Proceeds must be ringfenced for projects like a second Auckland Harbour crossing to ensure public trust. Photo / Getty Images
The Government’s proposal to explore selling its debt and equity securities in Chorus is the right thing to do, but only if it commits every dollar it receives to building additional public infrastructure that grows our economy and drives social progress.
Kiwis will likely only get on board with selling down a public asset if it is matched by decisive reinvestment in something that improves our society. In other words, we shouldn’t sell unless we’re also building.
As the Finance Minister recently announced, the Crown acquired its stake in Chorus via its contribution to the Ultra-Fast Broadband (UFB) rollout. This stunning example of a public-private partnership is enjoyed by 92% of us daily as we digitally connect at home and at work. However, with UFB now largely delivered, the policy justification for the Crown holding those securities has substantially weakened.
It makes sense to realise this investment and recycle the capital into new nation-building infrastructure investments. What won’t be acceptable is for the Government to simply dissipate the proceeds across routine spending or have them absorbed into the black hole of general revenue.
The principles of asset recycling are well-established. Infrastructure New Zealand’s Unlocking Value report lays out how governments around the world have sold legacy, non-performing or non-core assets, ringfenced the proceeds and reinvested them back into transport, water, digital, climate or energy infrastructure. New South Wales is perhaps the poster child. Since 2012, more than A$53 billion ($59.9b) has flowed from old assets into new public infrastructure.
Here in New Zealand, we face an infrastructure deficit estimated at over $200b. In this context, it is irresponsible to let Crown capital remain idle in an investment that delivers limited upside, particularly when those funds could mobilise schools, hospitals, roads or transport links that current and future generations will use. Chorus is an important organisation, but it’s now a legacy holding for the Government, not a strategic platform that still requires state intervention.
Of course, the first project we put that money into must be visionary and visible. A second Auckland Harbour crossing is the kind of nation-building project that we can all rally behind.
From a big-picture perspective, it’s irrelevant whether we eventually end up with a bridge or a tunnel – they are merely possible solutions to what is an engineering problem. The result is what matters, namely the human connections, community connectivity, increased productivity and future growth that a second crossing will provide.
As a non-Aucklander, I believe it’s in every New Zealander’s interest to have our one international city perform exceptionally. This takes investment, leadership and courage, and when we have capital that is sitting idle in something that is no longer contributing to the future of the country, we need to repurpose it for something that will.
A clear “Chorus proceeds equals Auckland Harbour crossing” pipeline can build public trust, particularly if the Government can present the benefits of the second crossing. The public must see the “after” as sure as they saw the “before”. The Chorus funding won’t cover anywhere near the full cost of the project, but it’s a reasonable downpayment that can provide that project certainty to get it going sooner.
Both our major political parties need help here. National needs to sell what an asset-recycling programme that releases current assets to build new ones can do. Then they need to show us. Labour needs to get off the conservative ideological bench and recognise that creating new public assets is better for our communities than protecting assets that no longer serve our needs.
Asset recycling, if it is to be successful in New Zealand, needs to include the following guardrails to reassure the public that their investment won’t just be frittered away.
● The proceeds of selling down the public holdings in assets need to be ringfenced through legally binding allocations so the money cannot be redirected to general spending.
● An independently prepared shortlist of candidate projects that are pre-vetted, with cost-benefit analysis and that match national priorities (transport, regional growth, climate adaptation) needs to be developed.
● Community buy-in is needed upfront. Iwi and local government must have a role in selecting and designing the future projects their communities need. They should also be thinking about which of their own assets could be offered up to fund these projects.
If this approach works and benefits can be independently evaluated, we can establish a way of doing this repeatedly. We can also look at bringing public and private funds together to seed other new infrastructure, perhaps by way of a publicly owned infrastructure bank.
I concede divestment isn’t risk-free. Market appetite might underwhelm. Valuation disagreements could delay timing. Due diligence will be complex. But risks are manageable with a disciplined process.
To critics who see this as “selling the family silver”, the answer is that we’re not divesting our core assets, we’re converting a completed infrastructure investment into new infrastructure that the country requires. Think of it as rolling capital forward into the next need, not cashing out.
In short, the Government’s planned divestment in Chorus should be supported on one condition – that every dollar is pledged to build, not spend elsewhere.
“We cannot sell unless we are building” needs to be more than a slogan, it must be the contract the Government, and future Governments, sign with New Zealanders.
Let’s transform static assets into real outcomes that benefit our communities. Sell what we own in Chorus and use it to build infrastructure for the future.
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