New Zealand Productivity Commission Bill

I want to speak on Part 1, because although it is headed “Preliminary provisions” it contains some very important matters.

The first matter is in relation to the interpretation of “productivity-related matter”. I think that provision was improved before the New Zealand Productivity Commission Bill was introduced. The reason it was improved was to try to narrow the focus, but in narrowing the actual wording of the interpretation we were trying to expand what could be considered by the Productivity Commission. Leaving the interpretation as “ ‘productivity-related matter’ means any matter relating to productivity, or improving productivity, in the private sector, the public sector, or the economy as a whole” enables an incredibly broad brush to be applied to the definition of the word “productivity”. The last thing anyone on this side of the Chamber wants is a narrow approach to something that, hopefully, will be an important feature of our political and economic landscape for the future. I really hope the Government of the day takes an equally broad-brush approach to the definition of productivity.

During the Commerce Committee process it was very interesting to hear from Gary Banks, who heads the Australian Productivity Commission. He talked about the history of the development of the commission, and gave some background as to why its legislation focused on a quite specific but actually quite broad range of items. When one looks at the Australian Productivity Commission legislative provisions one sees that there are environmental, regional, and social dimensions to its definition of productivity. I think that is because of the background of the commission, which has come through various stages in its life. Gary Banks talked about the legislation originally coming from the Tariff Board, which is where the industry focus came from. The modern form of the commission came in under the Whitlam Government in 1973, and that was the Industries Assistance Commission. Finally, the Productivity Commission took over from that commission. That description helped me understand why it was better to go down the track that we had agreed prior to the introduction of the bill, which was to leave the definition very broad and open, rather than seeking to define every aspect of productivity that we would want to see applied. But that being said, the definition is not an open invitation for the other side to take a narrow view of productivity. If one of the early tasks of the Productivity Commission is to focus on regulatory matters, compliance costs, and all of those sorts of narrow issues, then we will be very disappointed. We want the Productivity Commission to achieve good things for our country. That is why I have tabled a new purpose clause, but I will not speak to that now, because it comes into Part 2.

The second thing I want to refer to under Part 1 is the definition of “responsible Minister”. I see that the Minister for Regulatory Reform, who is not the responsible Minister, is sitting in the chair. I am disappointed that he is not the responsible Minister—[Interruption] I knew that was going to excite concern from my colleagues, but I do think the Minister for Regulatory Reform ought to be the Minister who takes responsibility for this particular legislation. Then again, there are those who argue that the Minister of Finance has a broader sweep, and that the reason why we shifted the regulatory impact analysis unit from the Ministry of Economic Development to Treasury was to bring about that whole-of-Government approach. We also wanted a department that was capable of monstering other departments into doing stuff that perhaps they did not want to do, so it made sense to shift the unit to Treasury. Maybe that does mean the Minister of Finance is the correct responsible Minister.

I want to use the opportunity to comment on a couple of things that the Minister for Regulatory Reform has done while he has been the Minister, even though deeply involved in the discussions that we had prior to the introduction of this bill—and this bill does come from the agreement between the ACT Party and the National Party in forming the Government. That is to put on record again my deep concern about the decision that the Government took—and the responsible Minister is included in this—to remove regulatory impact statements from the pages at the front of the bill. I find that incredibly disruptive to the process of analysis. It also means that my first reading speeches are nowhere near as good as they would be otherwise, because I have always found the regulatory impact statements to be a great source of information about the nature of the problem, analysis of the different options, and stakeholder engagement as part of the consultation process. Those have all been really important features of regulatory impact statements. Having to find them on the website and download them separately I find very frustrating. I understand, having had discussions with the Minister about it, why that particular approach has been adopted, but I still feel that including even a modified form of the regulatory impact statement that reflected any changes Cabinet had made to the final set of decisions would be preferable. If that analysis were appended to the end of the regulatory impact statement and included with the bill, then the issues that the Government has grappled with in this matter simply would not be an issue. I would be very keen to see regulatory impact statements come back into the published versions of bills. I think a very short analysis at the end of the regulatory impact statement to identify any differences that had occurred as a result of the Cabinet process would certainly be extremely helpful. I think it would add to the quality of the debate in the Chamber, and, certainly, to the quality of my own personal contributions to these debates.

