The announcement in yesterday’s Budget, which confirmed a funding pitch revealed by the Otago Daily Times earlier this month, outlined plans for a wagon assembly facility at the South Dunedin workshop.
It is expected to create close to 200 jobs, including apprenticeships.
The announcement, part of a $1.3billion boost for rail, was welcomed by Rail and Maritime Transport Union Otago branch secretary Dave Kearns, who said staff would be "over the moon".
The union was 100% behind the announcement, which would benefit the South Dunedin community.
"The workers who have been holding on by their fingernails are having a degree of security," he said.
The union did want to see manufacturing return to the workshops at some stage, rather than just assembly, he said.
Dunedin Mayor Aaron Hawkins was also pleased with the boost, calling it great news.
"Rail has to be a bigger part of a climate friendly transport network, and where better to do it than at the spiritual home of rail in the South?"
But the funding drew the ire of National Party leader Judith Collins.
"They could have invested in infrastructure that would actually get the economy moving.
"Instead there’s Meccano lessons now going to be held in Dunedin to put together presumably Chinese-made products."
State Owned Enterprises Minister Dr David Clark said the investment meant local jobs, rebuilding expertise, youth training opportunities, a boost to Otago’s economy, and a more self-reliant railway.
“The Hillside Workshops have been an important part of Dunedin’s history and economy for over 100 years and we’re building off the nearly $20million investment we made in 2019 to re-establish them as a mechanical hub."
Transport Minister Michael Wood said about 445 jobs would be created between Hillside and a new South Island Mechanical Maintenance Hub in Christchurch.
The Hillside investment alone will support up to 150 construction jobs and up to 45 operational KiwiRail jobs, including apprenticeships.
“Covid-19 supply chain disruptions have reinforced the importance of having a resilient and reliable rail freight network," he said.
Earlier this month, leaked documents showed KiwiRail wanted $90million for Hillside, comprised of $55million for the premises and assembly plant, and $35 million for operations.
KiwiRail predicted it would create up to $21million in indirect and direct economic benefits.
Taieri MP Ingrid Leary said she could not be happier with the announcement.
"This is just what South Dunedin needs for economic development," she said.
"This Budget is incredibly welcome and shows that our Finance Minister Grant Robertson has not forgotten where he came from."
KiwiRail group chief executive Greg Miller called the level of investment in rail outstanding after decades of underinvestment.
More than 600 contractors would be needed to upgrade and build the new facilities, particularly in the South Island, and local businesses would be needed to supply building materials.
“This all means money going back into the regions, and helping New Zealand recover from the economic impacts of Covid-19."
Hillside
- $85 million for wagon assembly facility at Hillside.
- About 1500 wagons to be constructed.
- 150 construction jobs and up to 45 operational jobs.
- Part of $1.3 billion rail spend.
