A public-private partnership fund announced on Thurday could invest up to $500 million in infrastructure such as schools, hospitals and housing.
The New Zealand Superannuation Fund will contribute $100 million to the fund, set up by privately-owned infrastructure manager Morrison & Co, which will finance, build and maintain social infrastructure.
Annual fees will be charged for the facilities, which will be handed back to public ownership after 25 to 35 years.
A director at Morrison & Co, Peter Coman, says the fund will not invest in higher risk projects like roading where forecasting demand is risky.
Mr Coman says investors anticipate returns of between 10% to 20%. He says the fund's first priority will be New Zealand projects, though it will look at Australia.
The Council of Trade Unions fears the partnership is a move towards privatisation and could easily result assets being owned by overseas investors.
CTU secretary Peter Conway says it would be more-cost effective for the Government to build the infrastructure.
The Public Service Association cites a 2006 report done for Treasury, which argues public-private partnerships work only with highly specified, measurable targets, rewards and punishments built in to a contract, and guarantees the scheme will last.
Council for Infrastructure Development chief executive Stephen Selwood says such partnerships have worked very successfully in other countries.
"Private finance initiatives have been used to extensively to refurbish almost the entire school stock in the United Kingdom," he says. "Closer to home in Sydney, there's been a range of projects done, from schools to hospitals, courts (and) prisons."
The Superannuation Fund, set up to part-fund rising pension costs, says the investment suits its long-term investment horizon and stacks up well against overseas alternatives.
Its $100 million investment is less than 1% of the Superannuation Fund's portfolio.
The Government says it is interested in having the private sector involved in state services, but is not formally endorsing Public Private Partnerships such as that launched on Thursday.
