Simeon Brown has told various Government-owned companies they must explain why they are failing to deliver their cost of equity and how they will improve their return to the Crown.
The Minister for State Owned Enterprises (SOEs) told several of the SOEs – including NZ Post and Landcorp – that the Government was “disappointed and concerned” by their performance and they must deliver a “bold and challenging turnaround plan”.
Act’s David Seymour, who has previously raised the notion of privatisation, told the Herald it’s “coming into fashion” to ask hard questions about the Government’s ownership of the companies.
Asked if there was growing appetite from his coalition partners for privatisation, Seymour responded: “I can’t speak for them, but they’re reading the same numbers in the Budget documents as I am and they are smart people.
“I suspect we’ll be starting to ask these questions more frequently,” he said.
Seymour didn’t think the current Government was in a position to agree politically on changing ownership, but “I could be wrong”.
Brown’s expectations were laid out in letters sent in March to the Government-owned companies and have just been released publicly by the Treasury.
In total, letters from responsible ministers were sent to 30 various entities within the Government’s commercial portfolio.
Some of the most scathing came from Brown (on behalf of shareholding ministers), who has responsibility for SOEs. These are companies owned by the Crown that are expected to be as profitable and efficient as comparable businesses not owned by the Crown.
Each of the letters begin with similar notes about the Government’s priorities and the “tight fiscal environment” that New Zealand is operating in.
They highlight New Zealand is in a deficit and “getting the Government’s books back in order will require a sustained, collective effort”, including by all public sector organisations.
Among the key points the letters make is that the companies’ boards must “run a profitable business, focus resources, minimise and control costs, and deliver improved performance to represent a value for money investment for the Crown as owner”.
“Emphasise distributions to the Crown, especially whenever there is excess capital on the balance sheet; and set ambitious targets and develop robust performance measures,” the letters also say.
The companies must be prepared to show how their spending “is as efficient, effective and responsive as possible to increase the prosperity of all New Zealanders”.
“There will be enhanced scrutiny of cost of management, ability to make distributions to the Crown, and transparent, fair and reasonable executive remuneration in line” with the NZX’s corporate governance code.
The letters also have “specific expectations” for each of the various entities.:
Landcorp Farming is an SOE which manages more than 100 farms, forests and horticultural operations. Its brand name is Pāmu.
According to the letter from Brown to chair John Rae, Landcorp’s five-year average total shareholder return is 2.6% and its operating return on equity is 0.4%.
“Its returns have not met its cost of equity for at least 10 years,” Brown wrote.
“We are disappointed and concerned about Landcorp’s failure to make progress in improving its performance and expect an explanation why, and how and when the company will deliver its cost of equity”.
Brown said ministers expect the company to “deliver a bold and challenging turnaround plan to improve value and return to the Crown”.
Its plan should show how Landcorp will “manage farms as efficiently as those owned by non-Crown organisations” with a focus on core business and existing land, and no expansion of land holdings, Brown said.
The SOE should also dispose of any non-land assets, business units and ventures “that do not generate a return equal to or greater than their cost of equity”, he said.
The minister also wanted a reduction in corporate overhead spend, costs which had “increased significantly in recent years”.
Grant McCallum, the National MP for Northland and a local farmer, was pleased with the minister’s message.
“Farmers have been concerned about the performance of Landcorp for some time,” he told the Herald.
“It’s great to see the minister bringing a real focus on economic performance. The taxpayers deserve nothing less.”
Landcorp’s half-year report released earlier this year said there was no final dividend paid out in the 2023/24 financial year.
However, it is forecasting a full-year net profit after tax of $58 million to $66m, compared with a loss of $26m in the previous financial year.
A statement from Landcorp to the Herald said it had responded to the letter by acknowledging the clear expectations of ministers, in particular the focus on operating existing land assets “as efficiently and profitably as non-Crown entities and delivering value to the Crown (including through regular dividends)”.
It highlighted that by 2030 it was expecting to deliver a significant turnaround in financial performance, including getting total shareholder return to 9.3%.
“Pāmu has an improvement target of $29m of annual NOP (net operating profit) in its core farming business in FY28 (assuming consistent milk and livestock pricing),” the statement said.
“We are already seeing results of our focus on lifting performance. Pāmu is forecasting a NOP in the range of $43m-$51m for FY25 (double the five-year average) and a budget target NOP of greater than $50m for FY26.”
The company listed a number of areas it was focused on making progress in, including increasing dairy beef rearing capacity and reducing net greenhouse gas emissions.
The mail delivery company came under similar scrutiny from Brown in his letter of expectation to the SOE’s chair, Dame Paula Rebstock.
He highlighted the entity’s five-year average 1.9% total shareholder return and 1.2% return on equity and had the same message for it as he did for Landcorp.
Brown also said decisions by NZ Post to respond to the “structural decline in mail” should be made “quickly” and be implemented in a “cost-effective and commercially sustainable manner”.
Among his other expectations was that the entity’s transformation programme led to “higher performance”.
He noted a focus of the programme was automating processing capability. In early May, NZ Post’s new Auckland Processing Centre was opened with the ability to process 300,000–400,000 parcels a day.
