National strategists are tight-lipped but must be furious with the clumsy way Seymour rekindled the privatisation debate, risking that narrow issue overshadowing the Prime Minister’s attempts to turn the nation’s attention to the much wider issue of productivity and economic growth, especially per capita.
Questions remain about some of the processes, prices and personalities involved in the big trade sales of moribund state businesses 35 years ago, but Richard Prebble is right that his bold moves as State-Owned Enterprises (SOE) Minister raised productivity across important industries.
That was a crucial component supporting New Zealand’s exceptional economic growth from June 1993 – just in time for that year’s election – and over the following 15 years. But Sir John Key is also right that the Government doesn’t have much to sell.
As he observes, selling a few more shares in power companies, Air New Zealand or other businesses in which the Government has a residual interest will hardly make any difference to the nation’s destiny, one way or another.
God forbid we waste even a second arguing whether the Government should continue to own QV Ltd, with its shareholders’ funds of $15m and dividend of $1.5m. It can’t matter one way or the other.
More importantly when considering the Government’s overall portfolio and investment needs, is that none of the luminaries named at the outset have any idea whether they should buy, hold or sell shares in any of the companies in which the Government has a stake or any others.
With some lucky exceptions, nor do politicians have a good record deciding what major nation-building infrastructure projects are needed to boost productivity and per-capita growth, or where, when and how to pursue them.
Both the Prime Minister and Deputy Prime Minister are admirers of Singapore’s Temasek, established in 1974 to own and manage assets then held directly by its government.
That included a major bank and insurance company, Singapore Airlines and the country’s main port, its iron and steel mills and shipbuilders, some tourism and other property assets, its sugar industry and an eclectic mix of other concerns.
Temasek had a major nation-building role, including the development of Changi Airport, but has since expanded to invest globally in infrastructure, private equity and credit funds, while actively managing a vast international share portfolio.
In listed companies, its net portfolio is worth around $510 billion with an estimated $40b in unlisted investments. That’s more than half a trillion kiwi-dollars of assets, that are owned by a population only slightly bigger than New Zealand’s.
In 2024 – shock, horror! – Temasek sold $43b of its assets and bought just $34b of new ones for a net “privatisation” of $9b. But, over time, the value Temasek holds on behalf of the Government and people of Singapore grows.
While Temasek continues to have a nation-building role, none of its investment or divestment decisions are made by politicians.
Beehive strategists say Luxon is a big fan of the Temasek model, having visited it as leader of the opposition, and he continues to follow it closely.
Peters is an even longer-term Temasek fan. During the Labour-NZ First coalition, he, Shane Jones and Grant Robertson worked, including with advisers from Temasek, on merging the Government’s fully and partially owned commercial assets into something similar.
The project went nowhere after 2020. Yet, at his party conference in Hamilton last October, Peters’ big speech was dominated by a similar proposal for a $100b New Zealand Future Fund, after delegates backed a remit in favour. That idea was similar to the National Infrastructure Bank then-National leader Judith Collins promised in 2020.
The Temasek model has also won support from Labour, including from Helen Clark’s SOE Minister Trevor Mallard nearly 20 years ago. Mallard also wanted SOEs to be allowed to access private capital to establish subsidiaries, which could then be privatised and the capital recycled for the next one.
Nothing came from that work either.
Launching a local Temasek – let’s call it KiwiSec – would ideally have support from both big parties plus NZ First and Act.
For that to fly, Labour and NZ First would need to accept that KiwiSec’s investment committee – made up of investment experts not politicians – might decide to sell some of the shares in companies put under its ownership.
Both parties already accept it makes sense to sell one state house to build four more. They’ll just have to extend that principle more generally or explain why not.
For its part, National must accept KiwiSec might decide it was a good idea to fully acquire Air New Zealand. It might decide to sell down its shares in some of the energy companies Key floated, to take full control of one of them and expand it.
Act might have the biggest rat to swallow, by accepting that KiwiSec would be about growing the Government’s wealth over time, not net divestment.
Just as Labour and NZ First would have to learn not to panic hearing KiwiSec had sold some of its shares in, say, Mercury Energy, National and Act would need to learn there wasn’t something communist about it picking up a few more in Meridian, or taking a stake in Contact or Spark.
It might want to buy some farms. Or it might want to sell some of Landcorp’s existing ones. Or do both to improve the overall value of its portfolio.
Instead of fussing over who owns QV Ltd or whether the Government should hold 51%, 25% or 75% of Genesis shares, KiwiSec would be a much more strategic idea for Luxon to seek a mandate at the next election.
Better still, he’d stop the usual procrastination that’s held us back since 2008, and just announce and get on with it on Monday. After all, this is meant to be the year of economic growth.
Re-organising government bureaucracies and launching new visas for digital nomads are all very well. But much more is needed, economically and electorally.
