Bryce Wilkinson: NZ Initiative Fellow on the report on the cost versus benefit of Government-owned assets

The cost of keeping Government-owned assets could be more than the return it's getting from them.  

A report by The New Zealand Initiative says the Government owns $571 billion in assets, yet the returns from them don't even cover the interest on loans used to buy them. 

Author Bryce Wilkinson is calling for a review to identify if assets should be sold, and if so, which ones.   

He says the Government should be asking if someone else could put the assets to better use to improve public access. 

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Episode Transcript

Speaker 1 (00:00):
More insight this morning into the crown's assets and whether
they're worth owning, whether we should be in a discussion
again about selling them. State owns about half a trillion
in assets, five hundred and seventy one billion to be precise.
So here's the rub. The returns don't cover the interest
costs on money borrowed to own them in the first place.
New Zealand Initiative they've done the report in Bryce Wilkinson
is with it's a very good morning to you.

Speaker 2 (00:18):
Good morning.

Speaker 1 (00:19):
Make the amount of interest that we now owe in
every dollar? Do you reckon people? Get that? Understand that
or not?

Speaker 2 (00:24):
Really? No? So in the report we identify the net
interest feed on government borrowings is about three point seven
cents and every dollar collected in taxes, and that's about
three times higher than it was a few years ago
when interest rates were very lower and the debt was lower.

Speaker 1 (00:45):
What would you sell if you could?

Speaker 2 (00:48):
The literature empirical workers overwhelming that governments are not good
at running commercial assets, so you'd start there. Also, the
government owned an enormous amount of real estate in New
Zealand and dark owns about thirty percent of New Zealand
And it's never going to be funded well enough to

(01:10):
enhance the amenity value of that for New Zealand as
much as other people could. So Idle Land, which is
not using well, should also be looked at.

Speaker 1 (01:22):
You've already enraged people, and this is where the debate
gets interesting, isn't it. Do you think we're up for
the politics of this discussion.

Speaker 2 (01:30):
Yeah, the report acknowledges people's concerns about selling assets. We
use the analogy of what a household does when it's
in trouble with the level of its borrowings. You've either
got to cut back and spending or raise income somehow.
The government could raise tax rates, but it's also got
a productivity objective, so that doesn't help. The other thing

(01:53):
the report a knowledge is is that any assets sales
process has to be pretty squeaky clean. It's got to
be getting a good price and no sort of hidden deals.
It's got to be transparent, it's got to be an
option sort of process. So the report is very conscious
of the people's concerns about government as at sales.

Speaker 1 (02:13):
If this was the first time we were ever having
the discussion, would it be completely different from the reality
of what we're doing and we've seen key we rail
and all the other problems. You look at Wyala in
South Australia at the moment you look at Thames Water
in Britain. Saying you sell something well and it actually
being sold well are often two different things. And that's
a problem, isn't it.

Speaker 2 (02:32):
Yes, that's right, and to some extent there are report
emphasizes so that that so much so it is a
bit of a warning sign to the government that you
should be looking at doing this. You need so much
money for infrastructure, for maintenance, hospitals, schools and the like,
and now with the Chinese wake up are more on defense,

(02:54):
so should be looking at whether the country should be
prepared to look at all the options and have an
adult conversation about them and not let fears shut it down,
but insist on good process.

Speaker 1 (03:06):
You're only Bryce appreciated as always, Bryce Wilkinson, New Zealand
Initiative senior fellow Mike Transpowers not for sale WELP. According
to Greg Smith at Devon Funds, it should be that's
one and a half billion, I think from memory, and
then you get rid of the rest of the other
power companies going and then you can sell various airports
and ports, and so the debate begins what will be
interesting The next step required as a party to come
forward and go yep, that's us. And so we already

(03:26):
get David Seymour at the Act Party thinking that could
be something you get campaigned on. And the other interesting
thing is do national go down that same route. For
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