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Written by

Trevor Ammundsen

Published on

March 5, 2025

“We need to keep our infrastructure dollars moving, not tied up, which means that private enterprise needs to be involved.”

BY TREVOR AMMUNDSEN

Much discussion is currently taking place about the potential privatisation of Government owned assets, often called asset recycling. The conversation is founded on the assessment that the Government owns about $500 billion of assets so why not sell some of these to help fund some of the new assets we need? The argument against this is that “We must not sell our assets – ever. ‘Cause they are ours!”

Actually, both points of view have merit and should be considered. So, I will give an example to illustrate this.

Way back in time, when the Muldoon chap ruled the country, we experienced oil supply crises which severely affected our country. We needed to protect ourselves against this, so it was decided to ensure that we had sufficient oil refinery facilities to service the country’s needs. At that time, we did have a small refinery at Marsden Point but this was not of the size required for the whole country and so the Government underwrote, and eventually took over the expansion of this facility, at a cost of over $1.8 billion. Ownership remained with the private shareholders, predominantly being the oil companies involved.

While this project was messier than it should have been it is a good example of public money being used to fund the development of a much-needed asset and the Government then getting its money back from the private owners. This enables them to use this money for other asset construction projects. The repayment was done through a fuel levy charged on all fuel purchases. We had an asset the country needed, and we freed up our money to be used again, a win for the Asset Recycling faction.

Unfortunately, though, the owners decided in August 2020 to close the refinery and go back to importing fuel. In other words, back to the situation prior to the seventies fuel crisis. This was a bad decision for the country and a win for the Assets Are Ours faction.

This is a good example of how Asset Recycling can work out but illustrates how we need an Ownership Writ, or a set of rules, that apply to any strategic asset purchased or run.

In this example this Ownership Writ would have demanded that the owners maintain and operate the facility until such time as the government of the day decides it is no longer needed. Failure to do so means that the ownership of the asset immediately reverts to the government who takes over all operations, maintenance and decision-making roles. In other words, if you don’t want to run it anymore, bugger off and we will sort it out.

Another example where such a Writ could have worked for us is the Railways. This was owned by an Australian company, the Toll Group. They steadily lost money running Toll Rail as it was then known but threatened to close the business and bullied a simple, “Assets Are Ours” style of government into buying it back for about $600 million. Its value at the time was about 75 cents.

If, however, an Ownership Writ, as suggested above, was in place, the Government could have just used this to enforce either ownership was simply handed back or Toll kept operating the service. Toll could, of course, looked for another sucker to buy it but the Writ would still apply to the new owners.

There are many examples where the applicability of such a system can be seen. This is in areas such as usage as well as continuity of operation. For example, if we sold a hydro-electric dam we wouldn’t want the new owner to stop producing electricity because they felt they could get a better return selling water for irrigation. Major usage changes such as this would need to be protected.

It could be argued that such Writs would lower the value we could expect from any asset recycling programme but I do not think this is necessarily the case as the conditions in the Writ could also protect the purchaser.

For example, an electricity generator could be protected from being forced to not use coal or natural gas when needed, thereby taking out costs imposed by political decisions.

Food for thought but if we are to address our infrastructure deficit, we need to keep our infrastructure dollars moving, not tied up, which means that private enterprise needs to be involved.

Then we can ensure the protections the country needs through such a scheme as the Ownership Writ.