New Zealand Productivity Commission Act Repeal Bill

I present a legislative statement on the New Zealand Productivity Commission Act Repeal Bill.

ASSISTANT SPEAKER (Maureen Pugh): That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon DAVID SEYMOUR: Thank you, Madam Speaker. I move, That the New Zealand Productivity Commission Act Repeal Bill be now read a first time.

Technically, this is a very simple bill. The New Zealand Productivity Commission was established by legislation as a Crown entity. The Government now wishes to disestablish it for reasons that I will go into, and therefore it requires legislation for this disestablishment to occur. It repeals those changes that were made in 2010 when the commission was established by legislation. It also has a series of savings provisions, the broad effect of which is that the asset and, for that matter, liabilities of the Productivity Commission will pass to a host agency referred to in the bill as “the Ministry”—in this case, the Treasury.

The Treasury will become the custodian of any assets and liabilities outstanding, and the Treasury will take responsibility particularly for those matters relating to employment of those who will become former employees of the Productivity Commission. We’ve been very clear, as the Government, in our communications with the department that we want to ensure that those people who were working for the Productivity Commission are given every opportunity to find new employment within the Government, that those people do not find themselves unfairly treated throughout this process.

Now, to make some more general comments about the policy intention behind the bill, I’ll make a few comments. One is that this is not, in any way, an indictment on the quality of the work of the Productivity Commission. The Productivity Commission has done some tremendous work over the past decade or so, and that work will remain available as an asset or a taonga for New Zealanders to be a guide for policy formation.

I just make the case that if you look at the five most prominent inquiries according to Treasury, they are things such as housing affordability. I remember reading that report as a young staffer in a ministerial office here in Parliament when it came out in 2012. It remains very good advice for any Government wishing to improve housing affordability. Another one, which I’ll come back to, 2014, regulatory institutions and practices; more effective social services, 2015; new models of tertiary education; New Zealand firms reaching for the frontier. If you look at some of these subjects, they are clearly areas where, despite the best advice, Governments over the past decade, including those members opposite who have recently been retired from the Government benches by the voters, have failed to implement the policy process. The case I make is that we are much better at this point in time to retain the assets that the Productivity Commission has generated in its various pieces of policy advice and make sure that we do a better job of implementing them.

That is very much what the new “Ministry of Regulation” that will, in part, be funded by the funding that would have gone on to the Productivity Commission—approximately $6 million each year—is designed and is currently being designed to ensure that we finally do proper analysis of new regulatory initiatives; something that we have paid lip service to but failed to do with the cost measured not only in the compliance costs of things people do but also the things they don’t do and also the long-term cost of our culture being eroded—the so-called can-do Kiwi attitude being overwhelmed by a culture of no because there’s always a rule saying you can’t do that or it would cost too much to proceed.

That is, perhaps, one of the most important economic imperatives any Government has: to stop eroding the culture, to stop saying no, to stop putting costs on to the things people do, through poorly designed regulation. That is why it is so important that we actually have a part of Government that is there to stop poorly conceived regulatory ideas from the rest of Government, but also to train the staff across Government in regulatory capacity, which has been almost totally neglected by the previous Government, I should add. And, finally, to lead sector reviews to go through existing poor regulations and rules and actually ask the simple question: what is this rule for? Do the benefits outweigh the cost? And if we don’t know and we’re not sure, then maybe the answer is to get rid of the rule and leave people’s actions up to New Zealanders’ judgment again. That’s a novel idea. Let’s see where it might get us to. I suspect that this side of the House will have more faith in New Zealanders’ judgment than the other side of the House. That is why we’re doing this.

But there is an interesting point in the fact that this Government, instead of just ballooning its Budget, every time they have an idea, they decide that there’s more money to spend, because as Fred Dagg once said—it might as well have been Grant Robertson—“We could always borrow a few billion more.” Well, look where that’s got us. That’s why this Government, if it wants to do something new, is casting around saying, “Well, what we can stop doing, to make economies?” Now, this is not a familiar concept to Camilla Belich, who’s earnestly watching, or anyone else who was in the previous Government, obviously. But it’s a very familiar concept to households and firms and ordinary people up and down New Zealand, especially in the last few years. The fact that we’re doing this tonight shows that this Government is actually committed to looking after the taxpayers’ hard-earned money and spending it as carefully as they spend their own. Not a bad concept for a Government to start off with.

