Privatisation 101
Privatisation is being talked about more and more in the context of New Zealand’s health system.
With proposals to outsource services like ophthalmology now on the table, it’s worth taking a step back to understand what that actually means, and what it could mean for public healthcare in Aotearoa.
This is a simple guide to the key ideas, the trade-offs, and what’s at stake.
So what even is privatisation?
When the government hands over things that used to be public to private companies. This can include:
Public assets
Public services, including outsourcing (paying private providers to deliver them)
Why do governments do it?
The idea is that private companies can deliver services more efficiently, and that it helps reduce pressure on public finances.
In practice, that doesn’t always hold up.
They say it will reduce public debt, but it may increase costs in the long run, and we lose a public asset.
Because they believe private companies are more efficient (competition, profit, all that)
Through outsourcing, governments are effectively renting instead of building their own capacity — which often ends up costing more over time
Why do people push back on it?
Because the incentives change, from delivering a public service to making a profit.
Private companies are driven by profit, not public service
It can lead to higher costs
Access to services can be reduced
There’s less public accountability
Have we done this before in New Zealand?
Yes, and not always with great results. In several cases, the Government has had to step back in after things didn’t go to plan.
Postbank was sold in 1989. The Government later had to create Kiwibank to fill the gap
Air New Zealand was sold in 1989, then bought back in 2001 to stop it collapsing
Rail was sold in 1993, then bought back in 2008 after it fell into disrepair
Has any part of the health system been privatised already?
Yes. Pathology (things like blood tests and lab work) has been progressively privatised since 2007.
A large share of services ended up owned by an overseas company
That company later sold its NZ operations before going into receivership
Today, private pathology is under strain - with staff shortages, ageing equipment, and lower pay than in the public system
So what’s happening with ophthalmology?
The Government is planning to outsource eye health services across the country.
A national tender has been run to create a panel of private providers
These providers would take on services currently delivered in public hospitals
Contracts are expected to run for at least five years, with the option to extend
What are the concerns with that?
It doesn’t address the underlying issue, which is capacity in the public system.
New Zealand’s health system has been built on universal public care since 1938
There are already workforce shortages New Zealand-wide – outsourcing just shuffles scarce skills around – it doesn’t fix it
Health NZ has acknowledged it doesn’t currently have the capacity to meet demand
High equipment costs make it hard for smaller providers to enter the market
Overall, there are concerns this will cost more, reduce public capacity, and limit access
Is this a one-off, or the start of something bigger?
If it goes ahead, this would be the first time a whole public hospital clinical service has been privatised nationwide.
The obvious question is what comes next?
What can you do?
There are a few simple ways to get involved.