Have your say: Govt to establish Productivity commission

Finance Minister Bill English and Regulatory Reform Minister Rodney Hide have announced the creation of a Productivity Commission early next year to help boost New Zealand’s economic performance across the public and private sectors. The creation of the commission was part of the National-ACT confidence and supply agreement signed after the 2008 election. “It is essential that we increase our economic growth if we are to create the jobs, higher incomes and opportunities New Zealand families deserve. Our main challenge is to ensure this growth is based on private sector investment and exports, rather than the unsustainable increases in government spending and borrowing of the past decade," English said. “This will require action across the board – and it’s why the Government will give the Commission wide scope in terms of the issues it directs it to consider,” Hide said. Hide said productivity was crucial in maintaining and increasing New Zealanders' standards of living. “In the long run, productivity is the biggest determinant of wages and living standards. Lifting our output per worker - the amount of goods and services each worker produces and the value they add – is critical to closing the income gap with Australia," Hide said. “This income gap is one of the main reasons we lose so many talented, hard-working New Zealanders every year. The Government is committed to taking a number of steps to close the economic gap with Australia. Establishing the Commission is one concrete step towards arresting New Zealand’s productivity slide,” he said. The Commission’s roles and functions would be modelled closely on the Australian Productivity Commission, which has been operating for more than 10 years, they said. The Government aimed to enact legislation to set up the Commission by the end of this year so it could be operating by April 2011. The Australian and New Zealand commissions would cooperate. Here's more detail from the announcement and Questions and Answers below:

The independence of the Australian Productivity Commission has ensured that important public policy issues have been tackled in a non-political way. Examples of Australian Productivity Commission inquiries include energy efficiency and the economic impacts of migration and population growth. The new Productivity Commission will be headed by up to four part-time commissioners and will provide independent advice on ways to improve productivity in areas identified by the Government. Its main functions will include: * Inquiries into productivity-related matters and reporting back to Ministers. * One-off reviews of existing regulations. * Reviews of the efficiency and effectiveness of regulatory agencies. * Regulatory impact analysis of a small number of proposed new regulations. * Research into productivity-related matters, to build up its institutional knowledge. * Promote public understanding of productivity-related issues. The commission will be funded through contributions from reprioritising the existing budgets of 29 Government agencies. “No extra money will be called upon to fund the Commission and its activities,” Mr English and Mr Hide said. Q: Will the New Zealand Productivity Commission be a unit of an existing department or a new entity? A: It will be a new Independent Crown Entity, like the Commerce Commission or the Law Commission. Q: Wouldn’t it be cheaper to make it a unit of the Treasury, like the National Infrastructure Unit, the Debt Management Office or the Export Credit Office? A: It would not necessarily be any cheaper to be run as a unit of an existing department and, more importantly, the Government is very keen to ensure that the public of New Zealand are absolutely clear that this is very much an independent agency. However, we do want the Commission to operate as efficiently as possible, and it will share back office services with another agency. This will be worked through in the course of setting up the Commission. Q: How can we afford a new government agency with the Crown forecast to run deficits for years to come and the Crown’s net debt levels forecast to rise dramatically in the years ahead? A: Funding for the Commission will be sourced from the existing baselines of 29 Government departments, ministries and agencies that currently provide productivity-related policy advice and those agencies with a significant influence on productivity. Not one extra cent of taxpayers’ money will be called upon to fund this significant new agency. Contributing agencies will be required to continue to fund all of their normal outputs out of efficiency gains. Q: How will the NZPC compare with the set-up in other countries? A: The New Zealand Productivity Commission is based closely on the Australian Productivity Commission – In terms of size it is comparable to the State of Victoria’s Victorian Competition and Efficiency Commission (VCEC), which is judged to have critical mass.