A similar necessity for adequate transport facilities prompted the settlers of Southland to embark on a programme of railway construction. Two lines were built: a 17-mile link between Bluff Harbour and Invercargill, opened on 5 February 1867; and an 8-mile, wooden-rail tramway between Invercargill and Makarewa, opened on 18 October 1864. Both these railway ventures strained the financial resources of the Southland Provincial Council, and contributed to its eventual bankruptcy.

As surveyed by the Auckland Provincial Council in 1863, Auckland's first railway was to extend from the Waitemata Harbour to Drury, 22 miles, with a branch to Onehunga, and was to cost £100,000. In 1866, when work came to a standstill, nearly all the money had been expended, yet only a few miles of formation had been completed. For six years the project lay virtually abandoned, until in 1872 it was revived by the General Government.

As early as 1863 the Otago Provincial Council had formed a Railways Department headed by a chief railway engineer. But it was private enterprise that built the first railway in Otago, a narrow-gauge line from Dunedin to Port Chalmers. This railway was purchased by the General Government in 1872.

With their limited resources, Wellington and the other provinces could not command the capital necessary for extensive railway construction. Moreover, from 1867 they were forbidden by the General Government to raise loans independently for railways and other public works, with justification, for the provincial record in the field of railway construction makes sorry reading. Indeed, it was providential that the provincial councils did not make better progress, for New Zealand narrowly averted being committed, like Australia, to the inconvenience and expense of trans-shipment at break-of-gauge stations. Fortunately, the General Government adopted the only course possible. It decided to build all railways on a national rather than on a provincial basis. And it adopted a uniform gauge of 3 ft 6 in.