Treasury review may open debate on selling state assets

Friday, 7 November 2025

The Treasury is conducting research that could pave the way for Government asset sales.

Treasury Secretary Iain Rennie said that it was - “probably for the first time” - trying to assist governments to work out why they own entities that they do.”

The comments were made as the Treasury released an Investment Statement highlighting what it described as “stark fiscal challenges” facing the country, and two days after ACT Party leader David Seymour said the party wanted the Government to consider selling down its 51% stakes in Meridian, Mercury and Genesis Energy.

Rennie did not comment directly on the ownership of power firms, but questioned whether the public policy rationale for the Government owning some entities could be achieved through “other measures like regulation or funding to achieve the same purpose”.

The dilemma the Government could face in switching to more stringent regulation, rather than ownership, to protect the public interest in sectors such as electricity was illustrated on Thursday, when broker Forsyth Barr trimmed its estimate of the fair value of the big four gentailers by $1.3 billion to reflect “elevated” political risks they might face after the next election.

The Government owned $100 billion-worth of commercial assets, in addition to about $470b of physical and financial assets such as buildings and investments held by ACC and the NZ Super Fund, so their performance “mattered a lot”, Rennie said.

While those that were listed on the stock exchange — which include the power companies — had consistently outperformed the NZX Top 50 index, the ones that were not listed hadn't met that benchmark, he said.

“We need to look very closely at the performance of assets in the portfolio, to think about the ways in which government can enhance the performance of those entities — whether that's through maintaining ownership of those entities … or thinking about whether some of the capital in those entities, or all of the capital in those entities, could be better put to use elsewhere.”

In a number of cases, New Zealand didn’t manage its “social assets”, such as schools, hospitals and transport infrastructure very well, Rennie said.

“The average age of our hospitals is around 45 years and a third of our schools are over 50 years old, and evidence that we have is that there's significant variation in the quality of those assets across the country.”

The Government’s net core debt is forecast to peak at 46% of GDP in the year to June 2028, when it is expected to top $230b.

But the Treasury is assuming a government might need to borrow an additional $115b in the next few decades in the aftermath of a major earthquake, which could push the debt ratio up to 73%.

Because of that, and other fiscal risks such as the chance of a major trade war, it determined in 2022 that it would be prudent for the country to keep the debt ratio below 50% in normal times.

Rennie said he was still broadly comfortable with that position, but the Treasury might need to re-test the cap periodically given the “prudent level of debt can shift over time”.

“The debt has moved up faster than we thought,” he said.

Past experience showed the Government had tended to spend a sum equivalent to 10% of annual GDP each decade to cover the costs of “shocks” such as Cyclone Gabrielle, the Christchurch earthquakes and Covid, but such shocks were likely to become more frequent, he said.

Public debt had ratcheted up over the past 15 to 20 years, he said.

“Shocks are more frequent, so it's been harder for governments to save and rebuild buffers after a shock before the next one comes through, but also in the period between shocks we haven't saved enough to build buffers.”

The Investment Statement showed the Crown’s net worth rose to $191b as at June 2024, having risen faster than the rate of inflation over the past decade, but projects that will fall to $172b by 2029, reflecting the projected ongoing fiscal deficits.