NZ Post was also reminded that all Crown companies are expected to maintain an efficient balance sheet and therefore should “deliver an appropriate level of commercial return to, and represent a value-for-money investment for, the Crown as owner”.
According to NZ Post’s 2025 half-year results, it grew its operating profit in the six months to December 2024 to $16m, which compares to $7m for the same period in the previous financial year.
But that didn’t translate into higher net profit after tax. At $3m for the six months, it’s $4m less than the $7m recorded previously. It paid a special dividend of $100m to the Crown in the 2024 year.
NZ Post declined to comment for this story.
The communications group, which also provides cloud and cyber security services, also hasn’t met its cost equity during the past five years, according to Brown’s letter to chair Sophie Haslem.
It had a five-year average total shareholder return of –4.1% and a return on equity of 4.9% and received the same message from Brown about his disappointment and concern with its progress.
Brown said Kordia had recently completed a strategic review of its business and expected the company to implement the findings and “effectively execute its transformation programme, ensuring the business operates efficiently and effectively while demonstrating a clear purpose and strategy”.
The minister also said he appreciated Kordia had had a “challenging year” in part due to a change in its role with the Public Safety Network and changes in its leadership.
“We encourage the board to support the organisation refocus and rebuild through engaging with staff and developing a strong culture to take the organisation forward,” Brown said.
“We expect Kordia to continue working proactively, openly, and co-operatively with key stakeholders and keep shareholding Ministers and the Treasury updated on progress of its transformation programme and any other key matters.”
In a statement, the company said since the completion of the review and the initiation of its transformation programme, it had “restructured the business to enhance accountability and performance, with a strong emphasis on clarity of purpose, setting clear and transparent goals, improving controls, and maximising our unique strategic assets and capability”.
“We are now progressing in the right direction to meet our targets aligned with this vision, including a strong improvement in return on equity.”
In the six months to December 31, 2024, the company declared a profit after tax of $681,000, down from $1.3m in the same period a year prior.
“Kordia is navigating economic pressures and working through disruption in the media and government consulting landscape,” Haslem said.
“In addition, the cost to maintain Kordia’s critical assets is increasing considerably. However, Kordia’s transformation programme will support the company to best navigate these challenges, positioning the business to continue to deliver value.”
Speaking to the Herald, Seymour said the Government – the shareholder in SOEs – had an obligation to ask questions on behalf of taxpayers about the performance of these companies.
“We’re giving them a chance with a clear objective of returning money to the taxpayer,” the Act leader said.
“If they can’t do that, even when it’s made crystal clear to them, that’s when I think reasonable people are going to start asking the question: do I want to pay taxes to pay interest on the Government’s debt so we can own a company that is a dead duck commercially?”
He said Act had long believed that there is no benefit in the Government owning a business that is competing with other businesses.
“The fact that they’re in competition tells you that it’s possible to provide the service without Government being involved,” he said.
“If it was impossible for anyone to do the thing, except for the Government, we’d have a monopoly.
“That is Act’s position and it’s never changed, but I think it’s starting to come into fashion because the time of easy choices is coming to an end, and the time of asking hard questions is approaching.”
While he didn’t believe the current Government would be able to agree on the matter, he thought “sooner or later that basic message of the Act Party will be vindicated”.
“As a minister, I’m happy to be part of a Government that is actually starting the conversation by demanding some results.”
Seymour believed this issue would become a higher priority for voters as “unless we make changes to our overall policy settings, we will never balance the Budget”.
The Government has a very narrow path to surplus in the latest Budget forecasts. Using the Obegalx measure – which is the traditional deficit or surplus measure excluding the revenue and expenses of ACC – a surplus of about $200 million could be reached in 2029.
But so far both of the Government’s Budgets – in 2024 and this year – have been propped up by major savings programmes. That includes reprioritising the near-$13 billion saved through pay equity reforms.
It has raised questions about what else the Government may need to do to find similar savings in the future to return to surplus.
Seymour has honed in on three key areas Act believes are important; improving government efficiency, tackling entitlements, and considering asset ownership.
He revived the debate about selling some companies earlier this year when he said it was time New Zealand moved past a “squeamishness” about privatisation and considered whether there was value in the Government owning about $570b worth of assets.
“If we want to be a First World country, then are we making the best use of the government’s half a trillion dollars’ plus worth of assets?” he asked in his January State of the Nation speech.
“If something isn’t getting a return, the Government should sell it so we can afford to buy something that does.”
Prime Minister Christopher Luxon has ruled out asset sales in this term of Parliament. After Seymour’s speech, Luxon said he was open to discussing it at the next election.
But NZ First leader Winston Peters made his thoughts about privatisation clear earlier this year when asked by reporters.
“Give me a break. I spent my career ensuring our assets stay in our possession,” he said.
Jamie Ensor is a political reporter in the NZ Herald Press Gallery team based at Parliament. He was previously a TV reporter and digital producer in the Newshub Press Gallery office. In 2025, he was a finalist for Political Journalist of the Year at the Voyager Media Awards.