There are a couple of other things that I want to mention in relation to Part 1, because even though it is a very short part it is very, very significant.

Sitting suspended from 6 p.m. to 7 p.m.

I spent the entire dinner break reflecting on what I had said before the break, and I have decided that it is correct that the Minister of Finance is the Minister responsible for the New Zealand Productivity Commission Bill. I came to that conclusion because if the Minister for Regulatory Reform undertook the role, that would shift the primary focus of the New Zealand Productivity Commission to regulatory matters, and Labour does not agree with that. I discussed it with several colleagues over the dinner break, and I think we are now of one mind that the Minister that the Prime Minister has selected to be responsible for the bill is, in fact, the right Minister.

But it is good to have the Minister for Regulatory Reform in the chair, because I know that he and his party were significant driving forces behind this measure. Although I do not agree with the emphasis on regulatory matters, I do think the emphasis on growing New Zealand’s productivity, enhancing our productivity, and looking at all the different aspects of our productivity in order to improve New Zealand’s economic development is good. So it is important to acknowledge the role that Rodney Hide has played in this matter, and it is good that he can debate the bill from the chair. It is only Thursday night, after all, according to the calendar on the wall, and I have to say that the House being in urgency does reflect a significantly higher level of productivity than is normal in this place.

💬 Hon Trevor Mallard: Are you sure?

It depends. If people have taken advantage of it, and have used the approach my colleague took on the previous bill, the Education Amendment Bill (No 2), which was to get the Government to finally concede that the point he had been going on about for quite some time was correct and to fix that little problem, then it is amazing how much more productive Parliament can be under urgency; otherwise, there is a high risk of a little bit of filibustering. But that is not what Labour members are doing on the New Zealand Productivity Commission Bill. We think it is very important, we do want to see it passed, and we do want to see the current Government utilise it in the way that we intend to utilise it to get the productivity gains for New Zealand that we need.

It is a pleasure to take a—sorry about that noise. It takes me back to my old death metal days at university—a bit of feedback.

💬 Chris Hipkins: He doesn’t like feedback.

No, I do not mind feedback; not usually from Mr Hipkins, though.

We strongly support in principle the notion of having a productivity commission, as my colleague Lianne Dalziel has said. From my perspective as the spokesperson on State services for the Labour Party, it is a good thing. Some eyebrows might be raised on the other side of the Chamber at that statement, but I think that productivity in the State sector is a big issue. Obviously, I believe that we need a strong, healthy State sector that provides high-quality services to New Zealanders, and one issue it struggles with from time to time is productivity.

It is a conundrum for New Zealand as to why we have consistently not been able to lift our productivity rates. Throughout the last 20 or 30 years we have struggled to see productivity rise, we have lagged behind other OECD countries, and questions have been asked. Productivity was at the heart of the agenda of the fifth Labour Government, which aimed to raise skills and improve innovation in order to do the things that we thought would help lift our economy and improve our productivity. I think that a commission like this one is useful. If we look at Part 1, these are obviously the preliminary provisions, and the bill goes into more detail in Part 2.

The particular matter I will discuss is the definition of “productivity-related matter”. As my colleague Lianne Dalziel has said, a difficult balance needs to be struck between a definition that enables plenty of scope and one that at same time is not so broad that we cannot have a good mandate for the commission. The definition of “productivity-related matter” in Part 1 is “any matter relating to productivity, or improving productivity, in the private sector, the public sector, or the economy as a whole”. It is very important that we have managed to break out the private sector, public sector, and the wider economy in that interpretation. Members on this side of the Chamber are very attracted to the kinds of reports that the Australian Productivity Commission has made. It has made a very wide range of reports, including some on issues that people might not have traditionally seen as being about productivity but about how the Australian economy and society are developing. We think there is potential for the New Zealand Productivity Commission to do that.

