18 Sep 2025
While productivity has lagged in New Zealand in recent times, we can look at some key projects in the past for examples of how capital investments have created opportunities for new markets, increased resource utilisation and improved transport.
New Zealand has not had a great recent record with productivity growth. This is often associated with our modest economic growth. Occasionally productivity gets the Government’s attention, but nothing seems to change much. Productivity taskforces and commissions have come and gone. Economists say productivity growth depends on investment. This means not only making things more efficient, but also opening new areas of commerce with products not previously conceived. Our economy is marked by long work hours and low capital employment – factors which respectively impact on opportunity and restrain productivity growth.
Capital investment sounds like the work of engineers – building things – and that is true, but not quite in the way it was in the past. The nature of the economy is changing: today services are approximately 70 percent of gross domestic product, part of a long upward trend, which may seem to have a lighter engineering component. But while productivity improvements may come from things like new roads reducing costs of services, they also come from innovative new services – ones sparked by investment in education and facilitated by communication links and computing power. Some people who are utilising the electronic tools will call themselves engineers and never get near to building traditional infrastructure. So, engineers are inevitably at the productivity coal face. When we do that well, everyone will benefit.
Where, then, is the heritage link? One ambition of Engineering New Zealand’s Heritage Group is that engineers use their knowledge of engineering heritage to reflect on changing social, cultural and environmental contexts and to make informed decisions about current practice.
For example, the Wairākei Power Station, the world’s second geothermal power station and the first to utilise flash steam from geothermal water as an energy source to generate electricity, was completed in 1963. The bore field and the plant have since been redeveloped but the innovation that went into them has resulted in many more geothermal stations. Installed geothermal capacity is 10 percent of the national total now and through high availability, they deliver almost twice that proportion in power, and with low emissions.
The high voltage direct current (HVDC) link between Benmore and Haywards is a transmission link that integrates power supply between the South and North Islands. When built in 1965 it was the world’s largest and longest, incorporating the world’s largest submarine cable. Many technically complex matters were involved in its innovative engineering achievements. It allowed untapped power in the South Island to pass to the North. The energy market that operates today has transmission elements like this at its heart.
The Kaimai Rail Tunnel opened in 1978. There was a Bay of Plenty rail link before, through the Karangahake Gorge, but it was severely limited. The problematic construction of the tunnel included a fatal portal collapse, with an ill-suited tunnelling machine that had to be shifted to a different portal and only completed about half of the job. It has a heritage listing as our longest railway tunnel. It is a great productivity story, with traffic soon exceeding forecasts and the rail link being a key driver in making Tauranga our largest export port. The port too has a deserved listing for it is a story of growth through prudent and timely investment.
These three examples show how capital investments boosted productivity by opening opportunities for new wealth (Wairākei), opening opportunities for markets and allowing fuller utilisation of a resource (HVDC) and facilitating transport services (Kaimai). Two involved significant innovation while the Kaimai Tunnel tried an innovation that did not deliver, but nevertheless produced a significant benefit to service delivery when completed. Innovation certainly helps, but capital investment at the right scale at the right time remains a fundamental.
Garry Law FEngNZ is Chair of Engineering New Zealand’s Engineering Heritage Board.
This article was first published in the September 2025 issue of EG magazine.
