ROGER PARTRIDGE: The Wrong Solution to the Wrong Problem

Labour’s Future Fund

Labour’s first policy announcement ahead of the 2026 election reveals the party recognises New Zealand’s infrastructure crisis. But it also shows it has no idea how to fix it.

Yesterday, Labour Leader Chris Hipkins unveiled a “Future Fund” that would redirect Crown asset dividends into investments in New Zealand businesses and infrastructure.

The fund would be managed by the Guardians of the Super Fund but with a mandate to support domestic companies rather than maximise returns. This is the wrong solution to the wrong problem.

As I argued in my April Herald column, the country confronts a $210 billion infrastructure deficit while sitting on a sprawling portfolio of Crown assets worth hundreds of billions. The rational response to the infrastructure funding challenge would be to recycle assets the Crown does not need to own into infrastructure the public desperately needs. Instead, Labour proposes to preserve every Crown asset whilst diverting their returns into government-picked business ventures.

This is precisely backwards.

Corporate Welfare by Another Name

Labour’s invocation of Singapore’s Temasek Holdings is particularly misleading. Temasek operates globally with 13 international offices spanning China to Mexico to France. Only 27% of its investments are in Singapore. Its mandate is clear: maximise returns for the Singapore Government.

Labour’s Future Fund would do the opposite. Rather than seek the best global returns, it would invest in New Zealand companies selected for political purposes. The fund’s goal is not profit maximisation but job creation through government-directed investment. This is corporate welfare dressed in the respectable garb of sovereign wealth management.

As I argued in my 2023 Herald column, politically-directed investment has a dismal track record, from Muldoon’s Think Big to similar schemes worldwide. This year’s Nobel Prize in Economics went to scholars showing that sustained prosperity depends on creative destruction and open competition – not government direction of capital.

Labour’s Future Fund is not innovative – it recycles a 23-year-old experiment that has never delivered a self-sustaining market. The New Zealand Venture Investment Fund was established by the Helen Clark-led Labour govenrment in 2002 to catalyse private venture capital. After investing $173 million in 239 companies over 16 years, the Ardern-led government created the $300 million Elevate Fund in 2019, again promising temporary intervention until private markets matured. Meanwhile, another Labour creation – the NZ Green Investment Finance fund – invested $400 million before the current government wound it down this year, citing “very limited results.” Now a future Hipkins-led Labour government promises to expand this model tenfold through the Future Fund. Labour government venture capital funds are like zombies: shoot them down, and they stagger back bigger and hungrier. 

What’s more, New Zealand already has a genuine sovereign wealth fund: the NZ Super Fund, worth $89 billion and managed by the Guardians with a clear mandate to maximise long-term returns. 

Labour’s proposal would, in effect, give the Guardians a second fund with the opposite mandate: take risks on politically favoured businesses that private investors judge too risky to fund themselves.

The Real Solution

Privately, Labour politicians might acknowledge the case for asset recycling, provided Crown assets are preserved for future generations. The concern about “selling the family silver” to pay off debt is legitimate.

Yet the answer is not to preserve every Crown asset regardless of its performance or purpose. New Zealand does not need the Crown to own television networks, electricity generators, postal services, or 112 farms. TVNZ’s billion-dollar book value has collapsed, with multi-million in losses last year alone. The Crown owns 51% stakes in three electricity companies despite Contact Energy demonstrating that full private ownership works perfectly well.

Learning from New South Wales

New South Wales has raised A$53 billion since 2012 through asset recycling – using 99-year port leases, electricity network sales, and surplus property disposal. The result: commuter travel times cut by 60 minutes daily, alongside world-class hospitals and regional infrastructure.

The key is what NSW got right: ring-fencing proceeds in a dedicated infrastructure fund, selecting projects through rigorous cost-benefit analysis, ensuring independent assessment of proposals, and maintaining transparent governance. This prevents governments from using asset sales to fund operating expenditure or vanity projects.

Critically, NSW maintained strong public support through transparent governance. Research shows 71% of NSW residents prefer funding infrastructure through asset recycling over raising taxes or increasing debt. This support stems from visible results: proceeds were ring-fenced in the Restart NSW Fund, ensuring transparency and preventing diversion to general spending.

New Zealand has attempted asset recycling before. In 2014, the government established the Future Investment Fund using $4.7 billion from partially privatising three electricity companies and Air New Zealand. But that fund lacked the rigour and focus of the NSW model. Money was spread across diverse projects without specific infrastructure focus or independent oversight. By 2016, the fund was fully allocated.

The lesson is clear: asset recycling without discipline wastes the opportunity.

Labour itself demonstrated that concession models work. In 2023, the previous government granted a 25-year concession to UK-based Entain plcto operate TAB NZ. This allowed the Crown to exit operational control whilst preserving public policy goals through exclusive rights, harm minimisation requirements, and guaranteed funding for the racing sector. If Labour accepts that model for TAB, why reject it for other commercial Crown assets?

What the Government Should Do

The Coalition Government now has a clear opportunity. Labour’s announcement exposes the incoherence of preserving every Crown asset whilst diverting dividends into state-directed investment. National can make the case that asset recycling converts Crown assets into infrastructure that actually serves New Zealanders.

Indeed, the Government appears to accept this principle. In October 2025, Ministers of Finance and Infrastructure announced that the National Infrastructure Funding and Financing Agency would investigate the early sale of its holdings of securities issued by Chorus to free up capital for hospitals, schools and roads. This is asset recycling in practice. The question is whether the Government will pursue it systematically with NSW-style governance or continue ad hoc sales without the discipline of a structured fund.

My forthcoming report for The New Zealand Initiative will provide the detailed blueprint for disciplined asset recycling. Sales should be sequenced strategically, starting where the case is strongest. Each sale’s proceeds should be transparently allocated to specific infrastructure projects that pass independent cost-benefit analysis.

Labour has chosen to lock capital into political projects. The Government should unlock it for infrastructure that endures.

Roger Partridge is a founder and senior fellow of The New Zealand Initiative and writes on public policy, constitutional law and liberalism. He publishes on Substack at Plain Thinking.