Last month, I covered our golden economic era, the 1960s, and the first signs of the end of our economic golden age. The 1970s will bring us two global oil crises, high inflation and recession, and a ‘Think Big’ response. By Peter Tritt.
Our population reached the three million mark in 1973, but population growth had slowed. By decade’s end, the population had grown over 12 percent to reach 3.2 million (compared to plus 17.5% in the 1960s) as birth rates fell and migration slowed.
The fertility rate fell from 3.15 births per woman in 1970 to 2.14 in 1979 (compared to a high of 4.1 in 1961 and 1.84 in 2024). Migration population growth returned in the first half of the 1970s, recovering from the two outflow years of the 1968-69 recession, and reached a peak of 68,100 new migrants in 1974. But, from 1975-79, the number of departures increasingly outnumber new arrivals, and by 1979, there is a net outflow of 41,800. It was then the highest-ever recorded outflow in our history.
Most left for Australia (103,000 Kiwis settled permanently in Australia between 1976 and 1982), prompting the famous quip by Prime Minister Robert Muldoon in a television interview that the migration outflow was increasing the average IQ on both sides of the Tasman.
Perhaps not coincidentally, in February 1973, the New Zealand and Australian Governments signed the Trans-Tasman Travel Agreement allowing the citizens of each country to reside and work in the other country indefinitely, and for passport-free travel (which ended in1981).
The 1970s saw our country continue its slide down the World GDP per capita ranking table. By 1979, we had slipped from 19th (in 1969) to 26th placing in the World (20th in the OECD), and Australia was 19th and (11th in the OECD).
The global oil shocks of 1973 and 1978–9, and soaring oil prices here severely affected our oil-dependent economy. The first global oil crisis began when Arab oil producers cut supply following the fourth Arab-Israeli war (the Yom Kippur war), in which Egypt and Syria attacked Israel on 5 October 1973 and were again defeated. Oil prices soar, virtually overnight, from US$3 to US$20 a barrel, causing high inflation and a decline into recession. Our balance of payments worsens, unemployment and inflation rise, and by 1976, we are in recession.
The second global oil crisis begins with the Iranian Islamic Revolution of 1978-1979 that overthrew the Shah and send oil prices soaring from US$13 to US$32 a barrel. To reduce our oil consumption, the government introduces ‘carless’ days (based on odd and even plate numbers) and reduces the maximum speed limit from 100kph to 80kph. It also embarks on an ambitious and expensive ‘Think Big’ national development programme to reduce our oil dependency and passes the National Development Act 1979 to allow the Government to accelerate projects considered to be in the national interest.
Recession, high inflation and low real wage growth are a recipe for industrial unrest, which had already begun to grow in the late 1960s. Our once much-lauded and world-first 1894 Industrial Conciliation and Arbitration regime began breaking down after the Arbitration Court’s Nil 1968 wage order (despite inflation surging to over six percent in 1967) and second tier workplace bargaining, over and above annually negotiated industry awards, becomes the norm.
The 1970s sees the largest number of industrial disputes in our history, with unions adopting tactics such as stop-work meetings, 1-2 day ‘lightning’ strikes and working to rule. A 24-hour nationwide general strike is called when the Government rejects, as excessive and inflationary, a negotiated wage settlement of the Divers Award.
The first and only general strike in our history is described as a fizzer by the Government, but it agrees to refer it to the Arbitration Court, which subsequently approves the settlement.
Militant unions were frequently in the news and their industrial actions at Mangere Bridge and the BNZ Tower in Wellington make these two construction sites household names and a byword for militant unionism – sometimes called “the English disease”.
The new Mangere Bridge, which began construction in 1972 (with a 1977 completion date), is plagued by multiple industrial disputes from 1975 onwards. In May 1978 the nation’s longest ever industrial dispute stops work on the bridge, and it is picketed for the next two and half years. The contract is suspended in July 1978 and is awarded to another contractor in November 1980. The bridge is finally completed in 1983.
