Prime Minister Christopher Luxon this week opened the door to asset recycling. He suggested that the government could sell state-owned enterprises and commercial assets it no longer has any reason to own, to fund new infrastructure. He mentioned Kiwibank as one possibility, arguing that government ownership of a bank might not be the best use of public capital. 

This is a sensible conversation to have. But predictably, it has already veered off track. 

The opposition calls it a typical right-wing move that betrays Kiwi values. The government, meanwhile, is defending itself against privatisation accusations. Both sides are arguing about the wrong thing. 

Selling assets is the straightforward part. What happens to the money afterwards is where it gets interesting. 

When New South Wales pioneered asset recycling, it did not just sell assets. It created a political locked box.  

The bulk of the asset sale proceeds flowed into a special fund called Restart NSW, which is ring-fenced by law for infrastructure investment. Politicians could not touch it.  

Infrastructure NSW, an independent body, determined which projects were feasible based on evidence. The money could only build new, additional infrastructure. Sales were not short-term cash-grabs to fill the budget, but a means of funding what the state needed most. 

Sydneysiders could literally see the old, state-owned electricity company turning into their new metro system. They watched ageing ports become modern hospitals.  

When residents could track every dollar from asset to infrastructure, 61% supported the programme. Not because they had always loved privatisation. They were thrilled to finally have the infrastructure they needed. 

New Zealand owns assets that do not need to be owned by the government. Why have a state bank when private banks perform better? The Crown owns commercial buildings and hundreds of farms. Why is this so, when our infrastructure needs are enormous and pressing? 

The current debate about ownership ideology does nothing to solve this mismatch. 

Asset recycling with proper governance stops politicians from “selling the family silver to pay for the groceries.” It creates a binding commitment to turn underperforming assets into desperately needed infrastructure. 

If we are going to have this conversation, let us have the right one. 

The question, therefore, is not “Do you support asset sales?” 

The real question is “How do we ensure the government is investing in what the country needs the most?” 

Without that governance mechanism, asset sales are just asset sales. With it, they become an infrastructure revolution. 

That is a debate worth having.