Story: Colonial and provincial government

Page 3. War, debt and the provinces, 1863 to 1870

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War and debt

In July 1863, British and colonial forces invaded Waikato. The colony borrowed £3 million (equivalent to more than $420 million in 2023) to pay for the war. In late 1864 and early 1865 land in Waikato, Taranaki and elsewhere was confiscated from its Māori owners. The government hoped the sale of these lands would pay for the loan.

Otago separatism

Otago had become wealthy on account of revenue from the gold finds in the province since 1861 and the commerce that had resulted from them. It wanted to prevent its wealth being used to pay for the northern troubles. One idea was that all revenue should in the first instance be provincial, with grants made to the central government. The General Assembly did not agree.

Auckland separatism

The government led by Frederick Weld shifted the capital from Auckland to Wellington in 1865. Aucklanders felt the interests of their province, in which much of the fighting had taken place, would be overlooked, especially once British forces were withdrawn. Auckland also thought it might be left to the mercy of Māori, or lose control of the confiscated land; it demanded separation. ‘What Otago had demanded in her prosperity,’ said the Nelson Examiner in a comment two years later, ‘Auckland was demanding in her adversity.’1

Degrees of devolution

Southland’s financial difficulties prompted an amended New Provinces Act 1865, which required the General Assembly to approve new provinces. This made it much less likely they would be established.

Districts such as Ōamaru (North Otago), Tīmaru (South Canterbury), Whanganui and Gisborne continued to lobby for separation from their parent provinces, but unsuccessfully.

South Canterbury acquired a ‘board of works’ in 1867 – it was given a quarter of Canterbury’s land revenue for the purposes of carrying out public works, including bridges, and harbour works at Tīmaru.

West Canterbury, where there was a gold rush in 1865, became the county of Westland in 1868 – it controlled its own finances for public works but had no provincial institutions.

Road boards for settled country areas were established in all provinces except Hawke’s Bay. The system was most developed in Otago. From 1868, 40% of Otago’s land revenue was paid into a road endowment fund, with half then paid to road boards.

By the mid-1860s there were many towns, and Otago and Canterbury had introduced systems of town government. The Municipal Corporations Act 1867 set up a template for towns throughout the colony.


The Post Office Act 1858 had created a uniform postal system throughout the colony. By 1863 Auckland, Wellington, Lyttelton and Port Chalmers had a mail service every five days, and Bluff, Picton, Nelson, New Plymouth and Napier every 10 days.

The establishment of the capital at a central location in 1865 made the colonial government more accessible from most parts of New Zealand.

Time was standardised throughout the country in 1868, a product in part of the advent of the telegraph, which linked Wellington and the South Island centres by 1866 (and Auckland by 1872).

In setting up the county of Westland, the General Assembly gave itself the right to abolish or alter any province at any time.

Game over

In 1866, Colonial Treasurer Francis Jollie announced that ‘the time appears to have gone by when the provinces can expect to receive from the colonial revenue the same rate of contribution as heretofore. In the altered circumstances of the country consequent upon the immense efforts it has made during the last three years for suppressing Native disorder and rebellion, it is, I believe, no longer possible for this or any other Government to continue the old arrangement of subsidizing the Provinces with three-eighths of the Customs ... [they] should rely more and more upon ... their own local revenues.’2

Financial pressure

The colony’s £3 million loan failed to pay its way, but still had to be serviced. Spending had eaten up most of the loan, while the confiscated land did not sell and the colony faced heavy defence spending.

In 1867 Colonial Treasurer William Fitzherbert consolidated a number of provincial loans and paid off some provincial debts, and after this provinces were stopped from borrowing. Fitzherbert also split ‘ordinary’ revenue (that is, excluding the proceeds from land sales) 50/50, with the colonial government getting half and the provinces getting the other half. This halted unexpected claims by provinces on the colony but left some provinces even worse off.

Depressed economic conditions throughout the colony in the late 1860s made matters more difficult for the provinces. In 1868, for the first time, the revenue of the colony was less than it had been the year before.

  1. Nelson Examiner, 12 Oct 1867, p. 2. Back
  2. Appendix to the Journals of the House of Representatives, 1866, B-6, pp. 6–7 Back
How to cite this page:

Malcolm McKinnon, 'Colonial and provincial government - War, debt and the provinces, 1863 to 1870', Te Ara - the Encyclopedia of New Zealand, (accessed 18 June 2024)

Story by Malcolm McKinnon, published 20 Jun 2012, reviewed & revised 6 Oct 2023