Wellington’s unfinished 31-storey BNZ Tower becomes a downtown symbol of the nation’s worst decade for industrial disputes. Its construction began in 1972 and was due to be completed in 1977, but industrial disputes caused by the militant Boilermaker’s Union cause endless delays and quadruple the original cost estimate by the time it is finished in 1984.
Despite the economic setbacks, the nation’s fast-paced post-war infrastructure development continues. As in the 1950s and 1960s, it is focused on electricity generation and infrastructure for land, sea and air transport.
Industry development remains focused on reducing our reliance on dairy, meat and wool, and protecting local manufacturing through import licensing, tariffs and foreign exchange controls that remain an outlier in the developed world.
Contractors kept busy
Building dams and power stations continues to keep contractors busy in the 1970s, with nine major hydro projects in the construction pipeline.
The Tongariro Power Scheme Stage 1-Western Diversion construction begun in 1964 is completed in 1971. Construction of the Manapouri power station – the nation’s largest hydro-electric generator – begun in 1964 is completed in 1971, and the new Tīwai Point aluminium smelter begins production that year.
The first of four Kaimai Power Scheme stations is commissioned in 1972. The Tongariro Power Scheme Stage 2-Tokaanu Project [Rotoaira Diversion] construction begun in 1966 is completed in 1973. The Tongariro Power Scheme Stage 4 – Rangipo project [Tongariro Diversion] construction (1974–1983) begins construction in 1974. Construction of the Aniwhenua Dam and power station (1977-1980) begins in 1977 – the project will go on to win the 1981 Construction Award.
Construction of the Mangatangi Dam begun in 1972 is completed in 1977 – it’s the last and largest of a series of rolled earth water supply dams built in Auckland’s Hunua Ranges between1950-1977, and the project is entered in the inaugural 1978 Construction Awards.
Construction of the Tekapo B Power Station begun in 1972 is completed in 1977. Construction of the Upper Waitaki Ohau A Power Station begun in1973 is completed in 1979. Construction of the Tongariro Power Scheme Stage 3 – Eastern Diversion construction begun in 1969 and is completed in 1979.
New motorways continued to transform our major cities and provide work for contractors. The Dunedin Southern Motorway’s first section (bypassing Green Island) is completed in 1972. Its second section – a 700m four-lane dual carriageway that extends the motorway south from Andersons Bay to South Road is completed in 1978.
Auckland’s Northern Motorway extends south to meet the Southern Motorway at Nelson Street/Hobson Street, allowing continuous travel to the Southern Motorway which extends south to the Bombay Hills at St Stephens/Great South Road in 1978. Wellington’s Urban Motorway construction (1969 –1978), which extends the motorway from Aotea Quay to Vivian Street via the Terrace tunnel, is opened by the Prime Minster on 31 May 1978.
Auckland’s Northern Motorway extends north to Sunset Road in 1979. In the same year Auckland’s Central Motorway Junction (CMJ – Spaghetti Junction) is completed; and Auckland’s Northwestern Motorway construction extends 2.4 kilometres from Western Springs to Newton Road, with city ramps as part of the new CMJ.
Investment in rail and sea transport also continues. The 8.9 kilometre Kaimai rail tunnel – the nation’s longest rail tunnel – finally opens in September 1978, 13 years after construction began.
The NZ Railways Department’s entry into the inter-island ferry market in 1962, with the nation’s first roll-on roll-off road-rail ferry service and contributes to the rapid decline of the vibrant coastal shipping market (and closure of its many small ports) that had moved freight around the nation since its founding.
The ferry service also contributes to the demise of the Union Steam Ship Co’s Wellington-Lyttleton roll-on, roll-off vehicle ferry service with the last sailing of the Rangatira in 1976. It’s an interesting background to the current debate about whether there is a need for the Government to own and provide a rail ferry service.
The arrival of containerised international shipping in the early 1970s prompts the government to decide on the number and the location of our container ports and it finally approves four container ports: Auckland, Wellington, Lyttleton and Port Chalmers, with Lyttleton only being added following political protests.
The civil contracting industry also continues to develop and grow in the 1970s, just not as quickly as before. Central and local government works departments also continue to grow and they remain an ongoing source of concern to the Federation.