Finally, I want to pay tribute to some of the many people who have contributed to the Productivity Commission over the years. Murray Sherwin as the inaugural chair—again, I recall when I was a young parliamentary staffer, in the year I worked here outside the private sector, I remember seeing Murray Sherwin give presentations about the works they were doing in things like housing affordability. Dr Graham Scott, one of the greatest public servants of his generation, former chair of the Treasury, gave his time to be a commissioner. Professor Sally Davenport, Andrew Sweet, Professor Gail Pacheco. Also, the subsequent chair after Murray Sherwin, Dr Ganesh Nana, and Dr William Rosenberg, Dr Diane Ruwhiu, and Vicky Robertson—these are the people who have been commissioners, but supported over the decade that the commission has been in place by dozens of staff who have worked hard to produce this stock of reports which are now an asset for the whole country. I hope members opposite, while working out why they’re on that side and how they could, perhaps, get back on this side, will take the time to ruminate and read, because there’s a lot of quality there and it’s not going anywhere.

But henceforth, we are going to use the money that would have gone to the Productivity Commission for a more active purpose of improving the quality of laws and regulations that New Zealanders are faced with on a day-to-day basis. Without further ado, I commend this bill to the House and I look forward to further debate on it. Thank you, Madam Speaker.

The question is that the motion be agreed to.

Thank you, Madam Speaker. Well, that was one of the stranger speeches I’ve heard; because whilst David Seymour strikes a knife into the heart of the Productivity Commission, he sings its praises. He tells us about the great reports that it’s done and names numerous people who have served with praise as he twists that knife. It’s absolutely bizarre. And here we are. This has got a certain déjà vu, but worse. It feels like I’ve been here before as the National-ACT coalition dismantles another thing.

But the truly bizarre thing about this is that he is dismantling Rodney Hide’s legacy. So here we have a great ACT initiative, which David Seymour is standing up and saying, “Well, that was pretty rubbish, so we’re getting rid of it.” And I just wonder who the next leader of the ACT Party will be to stand up and say, “I move that the ‘Regulation Ministry Disestablishment Bill’ be read for the first time.” It won’t be long—it won’t be long. And I’m sure it’ll be another ACT Party member, because the fact of the matter is that this is absolute chaos—the absolutely Kafkaesque attributes of disestablishing a Productivity Commission to set up a commission for red tape, a commission which is to overlay the work of the Legislation Design and Advisory Committee, the Parliamentary Counsel Office, select committees, ministries and departments, and the Attorney-General’s office because we need another look.

Now, if you wanted to put yet another barrier in the place of good and effective legislation, you’re doing a good job, David Seymour. The fact of the matter is that that is a vanity project and it will have absolutely no effect. Just like his Treaty principles bill, it’s going to be a dead letter. It will be of no effect.

And what’s worse is here is a party which talks about the importance of private property, the rule of law, and sanctity of contract. Have a look at clause 11 of the bill. What does it do? All employment contracts are terminated. “We don’t care that you’ve entered into an employment relationship bound by the rules of New Zealand, we are Parliament, we are Government, we decide otherwise, you’re all fired. That’s the end of that.” That is absolutely reprehensible. You have an entire body of people employed by the commission and that party—the ACT Party—doesn’t care. It doesn’t care that there’s a whole lot of people in there who have jobs, who have families, who have mortgages, who are actually the very same hard-working New Zealanders who their coalition partners want to protect, and they’re gutting them, with absolutely no remorse whatsoever.

Because that’s not a party for all New Zealanders. This is a party who’s out to look after themselves and their mates, and they’re trying to get rid of the Productivity Commission. They say that it’s done good work, and yet, they’re absolutely getting rid of it overnight. It makes no sense.

And, of course, how much is the ministry of regulation going to cost us? We don’t know.

Hon Grant Robertson: Way more than this.

Hon Dr DUNCAN WEBB: And I can tell you that because I’ve asked. And you’re right, Mr Grant Robertson, way more, because it’s going to be a much more large and lumbering organisation. It’s going to be a ministry of its own and it’s going to have a whole lot of machinery around it. But the only really important thing is David Seymour’s going to be top of it. It’s going to be his show, it’s going to be the little David Seymour show, and he’s going to be able to pontificate about how effective rules and regulations are. Well, bad luck, it’s not going to last long—another vanity project.

