The Government has pledged to help struggling Hawke's Bay businesses with initiatives to kick-start growth.

A Government study has suggested a number of business opportunities to boost the Bay economy.

The region could benefit from more wood processing, value-added meat production, a region-wide tourism marketing strategy and stronger business partnerships with Maori, the report says.

The East Coast Regional Economic Potential Study, released yesterday, said oil and gas activities were a "more speculative" opportunity for the region, but if that industry took off "there is the potential for the economy to be transformed".


It said SH2 between Napier and Gisborne needed to be improved to take advantage of growing wood exports but there wasn't the demand to justify reopening the rail link between the cities. Transport Minister Gerry Brownlee, who was in Gisborne yesterday with Economic Development Minister Steven Joyce to launch the report, said it provided sound analysis debunking calls to reopen the line.

"When operational, rail only accounted for 2 to 3 per cent of freight from the region and the report finds no clear evidence of a significant economic impact following its closure," Mr Brownlee said.

The report said low levels of local wood processing and access issues for harvesting represented significant untapped potential on the East Coast.

"Facilitating investment in, and the development of, a wood processing plants of scale in the study area would make a major difference. Encouraging the uptake of innovations should also make it more efficient and effective to harvest ... or to generate value from areas with traditionally limited harvest potential."

The potential to add value to the region's meat production would involve improving farming and processing practices and developing new niche products, the report said.

Better marketing of the area's "distinctive cultural and natural amenities and events" would boost the tourism experience for international and domestic visitors, and a "pan-regional approach" to tourism marketing could be considered.

"Building up the reputation of the Hawke's Bay as a distinctive location for international education should also be considered."

Iwi and other Maori groups "have demonstrated a strong commitment to respond to challenges, such as skills development, and to invest in opportunities in several industries, such as forestry and tourism, and will make an even greater contribution in the future."

Mr Brownlee said he would act on the report's findings regarding the economic importance of maintaining and boosting key roads on the East Coast, including SH2 between Napier and Gisborne.

"I will be asking the New Zealand Transport Agency to review its plans for these highways in light of this study."

Hawke's Bay Regional Council Chairman Fenton Wilson, who was in Gisborne for yesterday's launch of the study, said the two East Coast regions needed to work together to maximise the area's economic potential.

"We need a concerted effort if we are going to get some go-forward," he said.

The Government's stance on the Napier-Gisborne rail line differs from that of the regional council which has earmarked just under $5.5 million in its draft annual plan to re-establishing the line, but only if KiwiRail and the Government reopen it and fund its return, and that of associated infrastructure, in a good "fit for purpose" condition.

Mr Wilson said yesterday the council would continue to consult with the Hawke's Bay community over the rail investment proposal through its annual plan adoption process, but the idea would not progress without Government support.

Alan Dick, chairman of the regional council's transport committee and chairman of the Napier Gisborne Rail Establishment Group which has proposed leasing the line from KiwiRail and buying rolling stock to run a freight service, said the report had not factored in rail's importance for moving product other than wood.

The group was continuing working to restore the service, he said.