But the industry has to face the multiple challenges of high inflation (it peaks at almost 17 percent in 1976 and is 13.7 percent when the decade ends), inadequate cost escalation provision on contracts, recession, low growth, government expenditure cutbacks and industrial unrest.
The association strengthens
The Contractors Federation also continues to prosper in the 1970s. Its leadership passes from its founder generation to a strong second generation of contractors, including Don Finnie (President 1974-1976), and Tom Draper (1976-1978) and John Feast (1978-1980) who are both the sons of founding presidents.
The Federation strengthens its central role in the civil contracting industry by establishing a training organisation; bringing four associated industry groups into the fold; founding a successful new industry magazine; setting up an award for construction excellence; and by vigorously promoting its “Construct by Contract” campaign.
The Contracting Industry Training Council (CITC), with representatives from the Federation, the Labourers and Drivers unions and the Ministry of Work, was founded in 1970, to provide industry training courses.
The Federation brings together the four national organisations representing the aggregates, power crane, ready-mixed concrete and heavy haulage industries and together they launch the first industry-owned magazine – The Contractor – in October 1976.
It was and is still is published by Contrafed Publishing Co Ltd – a joint venture between the Federation and the four industry organisations. Contractor magazine replaces Road Transport and Contracting magazine, which had served as the Federation’s Official Journal from 1962-1976.
The Federation launches its New Zealand Construction Awards in 1977 to provide a showcase competition for members and to promote its “Construct by Contract” campaign.
The inaugural awards are presented in two categories (Category A below, and Category B above $1.5 million – $12.6 million today) at the 1978 annual conference. AG Dryden wins Category A for construction of the foundations of the waterfall Chairlift on Mt Ruapehu. Green & McCahill Contractors wins Category B for construction of the Mangatangi Dam, an Auckland Regional Authority water supply dam in the Hunua Ranges
The Federation’s national ‘Construct by Contract’ campaign crescendos by the end of the 1970s into an acrimonious national political debate over the contentious issue of who will build the new high dam at Clyde – will it be the Ministry of Works and Development, or contractors?
Interestingly, the ‘Construct by Contract’ debate starts the decade with the tragic Kaimai Tunnel construction collapse in February 1970. The collapse kills four men, and the nation is relieved when eight trapped men are finally rescued three days later. A Commission of Inquiry into the Kaimai Disaster (it was appointed in April 1970 and reported in June 1970, such efficiency being unheard of nowadays!) reported adversely on the Ministry of Works’ handling of the job and its capacity to finish the project, saying private enterprise is better equipped.
The report concludes: “We consider, therefore, that it would be a more satisfactory and economic proposition to complete the tunnel via contract.” But the Ministry of Works continues with the project and buys a Tunnel Boring Machine (TBM) for $1.4 million ($27.1 million in today’s money) to complete the tunnel’s construction.
The TBM proves unsuitable for the geology, and 48 percent of the tunnel ends up being bored using traditional methods!
It’s worth noting that 1971 saw the Ministry of Works celebrating the 100th Anniversary of Julius Vogel’s founding of the Public Works Department in 1871. Vogel, first as Colonial Treasurer and then as Premier, had started his “grand go-ahead policy” known as The Great Public Works Policy in 1870, to counter recession and to develop the Colony by borrowing overseas to build railways, roads and telegraph lines and to attract immigrants.
The Vogel Plan was a world-first national development plan, funded by borrowing and, with the abolition of the nine Provincial Governments in 1876, it centralised the Colony’s national development.
Robert Muldoon’s “Think Big” plan can be seen as a 1970s iteration of Vogel’s 1870 national development plan. But as the decade ends, the role that Vogel’s Ministry of Works will play in that development remains uncertain and is the subject of intense debate between the National Government and the industry.
• Next month’s column will look at the 1980s – from ‘Think Big’ (including who will build the Clyde Dam) to the ‘Big Bang’ radical reforms of the 1984-1990 Fourth Labour Government, which include the unexpected demise of the Ministry of Works.
Parting words from Jeremy Sole- a final column