“Productivity-related matter” in clause 4, “Interpretation”, has been defined pretty widely. From our point of view that is a good thing, but the issue with our having done that with regard to the commission is that each Government that comes along may have a different view on exactly how it will interpret a definition that is fairly wide.

Obviously, Labour has its own concerns—which we will be raising in Part 2, when we come to talk about the Productivity Commission in detail—including the fact that we already have someone appointed to run the commission at this time. That person is Murray Sherwin. He is a respected public servant of many years’ standing, but in all honesty, from a personal perspective, I do not see his appointment as being particularly ambitious for this commission.

💬 Hon Trevor Mallard: Not very exciting.

Not very exciting at all, I say to Mr Mallard. That is correct—not ambitious, not exciting. Murray Sherwin is a competent public servant; he is not the kind of person, in my opinion, who would drive the Productivity Commission to be the thing that it could be. It has the potential to harness a lot of different views from across the community, the private sector, and the public sector and to bring them together to face the challenge. My colleague Shane Jones has often asked what it is about the New Zealand economy that needs to be picked up and kick-started, and I am sorry to say that Murray Sherwin—as competent a man as he is—will not be doing that, leaving aside the question of whether having someone appointed before we have even gone through this process is appropriate.

I would like to think that what will come out of the House tonight will be an enduring agreement about the importance of having a productivity commission. Certainly, in terms of National and Labour, there is consensus that this is a good idea. Mr Hide has been championing it as part of the coalition agreement between ACT and National. Its time has come, but the interpretation clause tells us that there is a lot of room for manoeuvre when it comes to what constitutes a productivity-related matter. Members on this side of the Chamber certainly look to the Australian Productivity Commission. We look to some of the issues it has looked at, including issues in the environmental space, which are very, very important. I am not so sure that Mr Hide would see those things as being quite as important, but Labour can support this part.

Kia ora anō tātou, Mr Chair. Such is the importance attached to the New Zealand Productivity Commission Bill, that it requires attention that is likely to take us into Sunday, which will still be Thursday. This modest contribution is to reward the hard-working members on this side of the Chamber, and to alert the members on the other side of the Chamber that when they play loose and fast with the rules of the House they can expect to suffer.

I direct members’ attention to clause 3, “Purpose”, which states that “The purpose of this Act is to—(a) establish the Commission as a Crown entity for the purposes of section 7 of the Crown Entities Act 2004;”. A number of commissioners will be created under the Crown Entities Act 2004. My colleague Grant Robertson has already drawn the Committee’s attention to the fact that one of the favoured sons of the failed ideologues of the 1980s and 1990s has already been appointed to lead what runs the risk of turning into a discredited organisation, in very much the same way as Don Brash’s exercises with Dr Bryce Wilkinson and others have brought a great deal of opprobrium to those who are associated with trying to sensibly and credibly boost productivity and lessen the gap between us and our Australian cousins.

The Productivity Commission derives its powers from the Crown Entities Act, and it is evident from a cursory glance at that Act that commissioners are able to secure additional assistance—that is, through associate commissioners—or secure resources to undertake studies or examinations that might be called for from time to time. When we think about the purpose of the Act, we need to think about the people who will be there to give life, meaning, and form to the purpose. Under the current administration, it is evident that the narrow cast of ideological activists that it will draw from makes us doubt whether this organisation will achieve very much at all. At the end of the day, productivity is about people, and to date there has been a huge degree of disinterest on that side of the House in actually investing in people.

We have seen cuts—I mean, hypothetical—but I ask whether productivity can be increased at the same time as starving the most vulnerable group of New Zealanders—that is, the future workforce and their families—of the resources to ensure that they are suitably educated. How can we advance productivity whilst at the same time squeezing and starving resources from those avenues of the State’s resource base that are directed towards giving very good literacy and numeracy skills, civic skills, and social relations skills? All of that is actually being deprecated at the moment. It is a joke to think that we can create the Productivity Commission whilst at the same time not focusing on the building blocks of what is the greatest asset our country has. There is no productivity unless we invest in people.