But the real tragedy of this is that this commission has done good work. Productivity is one of the things that we need to work on in this country. This is an entity whose mission is to improve productivity. And this bill shows what the ACT Party really thinks about it and what this coalition Government thinks about it. It doesn’t care. It’s just more interested in making its own way, in making its own mark. Ideology and dogma—that’s what this bill is. So I’m looking forward to debating it further in the night. There’s a lot more to say about it. Thank you, Madam Speaker.

Thank you, Madam Speaker. Well, the night is yet young. I want to just start by framing what I’m about to say that there is a layer—or multiple layers—of irony with which we approach this bill. I wanted to just pick up some of the points that the Hon David Seymour made in his speech. He did spend quite a lot of time talking about the proposed new ministry of regulation or deregulation—or whatever it’s going to be called—which is, of course, how he intends to spend the money that he’s saving from the disestablishment of the Productivity Commission.

But the debate tonight isn’t about whether or not we should have a ministry of regulation or deregulation, and whether or not that’s a good thing. The debate tonight is about the disestablishment of the Productivity Commission, and so we should look at that entirely on its merits and whether or not that’s a good idea. We can have a debate subsequently about whether it’s a good idea to establish a new ministry, but the two things are actually distinct apart from the financial flow from one to the other.

Now, I note that the Green Party opposed the establishment of the Productivity Commission in the first place, because we thought that it would be a neo-liberal anti-regulation stalking horse which would shape future Government policy. I did say that this was going to be a speech laden with irony! So, having now had the experience of working with the Productivity Commission in Opposition and in Government, I just wanted to look at some of its advantages and some of its disadvantages.

It has, as the Hon David Seymour said, actually done some really good work. Some of that we disagreed with in terms of the slant of it; some of it we agreed with strongly. I wanted to mention, in particular, the “fair chance for all” report—we think it was superb. It also did a very substantial piece of work under Steven Joyce called “towards a net-zero economy for New Zealand”, which actually provided a lot of the basis for what became the zero carbon Act, the Climate Change Commission, and amongst its many recommendations suggested a feebate scheme for electric vehicles, which became the Clean Car Discount. So one of the ironies, of course, is that the Clean Car Discount was established by a Labour-Green Government on the recommendation of a neo-liberal stalking horse set up by the ACT Party. And, of course, that Clean Car Discount is also being disestablished by the parties who established the commission that recommended it in the first place. So it is kind of Kafkaesque how we’re entering here today.

One of the big disadvantages of the way that the Productivity Commission was designed, of course, was that there’s no requirement upon the Government to respond to its reports. It did some very, very good work, but because its findings were very inconvenient to the Government of the day—and it was largely ignored by both left and right Governments for many, many years and there was no requirement for those Governments to respond—a lot of the time that good work just fell on deaf ears.

When you set up an establishment which says, “How do you improve productivity in the country?”, and we kind of know what the answer to that is, but the answer is very inconvenient to the kind of cheap imported labour and record untaxed housing speculation - based economy that we have—then the Government of the day is not necessarily going to be interested in doing what the Productivity Commission says, because that would be against the vested interests that support the Government in the first place.

So that is one of the disadvantages of the way that it was established. But on balance, now that we’ve seen the work that they’ve done over the years, we actually think that it would be a shame to disestablish the commission, because it does mean that there will be less research and informed debate on complex issues facing the country. In our mind, if you were just to look at it on its actual merits, we would suggest that there would be improvements to the legislation governing the Productivity Commission, such as a requirement on the Government to have to respond to its recommendations and to require Government agencies to respond to its recommendations.

So, in conclusion, the Green Party will be supporting the continued existence of the Productivity Commission—despite the fact that we opposed its establishment in the first place—because it wants to do all of the things that the people who established it don’t want to do. Thank you very much.

Thank you, Madam Speaker, and it’s great to speak in the House for the first time in 2024, although I had a supplementary question this afternoon—I don’t think that actually counts. But it’s great to be back.

I commend Minister Seymour for bringing this bill to the House. Actually, like him, I have huge respect for the original commissioner Murray Sherwin, and I think they did fantastic work. Unfortunately, the work that they did didn’t transfer into actions, and actions actually matter. Having a regulations ministry gets to the pointy end, the bit that makes the difference, the little bits that actually unblock the blockages and allow people to actually get on and be more productive. So it’s far better that that revenue be directed—because what we are talking about is directing tax revenue to the best use, and, in my view, the regulations ministry is a far better use than the Productivity Commission, so I commend this bill to the House.

