The town of Palmerston, in New Zealand's South Island lies 50 kilometres to the north of the city of Dunedin. It is the largest town in the Waihemo Ward of the Waitaki District with a population of 890 residents. Palmerston grew at a major road junction: State Highway 1 links Dunedin and Waikouaiti to the south with Oamaru and Christchurch to the north, whereas Provincial Highway 85 (known colloquially as "The Pigroot") heads inland to become the principal highway of the Maniototo. The Main South Line railway passes through the town and a tourist train, the Seasider travels from Dunedin to Palmerston and back once or twice a week. From 1880 until 1989, the town acted as the junction between the main line and a branch line that ran inland, the Dunback and Makareao Branches.

Palmerston stands near the banks of the Shag River, five kilometres inland from the Pacific coast. Between it and the sea stands the lone hill of Puketapu (Maori for sacred head, known by Southerners as Holy Hill), crowned with a monument to the 19th century Otago politician Sir John McKenzie. An annual race takes place up to the memorial and back which is called the Kelly's canter dedicated to Albert Kelly who ran up Puketapu as a constable in the Palmerston police force every day during world war II.

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