Story: Government and industrial development

Page 1. Encouraging industry from the 19th century

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Local, provincial and central government in colonial times and the early 20th century had an interest in encouraging industry – it was an essential element of a thriving, productive society. Government support for industrial development took a variety of forms. The provision of infrastructure, bonuses, tariffs, and structuring of the labour market were all used in 19th-century and early 20th-century New Zealand.

Infrastructure

The provision of infrastructure was the most important way in which the government encouraged industry. Harbour improvements, better roads, telegraph and postal facilities, railways and electricity all supported industry, and were funded from customs duties, land sales and loans.

International connections

 

Skyrockets, gun salutes and loud cheers greeted Wellington’s Provincial Superintendent Isaac Featherston when he returned from Melbourne in 1858. He had organised a greatly desired direct steamer service between the two cities. Local businessmen agreed that the £3,000 annual cost was worth it. But the service didn’t last long, ending when the Victorian government refused to pay their share of the subsidy. Wellington’s boosters and businesses remained keen, and the search for an international connection began again. After vigorous scrapping with Auckland over which would be the destination port for a fortnightly service with Britain, Wellington won. The service began in 1866, when the SS Kaikoura left the city’s new wharf.

 

In the 1860s Wellington’s provincial government built Queen’s Wharf, with a steam crane, rails and turntables, goods sheds and bond store, after much harrying by local businessmen. Canterbury’s provincial government constructed the Lyttelton rail tunnel, linking the port of Lyttelton with Christchurch and the surrounding countryside.

The central government’s extension of the telegraph network in the 1870s, combined with a substantial reduction in the cost per word, allowed its use by industry to become commonplace.

Bonuses

Until the 1870s New Zealand industry was small-scale. Bonuses, an early form of government support for industry, were offered to encourage new and larger industries. The bonuses were substantial, offsetting the start-up cost of machinery and buildings required to win them. The sugar bonus of £5,000, for example, required the production of 500 tons of sugar, using machinery expected to cost £20,000.

Many bonuses were won, including those for paper, sugar and sulfuric acid; others, like that for fish curing, went unclaimed.

Employees

Industry depended on its employees, and the government shaped the structure of the labour market and the conditions of work. Legislation relating to the eight-hour working day and the employment of women and children limited hours of work. Particularly important was the Industrial Conciliation and Arbitration Act 1894. It provided a way of resolving industrial disputes which continued until the 1980s.

Tariffs

Competition from imported goods limited the market for local producers. In 1888 the government began a piecemeal introduction of protective tariffs (payments on imported goods), which were systematised in 1895. Tariff levels were limited by the opposition of the farming lobby and by imperial preference – a scale of tariffs that favoured British imports and, to a lesser extent, those from countries in the British Empire.

The government made small adjustments to tariffs relatively frequently, and held larger reviews of the system in the 1900s, 1920s and early 1930s. The attempts by manufacturers’ and employers’ associations and the Unemployment Board to get tariffs raised during the 1933 review did not succeed. The Unemployment Board’s argument – that properly protected industry could provide jobs – would shape later government action.

Department of Industries and Commerce

In 1894 the government set up an Office of Industries and Commerce to ‘find new markets for New Zealand produce and extend existing areas’ and to ‘give limited assistance to any branch of local commerce and industry requiring help’.1 The produce was agricultural rather than manufactured, and agriculture would remain the office’s main concern well into the 20th century.

In the course of its first 25 years, the office became a department, which at times had responsibility for agriculture, tourism, health resorts and publicity. In 1919 its focus became more firmly industrial. For a period a Board of Trade reported on supply and demand, made inquiries when prices seemed too high, and investigated undesirable trade practices.

Monopoly and efficiency

In the early 20th century the government became concerned that businesses were combining to control prices and supply. Legislation designed to prevent or control monopolies or ‘trusts’ was passed in 1905, 1907, 1908, 1910 and 1919.

Overseas monopolies were seen as the greatest threat, with the dumping of cheap goods on the New Zealand market identified as a particular problem. In an instance of favouring local industry over agriculture, government made provision for tariffs on farm equipment produced by overseas trusts.

In the 1920s the government tended to ignore or favour amalgamation of New Zealand businesses, even when this would reduce competition, on the grounds of greater efficiency.

Footnotes:
  1. Christchurch Press, 4 July 1893, p. 4. Back
How to cite this page:

Megan Cook, 'Government and industrial development - Encouraging industry from the 19th century', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/government-and-industrial-development/page-1 (accessed 20 November 2019)

Story by Megan Cook, published 11 Mar 2010