Thank you, Madam Speaker. New Zealand First rises to support this New Zealand Productivity Commission Act Repeal Bill. Essentially, the Productivity Commission has become superfluous, replaced by the new ministry of regulation. I’d actually like to commend the Minister, the Hon David Seymour, for actually walking the talk. I think he’s been someone that’s been quite outspoken about the need to cut red tape, and this is really hard, detailed stuff. I think all New Zealanders would wish him well in getting to the bottom of a lot of this stuff. We have simply become a country that is incredibly good at writing reports and setting up working groups, but it has become impossible to get anything done. This is part of a suite of policies that the coalition Government is bringing forward. It’s complementary particularly, I think, to the fast-track consenting legislation that the Hon Shane Jones will be bringing forward. It’s a piece of the puzzle, and New Zealand First supports this bill. Thank you.

Hon Grant Robertson: Madam Speaker—because no one else seems interested—

Sorry, has there been a transfer?

Hon Grant Robertson: No, no; there wasn’t anyone taking the call.

Thank you, Madam Speaker, for the opportunity to speak to, as has been indicated, what is a very odd bill that has come forward. Mr Seymour described it as simple; I think it’s silly and sad. Mr Patterson, who just sat down, said that the ACT Party now believed the Productivity Commission was superfluous. Actually, that’s not what Mr Seymour said at all. There’s total confusion across the House as to why the Government has decided to bring a bill to the House to get rid of an organisation that was the brainchild of the ACT Party.

Unfortunately, I’ve been here long enough that I spoke in the first reading debate on the establishment. Mr Shaw is correct that his colleague—David Clendon, I believe it was—spoke quite eruditely in opposition to it. We supported it, at the time, on the grounds that we thought we could make it better while it was in operation—we probably had some idea that we were going to be in Government a bit quicker than what turned out to be the case. And so it survived as it did—in the words of Mr Shaw, as a “neo-liberal stalking horse”—for somewhat longer than we had thought it would.

But in all seriousness, the Productivity Commission has produced some important and useful reports. Mr Seymour himself began listing them off—again, a somewhat odd thing to do, when you’re about to disestablish the very organisation that produced them. I know in my time, when I was the Minister overseeing its work, the frontier firms report that it did is an excellent piece of work around how New Zealand can establish stronger export businesses, how we can make sure that we have a stronger role for Māori in our exporting and trade area. It did some really good work around innovation policy. In fact, the follow-up work it then did on that has led and influenced the last Government’s innovation policy. Similarly, around immigration, the report that the Productivity Commission did on immigration provided significant challenges to all sides of that debate, and that’s exactly the kind of thing the Productivity Commission was useful for.

We don’t have many organisations in our government system who have the specific mandate to step back, to look at the bigger picture, to ask the big questions. Day to day, most of our public servants spend their time on the short term, on the things that need to be done now. So actually having an organisation, albeit established in circumstances that might have been different from what I would have done, was really important. Now, was it perfect? No. I agree with Mr Shaw; I don’t think that the way it was set up helped in terms of the way recommendations were adopted. There is a lot that could be done.

I’ve heard Mr Seymour, in the media, say that he thinks the Productivity Commission had been politically hijacked. I, obviously, reject that. But if that’s what Mr Seymour thinks, there’s a really simple way of dealing with that: change the commissioners, and then carry on with the Productivity Commission. It’s an utterly bizarre position for Mr Seymour to take—that something established by his own political party that has produced reports that he himself has just told us were valuable, he now comes and says, “Oh, no—actually, just going to kill it off.” Now, he himself has said, “Well, this is all so that the money can be used for the ministry of regulation.”, which, in itself, if I want to add another layer of irony to this debate, is one of the great acts of centralisation in the history of Government: to try and bring all of the work on regulation that’s done across all of the ministries into one place. And we can come back to that, as Mr Shaw indicates, when that work is actually done.

