafast broadband and a strong labour force.

Development in Tauranga's "eastern corridor", taking in Papamoa East and Te Puke, is poised to inject $8.5 billion into the Western Bay of Plenty.

That will bring with it 17,500 new homes, 450ha of industrial development and up to 100,000sq m of shops, office and commercial activity.

At the moment, the more than 1000ha of total available residential land in Tauranga is estimated to provide for 19,120 new homes, and future areas to be unlocked for development could add another 16,500 homes.

Between 2006 and last year, Tauranga's population grew by 10,000 to 116,000, but projections have the city's population grasping at 200,000 by 2051.

Hamilton gained an extra 14,000 people between 2006 and 2012.

Yet some say the river city is in danger of playing second fiddle to its smaller neighbour in the competition to pick up some of the Auckland overflow.

Hamilton Mayor Julie Hardaker shows her Waikato colours, believing the region and its main city are in for a boom decade. Photo  / Christine Cornege
Hamilton Mayor Julie Hardaker shows her Waikato colours, believing the region and its main city are in for a boom decade. Photo / Christine Cornege

Keeping it moving
Property developer Ian Patton believes Hamilton's growth is stalling because the city council has reined in vital spending on infrastructure and services.

Hamilton City Council capped its debt at $440 million in an effort to be "back in the black" by 2017.

This year the debt sits at $397 million, but one of the ways it has achieved the $43 million savings is by reducing expenditure.

That includes the infrastructure growth programme which has been reduced by $312 million over 10 years following the global financial crisis.

A property developer in Hamilton for the past 30 years, Mr Patton said now more than ever it was vital to keep the city's momentum going, not let it stagnate.

Mr Patton recently bought 28ha of land on the northern fringe of the city, where development has boomed in the past decade, for $2 million.

"Our contributions to the council are $9 million. So the land is now the cheap part and that's a really big change for developers, and the market has got to get used to that."

Mr Patton said residents were moving out of Hamilton to outlying areas such as Tamahere, Cambridge, Morrinsville and Ngaruawahia, taking valuable rate contributions with them.

Hamilton leads the way
Hamilton Mayor Julie Hardaker acknowledged the issue, but believed the city and region was on the brink of a growth boom.

"I am absolutely certain that our time is now and this coming decade is the Waikato's. Everything I see tells me this is ours for the taking and I believe we are already on that journey."

When she first became mayor in 2010, Ms Hardaker received a two-page monthly update on investment and commercial movement in the city.

Now it's 38 pages long and includes the likes of a $67 million plant expansion by Waikato exporter Dairy Goat Co-operative, the expansion of Fonterra's inland port, the $430 million development of Waikato Hospital, and the construction of a new retail and office building in Hamilton known as Citygate.

It was clear Hamilton's economy was further developed than Tauranga's, she said, with more established foundations, but the regions needed to work together.

"I don't think it's a matter of saying it's us versus Tauranga. We're different but we all have a part to play in the upper North Island."

She dismissed suggestions Hamilton and Tauranga were in a competition to attract population growth from Auckland and said Hamilton was already doing it.

"One third of sections in a new subdivision recently sold to Aucklanders. I don't see Tauranga as a competitor. Why?

"Because of our location, our projected demographic trends which have continued to maintain youth and working age population, because of our mature economy.

"And because of our proximity to Auckland, because of the expressway, because of our growth sectors, because the Government has centralised all of its central North Island services here in this city."

Andrew Coker, standing in front of the Port of Tauranga, says the Bay of Plenty and Waikato will benefit from Auckland growth. Photo / Alan Gibson
Andrew Coker, standing in front of the Port of Tauranga, says the Bay of Plenty and Waikato will benefit from Auckland growth. Photo / Alan Gibson

Port in a storm
As for Tauranga, Andrew Coker, chief executive of Tauranga-based Priority One, said the city had its own strong infrastructure in its port, but was also still close enough to Auckland to reap its benefits.

"From our perspective, a strong Auckland means a strong Waikato and Bay of Plenty," he said.

"We are the beneficiaries of the growth in Auckland and clearly, they are going through some infrastructure challenges up there, which mean we in the Waikato and Bay of Plenty are the top absorbers for that."

Ms Hardaker said the whole region was growing fast, two-thirds of the country's population living north of Taupo.

This was recognised with the formation of the Upper North Island Strategic Alliance, which reported the region produced just over half of New Zealand's total gross domestic product - around $70 billion in annual GDP as at March 2011.

Another Core Cities report, commissioned for the Government, described both Hamilton and Tauranga as attracting businesses and people, partly because of their relative proximity to Auckland.

Research found that by building on the expertise developed through its history, Hamilton was experiencing growth in high-value manufacturing and this was partly attributable to its proximity to the Auckland economy.

The most evident economic activity between the three cities was freight traffic.

On the same road
Tauranga Mayor Stuart Crosby said transport had been the obvious area for improvement when the mayors of Auckland, Tauranga and Hamilton met to collaborate after Len Brown's election.

Previously, Tauranga and Hamilton had competed for Government funding of big-ticket roading projects.

"We would be losing out because we weren't taking advantage of working together. When you work together, you attract more Government support and money, and you attract the confidence of the private sector - which is probably more important."

Since 2009/10, Tauranga City Council has issued more than 100 new commercial building consents.

By January this year, there was 900ha of industrial-zoned land in the city, and just under half of that was identified as vacant.

On top of this, there was just under 200ha of land zoned under port industry, with 7.13ha of it classified vacant at the start of the year.

Mr Crosby said there was still a "healthy tension" between the neighbours - yet all had different strengths to play to.

Tauranga's biggest included its port, industry-ready land and infrastructure, and lifestyle.

Its Achilles heel, he said, was its lack of university opportunities.

The Core Cities report found the Bay of Plenty had a relatively low proportion of residents with a university degree, which might reflect "the absence of a range of tertiary provisions and the city-region's labour market".

Education boost
The problem also contributed to net migration losses of people aged between 15 and 24, as they sought education in other cities. But efforts were being made to address the shortcoming, and this month a $15 million breakthrough was announced to boost a project to build a $30 million campus in downtown Tauranga, part of it involving the University of Waikato.

The new campus was predicted to generate $133 million in regional revenue and provide more than 600 new jobs.

It would also revitalise the city centre and strengthen the business case for other projects, such as the development of an international hotel and conference centre as well as student accommodation.

"This partnership is unique to New Zealand and will provide long-term benefits that will play a critical role in supporting sustainable regional economic development," Mr Coker said.

"The city centre campus development is a key project to enable the University of Waikato to grow to scale in the Bay of Plenty, providing student pathways to higher education. It will also assist the region to develop applied research to support industry and economic growth."

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