Prime Minister Christopher Luxon says the Government should consider selling underperforming assets next term

Prime Minister Christopher Luxon is laying the groundwork for asset sales after the 2026 election if the National Party wins a second term.

He says New Zealand needs to have a sophisticated conversation about “asset recycling” or selling existing assets to help fund the purchase of newer ones.

Politicians need to question whether they are using the Government's balance sheet effectively without getting bogged down in the “dirty politics” of asset sales.

“You don't just own an asset forever without questioning why you're owning it,” he said, at a press conference on Monday. 

Luxon wouldn’t comment on specific assets, as National’s caucus has not yet settled on a policy for the election, but he wanted to start the discussion.

“All I'm saying is there's a pool of capital, of cash, that can be deployed in different ways to get better returns for New Zealanders,” he said. 

The statement follows Treasury’s 2025 Investment Statement, published last Friday, which advised the Government to adopt a more “formal capital recycling programme”.

The Crown’s balance sheet has grown significantly over the past decade in both size and complexity, with assets now totalling $571 billion. Net worth has risen 22% in the past three years.

Swapsies

Treasury said governments had provided “limited articulation of the rationale for ownership” for many assets in the commercial portfolio, which includes Kiwibank, the electricity generators, Kordia, Quotable Value, KiwiRail, NZ Post, and MetService.

“A formal capital recycling programme may be useful where the Government reallocates or reinvests capital from existing assets or infrastructure projects into new opportunities or projects to meet policy objectives,” Treasury said. 

“This can avoid the often increased operating and maintenance costs from ongoing ownership. The goal is to enhance the use of taxpayers’ capital and support wider economic outcomes from the release of under-used assets.”

Almost $100 billion of the Crown’s balance sheet is classed as commercial assets, with a net value after liabilities of $48.9 billion. This category is most often targeted for asset recycling, though in some cases it may be easier to recycle within the $313 billion social asset category.

Commercial assets are supposed to generate dividends that offset tax revenue and help fund borrowing for social assets. Selling a dividend-paying asset to build a public one could leave the Crown in a weaker fiscal position.

Good asset management isn’t just about strengthening the Crown accounts. Treasury said it was also important for broader economic efficiency.

“The Government is the largest asset manager in New Zealand. This means that where the Government invests capital, and how it performs, matters for the country’s capital productivity and wider economic performance,” the agency said.

Open season 

Luxon, National, and the Act Party are open to these ideas but have struggled to gain voter support. The Prime Minister ruled out asset sales during the 2023 campaign, but only when asked directly.

Several ministers have since signalled a desire to manage the balance sheet more actively and have been testing the waters with minor asset sales.

Kiwibank’s capital raise technically counts as an asset sale, as does the plan to sell financial securities linked to Chorus. Neither resembles what voters usually consider “asset sales”.

Treasury has been instructed to work with Crown entities to clarify the rationale for owning various assets and assess their performance. That work could support a case for an asset recycling programme.

While Luxon mostly avoided specifics, he said Landcorp Farming (trading as Pamu) was a “good example” of a state-owned enterprise without a clear purpose.

“Are we the best people to run those farms? How do those farms perform relative to farms that aren't run by the Government?”

“It may well be that they're needed for Treaty claims, or be used for R&D as model farms. There might be a real rationale for it, or there may not be a rationale for it.”

Luxon said he wanted to optimise the Crown’s balance sheet and overall fiscal performance. That doesn’t necessarily mean selling assets to reduce debt; it could also mean encouraging commercial entities to deliver stronger returns.

“As a former business guy, you just don't want lazy balance sheets,” he said.

“You want to optimize your profit and loss statement, that's strongly connected to your balance sheet, and you want to be … actually maximising your balance sheet really effectively."