Dalziel Lianne: New Zealand Productivity Commission Bill — In Committee Third Reading 
Text is incorporated into the Bound Volume 
Dalziel Lianne: New Zealand Productivity Commission Bill — In Committee Third Reading 
[Sitting date: 09 December 2010. Volume:669;Page:16369. Text is incorporated into the Bound Volume.] 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 Labour will be supporting the passage of the New Zealand Productivity Commission Bill. We sought to make amendments to it during the Committee stage but they were not supported by the Government. I still believe that they would have strengthened the legislation but so be it—you win some you lose some. What I want to do is focus on an important aspect of this law that the Minister of the Local Government just referred to in his address where his comments almost exclusively focused on the role of workplace productivity. 
I refer back to a joint paper that Business New Zealand and the New Zealand Council of Trade Unions put together on productivity under the previous Government. Under our Government they worked together in a social partnership. They worked in a triumvirate way with the Government. We had the Government at the table we had Business New Zealand and we had the Council of Trade Unions representing the workforce. That triangle approach was a very strong approach because it provided protection for those who work within an industry from the kinds of excesses that we saw in the 1980s and in the 1990s—so I will not reflect on Governments of any particular colour in this regard. It is very easy to think that productivity improvements can be imposed by cutting the cost of production through making the workers carry that cost. That was the experience of both the 1980s and the 1990s and I do not think New Zealand has ever fully recovered from the serious impact that the Employment Contracts Act had on our workforce. 
I will refer to the joint paper where we had Business New Zealand working with the Council of Trade Unions on the definition of workplace productivity and on the issues that accompany it which are infrastructure and education and skills. We cannot get improvements to workplace productivity without talking about the lot. They all go together hand in hand. This is what that paper said. It stated: “At a macro level debates about productivity inevitably weave into the overall drivers for economic growth and therefore include tax inflation capital formation population global connectedness adequacy of infrastructure size of workforce relative to population amount of capital goods relative to the workforce degree of competitiveness research and development incentives as well as the importance of education and innovation.” That is the macro-level perspective. “There is a need to build a consensus around how to grow tomorrow’s jobs based on investment in skill technology and good workplace relations to create high wage employment producing quality goods and services.” That is why I moved in the Committee stage that we change the purpose of the commission to look specifically at boosting productivity on a sustained basis in order to support the overall well-being of New Zealanders through the development of a high-wage high-skill sustainable economy. 
What those organisations highlighted as critical among these issues were “The relative contributions of physical capital financial capital human capital and total factor productivity (or multifactor productivity);”—and that is the one element that the Minister chose to address in his comments. But there are also “Particular capacity issues on infrastructural enablers—physical capital investment in power/energy waste water broadband transport etc;”—those sorts of physical infrastructural enablers as they describe them. “Drivers of high quality physical capital investment at enterprise level;”—and of course we know that productivity improvements can be found through capital investment as well. “The contribution of ICT; Lags between technological progress and productivity increases; Learning across boundaries—networks and clusters;”—that is businesses operating together regions operating together and industries operating together. “Knowledge generation diffusion and adoption in the production of valued commodities; Gaining a critical mass of skills; Literacy and numeracy; Worker scepticism towards productivity proposals based on their experiences;”. Anyone who lived through the 1990s will know perfectly well what that period meant by way of productivity improvement. They paid the price. They paid the price in lower wages. 
Grant Robertson 
: The wage gap extended out as well. 
Hon LIANNE DALZIEL 
: When did the wage gap extend between Australia and New Zealand my colleague chips me to ask. It happened in the 1990s. Comparative wages between Australia and New Zealand were almost identical at the end of the 1980s. The 1990s were the period that produced the gap. Who was it who said that we could bring that gap down? Well I think the Government engaged Don Brash in a 2025 Taskforce. Did members know that he is so productive that he spent 3 years of his salary in 1 year? That is pretty amazing. The Government set aside a certain amount to fund his salary as the head of the 2025 Taskforce and he managed to spend it all in 12 months. Well that is very productive from his point of view but no one else’s. 
The next question is immigration policy and practice and we all know that that is directly relevant. The there is “Measuring productivity in the service sector …”. That is a serious challenge. How do we measure a teacher’s output compared with that of a dairy worker for example? They are difficult questions but all of these issues were put on the table by the Council of Trade Unions and Business New Zealand when they were working collaboratively with our Government. 
Next are “Productivity and the level and type of employment; The role of intermediate inputs (materials business services leased capital); Links between R&D and commercialisation;”. What did this Government do to research and development in this country? It completely gutted it. It took away the research and development tax credit that Labour had provided and it also destroyed the Fast Forward fund which would have seen some major productivity gains in our primary sectors. 
Next are “The role of institutions; The role of unions; Management styles; Organisational structure; Attitudes to business success and failure; Cyclical factors; Cultural factors; Distribution of productivity gains; The role of social development; and Robustness of assumptions in models.” The point is that the Government simply has not been prepared to listen to the combined voice of Business New Zealand and the Council of Trade Unions because it has this absolute shuttered view of the engagement that is required in order to bring about these changes. 
I put forward three amendments. One was about the definition of well-being being extended into the wider area of equity and another was seeing the Productivity Commission as the portal through which anyone can enter the productivity realm from the micro level to the macro level. I thought the Government would have seen that as a major advantage rather than as a disadvantage. And the final one was to embed those principles of social partnership into the work of the Productivity Commission. I was criticised for the amendments on the basis that they sought to narrow the focus of the commission. But in fact it was the opposite. I sought to ensure that the importance of the workplace was not lost. I have a real fear that the Government only speaks to it and that it never ever is able to deliver on it because it just cannot let go of its old-fashioned view of what is an important part of the equation which is the workplace. 
Process is important. I turn to the process of the appointments so far. There has been only one appointment to this commission. Before the legislation has even gone through we already have a chair-designate of the Productivity Commission. That process does not engender confidence on this side of the House. I will not comment on the individual himself but he is not somebody I personally would have chosen. I hope the remainder of the appointments do ensure balance and reflect that concept of social partnership because I believe that it is absolutely critical to the success of the Productivity Commission. But to receive a letter on a Thursday telling us that the Government will announce an appointment on the following Tuesday is simply intolerable and does not reflect very well on the Government’s process. 
Finally I again place on record my thanks to Gary Banks for travelling to New Zealand and for providing such a good analysis for us to consider of how the Australian Productivity Commission has developed into an independent authoritative voice on productivity. I think his ongoing support and offer of cooperation across the ditch is very welcome and it is welcome on both sides of the House. When Labour is in Government we will take him up on his offer and we will ensure that the New Zealand Productivity Commission works as collaboratively as possible with the Australian Productivity Commission. I still believe that it will be possible to merge the two operations at some point.