The Key Government plans to sell 49% of four state-owned energy companies and a further 23% of Air New Zealand. It is claimed that $5 billion to $7 billion can be "freed up" to reduce debt and invest in new infrastructure.
The re-elected centre-right Government moved quickly after the election last November to implement this partial privatisation pledge.
The Key Government has recently appointed four investment firms to fill three joint-manager slots for its first state-asset sale in more than a decade.
The Key Government's asset-sales agenda is linked to two international trends. One is long term, and concerns the advent of globalisation in the 1980s - a process, powered by revolutionary changes in information and communications technology, which heralded the intensification of interconnections between societies, institutions, cultures and individuals worldwide.
With a new global context, decision makers in Wellington were keen to frame economic policies that could help realise the new possibilities available for trade, foreign investment and a strongly market-based approach (sometimes called the Washington Consensus).
In the 1980s, New Zealand began to liberalise and reform its economy in earnest. As part of the process of economic integration, New Zealand signed a series of agreements with Australia in 1983. By 2005, New Zealand traded with more than 150 countries and was widely regarded as having one of the most open economies among OECD countries.
At the same time that New Zealand began its economic restructuring, political reforms were also implemented, including introducing new public management practices into the running of the core public sector services.
So, in a sense, Mr Key's asset sales plan seems to be consistent with the recognition by both Labour and National governments since the 1980s that globalisation was here to stay, and that the role of government was to make policy choices that maximised New Zealand's national interests in a increasingly interconnected world. Adaptation, rather than resistance, was and is still seen as the best course of action in global circumstances largely beyond New Zealand's control.
Presumably, the Key Government believes that a partial privatisation programme will increase production efficiency; inject a financial discipline alongside the social and strategic concerns that governments generally bring to their investments; provide new opportunities for investment by businesses and business people from around the world; and generate substantial amounts of cash for the Government.
These expectations are shaped, in part, by the international experience of privatisation. It was in the 1980s under the leadership of Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States that privatisation gained worldwide momentum. In the UK this culminated in the 1993 privatisation of British Rail under Mrs Thatcher's successor, John Major, British Rail having been formed by prior nationalisation of private rail companies.
Significant privatisation of state-owned enterprises in Eastern and Central Europe and the former Soviet Union was undertaken in the 1990s with assistance from the World Bank, the US Agency for International Development, the German Treuhand and other governmental and non-governmental organisations.
Privatisation in the Czech Republic, for example, has had far-reaching effects on that country's economy. In 1989 the private sector accounted for less than 1% of the gross domestic product. That figure had reached 22% by the start of 1993 and 44% by the start of 1994.
The impact of privatisation for Latin American countries almost paralleled the experience of formerly communist countries.
Mexico provides a good example.
From 1989 to 1994, President Carlos Salinas privatised 252 state companies, including major banks and Telmex, the government-owned company that monopolised telephone services. Sales of Mexican businesses have generated sorely needed funds for the Mexican government, which faced a major debt crisis in 1995-96.
Mexico has been able to discontinue subsidies to unprofitable state-owned businesses.
Another major privatisation involves Japan Post, encompassing the Japanese postal service and the world's largest bank. This privatisation started in 2007 after decades of debate. The process is projected to last until 2017.
Egypt undertook widespread privatisation under former president Hosni Mubarak. But many of the newly privatised businesses were associated with the corruption of his regime. After his overthrow last year, and along with the new look at long-festering labour and police-state issues, calls have been made for re-nationalisation.
Clearly, privatisation is taking place in very different economies.
These differences cannot be glossed over when trying to draw lessons from the process.
Privatisation in a less developed country is quite different from privatisation in a developed state. Similarly, a country's history as a capitalist, communist or closed economy cannot be ignored when weighing the international significance.
Thus, the track record of privatisation is somewhat mixed.
The other trend that has affected the Key Government's calculations is short term, but no less significant. It concerns the fallout from the global financial meltdown of 2008-09. Although New Zealand's economy came through the crisis better than many, the impact of what happened in the US and Europe eventually registered in Wellington, after several international credit rating downgrades and the ballooning costs of the Christchurch earthquakes.
The financial collapse of countries like Iceland, Ireland and Greece served to highlight the current dangers of excessive borrowing, and encouraged the Key Government to embrace the option of state asset sales to raise public funds - albeit one-off.
But if the Key Government's focus on the selling of state assets is related to two broader international trends, it must keep an eye on another very significant development to avoid a policy miscalculation.
Globalisation has often mistakenly been treated as a purely economic phenomenon.
During the post-Cold War era, we have witnessed, particularly after the global financial crisis, the rising power and political focus of international civil society.
The Occupy Wall Street movement is a symptom of this major development and the same can be said for the uprisings in the Arab world. A combination of new technologies, the falling cost of international communication and the gradual increase in international awareness on the part of civil society throughout the world has unleashed new social and political forces that have not only toppled several dictatorships but also call into question the way the global economic system operates.
The growing concentration of wealth in relatively few hands does not sit comfortably with a world that, thanks to technology, is increasingly aware of such discrepancies. Demands for greater financial transparency, taxation reform and a more equitable distribution of wealth are set to intensify in many countries.
Thus, the Key Government faces much more public scrutiny than previous New Zealand governments did when selling major state assets more than a decade ago. And if talk of "mum and dad" investors proves to be just empty rhetoric, the Key Government will face the prospect of strong opposition across the political spectrum to its strategy of asset sales.
• Robert G. Patman is a professor of international relations at the University of Otago.
