Another $995,000 would pay for a business case for stage two of Invercargill's inner-city development plan, while a further $490,000 would support the development of a national sheep and goat milk industry with possible benefits for Southland.
The grants were welcomed by Southland Mayor Gary Tong, who said the projects were ''massive'' and would deliver a ''significant boost'' to the region's drive to attract 10,000 more people to the region by 2025.
''I'm very, very rapt. This is a big 'wow' moment for Southland.''
Tong, also the chairman of the Southland Mayoral Forum, said the aquaculture facility would involve a commercial hatchery producing salmon smolt and mussel spat.
It would capitalise on the ''constrained'' supply of smolt in New Zealand, as existing hatcheries were close to capacity, he said.
Southland Aquaculture Working Group chairman Mark O'Connor said the industry was now the ''number one opportunity for economic growth'' in Southland.
Aquaculture was the world's fastest-growing primary industry and Southland's aquaculture industry had ''tremendous potential'' to supply a global demand and lift the region's fortunes, he said.
''We see this as another important economic engine for the Southland region,'' O'Connor said.
The aquaculture facility was expected to cost between $50 million and $100 million to develop.
Although a preferred site was yet to be identified, it would be within Southland if the project proceeded, he said.
As well as economic benefits, the new facility would also help alleviate the biosecurity risk associated with the existing need to transport salmon smolt from other parts of the country, he said.
All three grants were announced by New Zealand First deputy leader Fletcher Tabuteau, the parliamentary under-secretary for regional economic development.
Tabuteau said the business case for the new aquaculture facility was ''a critical building block'' to help ''upscale'' the industry in Southland.
It would also help diversify the regional economy, upskill local workers and attract higher-skilled labour to the region, he said.
The PGF grants would also help progress stage two of Invercargill's five-year, $250 million inner-city development plan, which would create up to 500 construction jobs.
The joint venture, involving the council-owned Invercargill City Property Ltd and HWR Property Ltd, was being led by HWCP Management Ltd.
HWCP director Scott O'Donnell said the grant was a ''wonderful thing'' and would help deliver the biggest development boost in Invercargill ''for probably multiple generations''.
The PGF's $490,000 investment in a national sheep and goat milk industry could also deliver a boost in Southland, where the industry was already established, Tabuteau said.
The grant to FoodSouth would pay for a business case assessing the viability of an expanded industry, which would have additional benefits in Southland.
