Unlocking ‘Lazy’ Capital To Build New Infrastructure For Our Future

Aotearoa New Zealand needs new infrastructure to improve public services and stimulate economic growth, and one solution lies in unlocking the ‘lazy’ capital tied up in existing public assets, according to a new report by Infrastructure New Zealand and Aurecon.

“Asset recycling – realising capital from existing assets through sales, leases or partnerships with the private sector – can be a key strategy for funding new infrastructure without unnecessarily increasing government debt,” says Infrastructure New Zealand Chief Executive Nick Leggett. “It allows us to maximize the value of what we already own, build the transport links, hospitals and schools we require for our future, and is fiscally responsible.”

“This is about unlocking funds from today’s assets so we can re-invest it in the critical public infrastructure that we will need tomorrow.”

“New Zealand’s infrastructure gap is significant, and the long-term capital required to address it is a heavy burden for both central and local governments to bear alone. To overcome these challenges, we need to tap into capital.”

Leggett points to successful models from small nations like Ireland, Singapore, and Denmark, which have effectively blended public and private funding to boost productivity and growth.

Recent research from The New Zealand Infrastructure Commission | Te Waihanga highlights the pressing need for better management of existing infrastructure, emphasising the lack of renewal and maintenance funds.

“Asset recycling can create a ‘win-win-win’ situation. It improves existing assets through private sector expertise, raises capital for crucial new projects, and ensures better public services,” says Leggett. “This approach could unlock billions of dollars for investment in vital infrastructure like transport and healthcare without increasing debt.”

Infrastructure New Zealand is calling on the Government to consider asset recycling by developing a comprehensive infrastructure funding policy.

“We recommend establishing a National Policy Direction on Asset Recycling. This would allow New Zealand to weigh the benefits of government ownership against the potential gains from monetising certain assets to reinvest in new or upgraded infrastructure,” says Leggett.

“The proposed policy would help identify which assets should remain public and which could be managed by private entities to enhance New Zealand’s economic, social, and environmental outcomes.”

“Ultimately, the success of asset recycling hinges on building political consensus and ensuring it’s a viable, long-term strategy for both central and local government. This would be another effective tool in the kit to fund much needed infrastructure.”

Unlocking Value: Recycling our Infrastructure Assets to Grow New Zealand, was developed in partnership with Aurecon. A policy position paper based on recommendations from the report is also available here.

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