Parker David: New Zealand Productivity Commission Bill — First Reading 
Parker David: New Zealand Productivity Commission Bill — First Reading 
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Hon DAVID PARKER (Labour) 
: 
 I rise on behalf of Labour. As earlier speakers have said we are supporting the referral of the New Zealand Productivity Commission Bill to the select committee. Before dealing with some of the issues that arise from it I will respond to one of the comments made by the previous speaker Jo Goodhew who asserted to this House that one of the things that went wrong in the last decade was an increase in borrowing. What a short memory she has. If that is the level of intellect that is going into the establishment of the detail of the Productivity Commission it really does not portend well for its future. The reality is that the previous Government reduced gross Government debt from 38 percent of GDP to 17 percent of GDP and net debt once we took into account savings through the likes of the Cullen fund was virtually zero. 
Of course that is the stand-out difference between the economic performance of New Zealand and that of countries like Japan the United States Great Britain Greece Portugal and Spain. All of those countries have high Government debt and as a consequence they have very little room to move in terms of what their Governments can do compared with New Zealand. The National Government inherited a position of low debt not high debt. So I say to Ms Goodhew that she was just wrong when she made that assertion. 
Parliament agrees on just about all sides that we need to improve our productivity output in New Zealand in order to improve the well-being of New Zealanders and fund the sorts of services that we think Governments should fund in terms of education health superannuation and the like. If I have a concern about the way in which the Productivity Commission may turn out it is that it will be focused unduly on deregulation. The Minister Bill English primarily talked about deregulation. I heard Rodney Hide comment that it will “begin modestly” using his words. I think that might be a code for there being an undue focus on deregulation. If the Productivity Commission is to work it must have a function that goes beyond deregulation. I really urge the Government to have a broader focus. 
I think it is absolutely clear that the Government needs some help in terms of building productivity because it has made some bloomers so far. It has certainly made some terrible mistakes. 
David Bennett 
: Get a life mate. 
Hon DAVID PARKER 
: Well we hear criticisms again from David Bennett saying that is not so. Well I ask him whether he thinks that the Australian Productivity Commission would have stood and commended National for reducing savings in New Zealand by cutting KiwiSaver at the very time that the Australian Government has been increasing savings in Australia. Currently 9 percent of gross salary or wages is saved in compulsory savings in Australia and that is going up to 12 percent. The Australian Government says it has an effective Productivity Commission and that move has certainly not been criticised by the Productivity Commission itself. But what did the National Government do here? It cut KiwiSaver contributions. What did it do in terms of public sector savings? It stopped making contributions to what colloquially used to be called the Cullen fund which could now be called the English fund because it is getting so small in terms of contributions. In terms of savings this Government has made some wrong moves. Let us hope that if it gets from advice from a Productivity Commission it will do better on that front. 
If we look at where else the Government is going wrong we see it is really focusing on an extractive economy. The National Government is focused on extractive industries be it agriculture which extracts value from the land or mineral extraction. Both of those industries are very important to New Zealand and I am not decrying their importance. But New Zealand will not approach the wealth of Australia or that of other more successful developed nations on the back of farming or extractive industries. Indeed it pains me to reflect on the fact that the first 18 months of this Government’s economic agenda have been so much focused on increasing mining in national parks and the like. According to the Prime Minister in his statement to Parliament at the start of this year mining was to be an important part of the economic step change for this country. It is absolutely plain that the Minister for Economic Development Gerry Brownlee saw mining as his cornerstone policy. Just this week we have seen that ambition dissolve. The Government has resiled completely from mining in national parks. That is a good decision because it was never going to make the major step change that is needed. It was inappropriate in any event as national parks should not be mined. However it shows that the Government does not have any plan as to how it will increase New Zealand’s productivity in a way that bridges the gap between New Zealand and Australia. 
I want to come back to that gap because we heard Rodney Hide make reference to it in his speech. The problem is that other than the mantra that we had at the time of the election that National would bridge the gap with Australia by 2025 we have had no deliverables and no articulation or specificity as to how we are to measure progress towards that goal. In fact Gerry Brownlee went so far as to say in Parliament this week that it is no longer a goal; it is just an aspiration. We had him at a select committee recently saying the Government had no subset by which it could be held accountable as to whether it was achieving that goal. We all know that by 2025 Gerry Brownlee will not be here and Bill English will not be here. I have no plan to be here; I do not think many of us plan to be here by 2025. 
Hon John Carter 
: Some of us do. 
Hon DAVID PARKER 
: Well what a sad life Mr Carter from Northland must have if he plans to be here in 2025—and it would be sadder still for the country. The reality is that the Government has no subset of that 2025 goal by which it can be held accountable. We have nothing to judge the rhetoric against. Maybe the Productivity Commission if well designed will provide a bit of input into the Government and at last give it some direction. Certainly the Government has none of its own. 
I have talked about some of the mistakes that have been made with regard to savings and an over-reliance on extractive industries. It is clear that we have to build productivity in our other export industries. Again I contrast what Australia has done under its Productivity Commission which ours is said to be modelled on with what the Government has already done. Australia has a research and development tax credit. It has long had a research and development tax credit in addition to savings to encourage depth in capital markets and therefore more money being available to businesses to borrow and spend on increasingly productive plant and equipment. Australia can do more of that because it has good savings. In addition to that it encourages businesses to take advantage of those savings and the availability of capital through a research and development tax credit. 
What did the current Government in New Zealand a National Government do after it took office? It did the opposite of what Australia does to improve research and development expenditure—to increase the sort of expenditure that improves productivity over time. The National Government went in the opposite direction of that and it removed the research and development tax credit that was legislated for by us pretending instead that we are better to just have tax cuts weighted to those who are already the more wealthy people in society as a substitute for a tax credit. If that was the answer why is that not the answer in Australia the economy of which has patently performed better than New Zealand’s recently? The Government abolished the research and development tax credit and has replaced it in the latest Budget with a sort of voucher-based system that goes some of the way but not nearly far enough. 
The other thing that the Government has done—and I am pointing out all of these things because it seems to me that the rhetoric of the Government about wanting to improve productivity flies in the face of common sense in a lot of areas—in the latest Budget is to cut the depreciation allowances for investments in short-lived assets. Short-lived assets are things like computers which we need to have for increasingly sophisticated service industries and productive industries. The Government reduced the rate of depreciation that a business can claim in respect of those short-lived assets. Again to me that measure seems to go in exactly the opposite direction of that which Australia pursues through its Productivity Commission. If I have a suspicion here—and we are embarking on this journey and voting for this bill at its first reading and we do want to see something put in place that is enduring if it can be agreed— 
Mr DEPUTY SPEAKER 
: I am sorry to interrupt the honourable member but his time has expired.