Editorial: NZ for sale - Should we sell state assets? If so, what?

David Seymour delivering his State of the Nation speech. Photo / Alex Burton

Opinion

There’s no question that New Zealand is in an economic hole. The Crown accounts are in the red and the growth outlook is lacklustre.

That has prompted Act leader David Seymour to push for state asset sales to help pay the bills.

In his State of the Nation speech last week, Seymour argued that New Zealanders move past a “squeamishness” about privatisation.

Of course, Seymour and Act see privatisation as a fundamental economic shift that matters more than just raising funds. Seymour argues it would bring more efficiency and greater social benefits in many areas of life.

Others disagree – strongly.

Labour leader Chris Hipkins has described New Zealand’s past programmes of asset sales as an unmitigated failure.

He may have a point about some of the big sales made under financial duress in the 1980s and 1990s.

However, the partial privatisation of power companies is less clear-cut. While the service and value delivered to consumers can be debated, there’s no question the sale has paid off for the Crown accounts. The listed entities are now worth more than twice what they were pre-float and deliver much greater dividends.

Seymour’s call has also allowed National to broach the issue again.

Prime Minister Christopher Luxon indicated there were no plans for asset sales this term but they might be on the agenda in the second term of a National-led government.

But what to sell?

Sir John Key, speaking to Mike Hosking on Newstalk ZB, avoided the politics of the debate by pointing out that New Zealand quite simply doesn’t have anything of value left to sell.

He has a point.

KiwiRail has been back and forth between private and public ownership twice now and typically looks more like a liability than an asset.

NZ Post’s value has dwindled with the demand for mail. It is a major player in the courier market but not much more.

Those assets that are actually worth something to private investors are also lucrative for the government.

State-owned Landcorp owns farms and forests and might release some value, but it also delivers good returns.

Likewise, the (already partially privatised) power companies deliver sizeable annual dividends.

Selling the rest of our stake probably doesn’t help the accounts in the long term.

As Key points out, there’s nothing there of enough value simply to materially change the financial equations for the country.

That brings us back to Seymour’s broader point.

Should we sell because private ownership would deliver better service for Kiwis?

That’s central to Act’s worldview and would see assets like hospitals and schools added to the list of assets on the block.

But Luxon and National know the voter support for this is marginal.

Kiwibank is an example of one asset that is likely in National’s sights for partial privatisation.

That’s because the injection of private capital might allow it to grow and bring more competition to the banking sector.

Ultimately, the rationale for asset sales can’t just be based on the cash injection they might deliver. There needs to be underlying economic logic.

We can’t afford a fire sale.