The nature of our people is changing. The school-age population is getting browner, with more Pasifika, tangata whenua, Māori kids, and Kiwis of Māori descent. There are also more children of Asian descent and more children from other ethnic minorities. I only hope that when the Minister moves forward with the Productivity Commission—fortunately it will be for a mercifully short period of time; the results of the next election will rescue us from this narrow-mindedness—he will take into account, in terms of the qualities of the appointees, such things as ethnicity and the experience of working at different levels of the economy, not just at the big end of town. It is the big end of town—characters who thought they were masters of the universe, especially in the financial community—that has brought us to our knees. When I hear the media raging about the most recent lapse of judgment in our world, the Māori world, I like to remind them that the last time I checked the $7 billion worth of wealth meltdown, I did not see any rūnanga or hapū involved in that.

💬 Hon Lianne Dalziel: Did anyone say sorry?

No. Well, they are unlikely to utter that because that requires a level of humility and modesty that we do not ordinarily associate with that end of town.

Anyway, I come back to isolating the point that when we establish a commission, we have to focus on the quality and the range of skills that those people have. We need those who know about the emergence of entrepreneurialism and how to feed the culture of entrepreneurialism. We need those who are skilled in capital formation, but, most of all, we need those who are skilled in what enables people to find a reservoir of enthusiasm, eagerness, and tenacity to continue to learn.

When we look at some firms and companies—because we will need to take a micro look, not a macro look—we will see that productivity-related matters will go down, and we will have to consider the culture that exists between the owners of the firm and the providers of the capital. When we have a set of toxic labour relations and a set of rules that are squeezing further and further and increasing the pain on the labour force whilst not focusing on the obligations and the duties of the owners of the capital or the directors of firms, we cannot perpetually make more miserable the providers of labour and imagine that we are to grow wealthier.

We have seen a level of belligerence and hostility towards the leaders of the labour movement in New Zealand. We have seen it recently in terms of the treatment dished out to Helen Kelly in the recent episode to do with the give-away to the Hollywood billionaires. It is a timely reminder that a Productivity Commission will only be as good as the spread of people who occupy the positions. They must command respect in the eyes of the Ministers of the future.

It would appear that the Savings Working Group, comprising a number of notable New Zealanders, has already lost a fair degree of confidence in the Minister of Finance, the Prime Minister, and other senior Ministers of the current Government, because issues that it ought to be looking at—that is, notions of compulsion, types of obligations, etc., in savings—have already been written out of the script. This suggests that this Government hears, sees, and senses something that does not immediately fit with its plan—and, of course, we all know that there is no plan.

The Prime Minister, I acknowledge, was a successful currency trader and a pragmatist. So there is no coherent plan; there is just a haphazard set of disconnected events where the Government takes a position, closes out, and rapidly moves on to the next position. Unfortunately, exercising stewardship over the economy, as Mr Mallard and other members more senior than me will point out, requires an overarching vision, a strategy, a narrative, and, whether or not we like it, a plan.

This commission will not advance any plan, because we already know that the types of things it will look at come from a very narrow ideological straightjacket—that is, that the State is bad and it must be shrunk. How do we shrink the State? We know that the Productivity Commission will be charged at looking at whether the State should be shrunk by shrinking revenue. Then, once revenue in a macro sense is decreased, the State has fewer options to take an activist role where the economy might be suffering from market failure, inject a degree of public investment, or ensure that the public interest is addressed.

If the people who come into this organisation are disconnected from the way the vast bulk of small to medium sized firms operate and the way the vast bulk of New Zealand families live, then we can rest assured that it will be a continual story of a narrow range of ideas being forced upon us and our families, and that will just not do.

In relation to what defines a productivity-related matter, the Productivity Commission will look at private sector productivity issues, public sector productivity issues, and the economy as a whole. Well, the economy as a whole cannot be understood by focusing just on economic rationalism, because people are not just economic utility-maximising rats. At the same time, they are social creatures, so it is important when we look at productivity—and this will depend on the quality of the people coming forward—to take account not only of human capital but of natural capital.

Part 1 agreed to.

Part 2 Substantive Provisions

The CHAIRPERSON (Lindsay Tisch): Debate on Part 2 includes the schedule.