So it is, for me—you know, I said it was silly and it was also sad. I do feel sad for the people who do the work at the Productivity Commission. There are some extremely bright and talented people there. I heard what Mr Seymour said about wanting to give them every opportunity to find their way into other parts of the public sector, but I also note the comments that Dr Duncan Webb has made about the fact that the bill brutally cancels their employment contracts without any say-so back. So, on this side of the House, we continue to support the work that the Productivity Commission has done. This is the direction that the Government wants to go in, but it seems to be a particularly bizarre act from David Seymour, and I just wonder whether Rodney Hide has followed in the line of Roger Douglas of disowning Mr Seymour. Perhaps this is Mr Seymour’s attempt to get back not only at Roger Douglas but also Rodney Hide. It’s a very strange bill. I look forward to debating it across the rest of the evening, but I simply don’t understand what the Government thinks it’s achieving here.

I support this bill. There’s no doubt that we need to increase productivity in this country. That means increasing our exports so we can strengthen our economy and afford the public services that we need. But that is not achieved by the Productivity Commission; it’s achieved by supporting our food producers and primary industries. I represent the food producing region of Tukituki. Hastings is the engine of horticulture in this country. In fact, our apple industry is the most productive in the world. Yet our growers have been restricted by regulation, compliance, and red tape. The best way we that we can improve productivity in this country is by reducing red tape and reducing regulation. We need to drive productivity by less regulation. This would be a better use of the resources and funding, so I commend this bill to the House.

Well, there’s clearly some confusion in the House tonight. We’ve heard David Seymour, the Minister responsible for this bill, describe the Productivity Commission’s advice as a taonga. He’s recognised its highly cited reports as assets for the whole country, and yet he is getting rid of it. My colleagues on this side of the House have already spoken on the irony of some of those changes, but I would just like to make the simple point that, surely, improving productivity to drive prosperity for all New Zealanders would be something everyone could agree on. And it seems like we are all in agreement that the Productivity Commission does excellent work to this end. So why is it that they are being disestablished?

One of the opportunities I had was to visit innovative businesses and scientists around the country when I was Minister for Research, Science and Innovation. The Productivity Commission did multiple pieces of work in this area, as my colleague Grant Robertson has already outlined, and there is so much opportunity for us to raise productivity in New Zealand that is unrealised. We have had pieces of work done that can create robotics for picking fruit, for example, that would mean that we would not be so dependent on the vagaries of international labour supply for doing that job. And yet industry has not been able to take that up. Now, I was lucky also in my role as Minister of Research, Science and Innovation to be able to visit a country that took that work seriously. I visited Singapore, where they had a programme, an $800 million multi-year programme, to improve the uptake of artificial intelligence (AI) by industry in order to improve productivity. They were doing things like reaching out to small business and building small businesses’ skills in artificial intelligence, as well as making sure they had world-class scientists to be able to help their big firms take up the latest opportunities in AI.

There is plenty of work to do in improving productivity, and yet it seems like this Government is closing the door on those opportunities for all of us. And if we’re to believe David Seymour’s rationale for why he’s doing this, he’s doing this so he can have a ministry of regulation. While my colleague James Shaw has made a contribution saying that isn’t the point, it’s about the only point we have to go on in this argument, so we’ll look into that. Well, it would be great if we had the opportunity, for example, as this ministry has intended to do, to look into regulatory impact statements. I’d love to see a regulatory impact statement on this bill. That would be fantastic—not to mention all of the other things that this Government is repealing, all of the legislation across health and across justice that is being repealed without a regulatory statement. It just shows the complete hypocrisy of this Government when it comes to making good regulation and that this is just a mere fig leaf for the fact that, as my colleague has said, David Seymour wants a little piece of the Public Service to call his own and something to lord over his predecessors.

The case has not been made for the removal of the Productivity Commission. There is no shortage of work to do to improve productivity. There is a number of good economists and other scientists who have done work in this area, and yet we see that while complimenting them the Minister is cruelly disestablishing their jobs. This remains an important area of work for our country to work on to make sure that there are opportunities for all New Zealanders to participate in the economy.

I can’t help but think that there’s some truth to the allegation that my colleague cited in the press about the politicisation of the Productivity Commission’s advice. I wonder if the Government is threatened by receiving reports that point to persistent inequality in our community as a sign of poor productivity and high housing prices as a barrier to everyone being able to participate fully in the economy. It does seem like there’s a fear of receiving advice, amongst this Government, that means that the sources of advice that are challenging, unpopular—but are actually what needs to be heard from time to time—are being disestablished. This bill will be no good for New Zealand, and I’m proud to have had the opportunity to speak against it tonight.