ROGER PARTRIDGE: How asset recycling can help solve the infrastructure deficit

Last week, the Government confirmed it would spend up to $200 million buying new Genesis Energy shares. Three ministers lined up to explain the decision. It was about energy security. It was about stronger assets. It was about better outcomes for Kiwis.

None of them mentioned the real reason. Under the mixed ownership model legislation, Genesis cannot issue new shares unless the Crown subscribes to maintain its 51 per cent stake. The law makes taxpayers a forced buyer in every capital call. Private investors were ready to fund the raise. But the statute gave ministers no choice: pay up or block the company from raising capital altogether.

That $200 million could have funded a new regional hospital. It could have replaced water pipes in a dozen towns. Instead, it went to preserve a shareholding in a listed electricity company. Yet, since 1999, Contact Energy has shown that electricity companies can thrive under full private ownership.

Genesis is not an isolated case. It is a but one example of a wider problem. The Crown’s balance sheet totals nearly $600 billion. Yet roads crumble, pipes leak, hospitals decay, and classrooms rot. Much of the balance sheet services essential public purposes – roads, hospitals, schools, and social housing. But tucked alongside this social infrastructure are commercial enterprises worth roughly $24 billion.

No one ever planned the Crown’s commercial holdings. They just accumulated – an airline, three electricity generators, a bank, a courier company, a television network, 112 farms and a weather forecaster. It is the investment strategy of a sleepwalker, assembled through decades of political drift, never by design. For the most part, the Crown does not use its ownership to direct or control them.

That raises an obvious question. Is $24 billion better tied up in mature commercial businesses – or invested in the infrastructure New Zealand urgently needs?

The government’s own advisers have been heading in this direction. Treasury Secretary Iain Rennie warned in November that New Zealand would not grow its way out of its fiscal difficulties. There would be a need, he said, for ongoing changes across the balance sheet. Treasury’s 2025 Investment Statement pointed to formal capital recycling programmes to support infrastructure funding. Days later, the Prime Minister told Radio New Zealand that the country needed a more mature conversation about state asset ownership – though his subsequent comments cast some doubt on whether that extends to ownership of Air New Zealand.

The New Zealand Initiative’s new report, Renovating the Nation, released this week, proposes a way forward. It is called asset recycling – selling assets the Crown does not need to own and channelling every dollar of the proceeds into the infrastructure it does. New South Wales has raised more than A$50 billion since 2012 doing exactly that – without raising taxes or new borrowing. Sydney Metro transformed commuter rail. WestConnex reshaped traffic flows. Hospitals, schools and water systems followed across the state.

New Zealand has tried asset sales before. Voters remember what was sold, not what the proceeds achieved. Asset recycling is designed to change that. NSW succeeded because its programme had three features that New Zealand must replicate.

First, proceeds went into a dedicated fund, protected by statute. The money could not vanish into the Government’s general coffers.

Second, the infrastructure the fund enabled was genuinely additional. It supplemented normal capital budgets rather than substituting for them. New Zealand’s 2014 Future Investment Fund lacked those safeguards. Its proceeds largely displaced capital spending that would have occurred anyway.

Third, projects were prioritised. Infrastructure NSW produced a costed, ordered list of what the state needed most. Ministers retained final authority, but they were no longer flying blind.

The Infrastructure Commission’s new National Infrastructure Plan – released to Parliament last month – confirms the scale of the problem and offers sensible recommendations on funding, delivery and asset management. But the Commission cannot say which projects should come first. Parliament created it to coordinate, develop and improve – not to decide or prioritise. The result is a process, not a plan. Without independent prioritisation, proceeds risk flowing to politically convenient projects rather than those delivering genuine returns.

Critics will object that private owners cannot be trusted to serve the public interest. But the Crown relies on regulation and competition rather than ownership to protect consumers. The Commerce Commission sets price-quality paths for natural monopolies. Competitive markets discipline the rest. The Crown does not need to own these businesses to regulate them.

Others will point to lost dividends. But the value of those dividends is reflected in the price the Crown can obtain for the asset. And infrastructure can generate returns that will ultimately appear in Crown accounts: roads that lift productivity, water systems that enable growth, hospitals and schools that build human capital. These benefits compound across generations.

An election looms in November. Voters deserve to know where the parties stand. Genesis Energy’s was not the first capital call, and it will not be the last. Every dollar the Crown spends maintaining commercial shareholdings it does not need is a dollar unavailable for the infrastructure the country does need.

The blueprint is ready.

This column was first published in the New Zealand Herald on 5 March 2026. Roger Partridge writes at Plain Thinking