Christopher Luxon calls for ‘mature’ conversation on asset recycling, as Chris Hipkins pledges to hold onto all state assets

Prime Minister Christopher Luxon says he wants to ensure the Government optimally deploys its capital, as a Treasury report sparks asset sales debate. Photo / Mark Mitchell

Opposition leader Chris Hipkins is dismissive of Prime Minister Christopher Luxon saying the country needs a “mature” conversation around the potential sale of state-owned assets.

“What would this government do when they’ve run out of things to sell?” Hipkins said, after Luxon spoke positively of a new Treasury report that calls for better management of the country’s $571 billion portfolio of assets.

Treasury said the Government couldn’t grow its way out of a fiscal deficit, so future governments should consider selling assets that are no longer fit for purpose and reinvesting that money into new assets.

“Some government assets are underperforming, poorly maintained and lack quality information. Regular reassessment of the purpose, performance and governance of the Crown’s assets would help increase the value they provide for the public or provide opportunities to reallocate capital to higher value uses,” Treasury said.

Luxon stressed the Government wouldn’t sell state assets in this term. Indeed, Act and New Zealand First have opposing views on the matter.

Luxon said National was yet to decide on the policy it would take to the election.

However, he said: “It’s not unreasonable to ask the question – should we own those assets forever unchanged?

“Your KiwiSaver account, Super Fund – they all cycle assets in and out. We have other governments that do it in that way as well.

“There are assets that you could ask, what is the purpose of the Government owning that? Are we better to liberate those funds and put them into new assets for the public of New Zealand that would be more beneficial?

“At some point we’re going to need to have a mature conversation.”

Hipkins responded by saying that although he hadn’t read Treasury’s report, released on Friday, Labour wouldn’t sell state assets if elected to govern.

He appeared unaware Kiwibank’s parent company sold Kiwi Wealth to Fisher Funds for $310 million under the previous Labour Government.

Nonetheless, he accused National of “actively considering asset sales in this term of government”.

“Christopher Luxon needs to be upfront with New Zealanders,” Hipkins said.

“What’s on the chopping block? What are they thinking about selling? Why are they going to sell them? How much money are they going to raise from it? What are they going to spend money on?”

The Government has been working on writing “purpose statements” for various state-owned entities to sharpen its thinking on why it owns individual entities and to ensure they perform strongly.

Like Treasury, Luxon didn’t detail how this work was progressing, what the outcome would be and whether purpose statements would be made public.

He pointed to Landcorp Farming as a state-owned entity that could have its ownership reassessed, but stressed National was still formulating the plan it would take to the election.

Luxon also didn’t comment on whether National would create a “formal capital recycling programme” to manage its assets.

Singapore’s Temasek investment company is an example of a “formal capital recycling programme”.

While Labour compared its proposed “Future Fund” to Temasek, the fund would achieve the opposite by preventing, rather than supporting, asset recycling.

Hipkins said New Zealand needed to increase its holdings of assets.

Asked how this would be paid for, he said Labour was yet to release the fiscal plan it would take to the election.

Hipkins pointed to the partial privatisation of the electricity companies as an example of privatisation hurting the public, claiming the gentailers’ ownership structure had led to the public being “gouged”.

He accused Luxon of “selling off the family silverware to fill the hole in his Budget”.

Luxon responded: “That’s a very simplistic political conversation on a very serious issue.”

He said he wasn’t talking about “flogging off the silverware”. Rather, he wanted to ensure capital was optimally deployed.

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.

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