Government raids departments to fund new Productivity Commission

Thursday 18th March 2010

New Zealand's government has raided small programmes across 29 government agencies to fund a new $5 million-a-year Productivity Commission. Finance Minister Bill English and Act leader Rodney Hide announced legislation would be introduced shortly to establish the commission as an independent advisory agency that the government could call on for specialist, non-partisan advice on policy issues affecting New Zealand's poor national productivity record.

Commitment to the commission formed part of the coalition agreement between the governing National Party and its coalition partner, Act, and is modelled on the Australian Productivity Commission, with which it expects to work closely under the trans-Tasman Single Economic Market initiative.

Membership and the initial focus of the commission have yet to be determined. It will be up and running next year.

"In the long run, productivity is the biggest determinant of wages and living standards," said Hide. "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."

Establishment costs of $2.355 million are budgeted next year, rising to a constant $5 million a year by the second year for a staff of 20.

English said the government had taken money from the budgets of 29 government agencies, all of which had been spending on productivity programmes started by the previous Labour-led government, so new funds were required to fund the commission.

The Productivity Commission's main functions will include inquiries into productivity-related issues, one-off regulatory reviews, and regulatory impact analysis on particularly important policy initiatives.

Hide confirmed also that a second report from the 2025 Taskforce, led by former National Party leader Don Brash and which produced a string of politically unpalatable recommendations to lift economic performance and productivity.

Businesswire.co.nz

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