Listing large council-owned seaports and airports on the stock exchange would put added pressure on these assets to lift their game, says the Productivity Commission.
In a 278-page draft report released yesterday on freight and transport, it said a stock market listing would offer "significant potential governance improvements for larger companies" with a partial-council ownership.
Listed entities are "subject to strong, and ongoing, scrutiny and pressure for improvement" and have a share price that reacts to market conditions, the perceived quality of directors and any plans they announce, it said.
"Stock exchange rules such as those requiring regular reporting and continuous disclosure can expose poorly-performing managers, and pressure from minority shareholders and external analysts can spur the timely rectification of such problems."
Four seaports - Port of Tauranga, South Port New Zealand, Northland Port and Lyttelton Port - are already on the New Zealand stock exchange.
Auckland Airport is also listed as is Infratil - the company which owns two-thirds of Wellington Airport.
Christchurch Airport, owned by the Christchurch City Council and the Crown, is not listed, while Ports of Auckland delisted in 2005.
The commission also said a degree of private ownership, particularly of New Zealand ports, could improve their efficiency.
Privately-owned companies tended to out-perform their publicly-owned counterparts, the report said, although they are not the best at delivering some services valued by the community.
"We know that privatisation 'works' in the sense that divested firms ... become more efficient, more profitable, and financially healthier, and increase their capital investment spending," the report said, quoting an international study.
Although five New Zealand ports have some degree of private ownership, the draft report included submissions from the Shippers' Council and Federated Farmers advocating increased levels of privatisation.
"It is perhaps no coincidence that New Zealand's best performing port [Port of Tauranga] is also the port with the highest proportion of private ownership," Federated Farmers said.
The commission also cited an argument from Auckland Council - which owns 100 per cent of Ports of Auckland - claiming "public ownership with commercially focused boards" was an efficient operating model for ports.
Despite this, the commission said the argument that higher levels of private ownership increased performance was "generally convincing".
The commission said that although government ownership of rail offered "poor incentives to improve efficiency", past performance suggests the infrastructure does not pay its way under any ownership structure.
The commission's final report is due out in April.