Cunliffe David: New Zealand Productivity Commission Bill — First Reading 
Cunliffe David: New Zealand Productivity Commission Bill — First Reading 
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Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to support the New Zealand Productivity Commission Bill being referred to a select committee pending further revisions as a result of the select committee process to broaden the mandate of the bill and to bring it further into line with the Australian Productivity Commission. 
This is a Government bill. The establishment of a Productivity Commission was part of the confidence and supply agreement with ACT and I acknowledge from the outset the healthy consultation that has occurred with the Minister for Regulatory Reform the Hon Rodney Hide and through him with the Minister of Finance the Hon Bill English. I commend the leadership of my colleague the Hon Lianne Dalziel who spoke earlier. She has significant experience in this area and has made a major contribution already to the evolution of thinking. 
In my brief remarks today I will recap on the areas on which there is substantial bipartisan agreement: the issue of productivity and the need for a Productivity Commission. I will then outline some of the areas where we need to do a little more work to establish consensus that would enable the Opposition to support the bill at its second and third readings. 
Let me begin at the highest level by saying that the Labour Opposition fully agrees with Government parties that productivity is an absolutely crucial issue to take New Zealand forward. No economically literate person could disagree with the proposition that productivity is over time one of the most crucial drivers of our economic performance. The second point that I think we agree upon is the concept of having a Productivity Commission that is well resourced that brings together some of the best academic brains and business experience that is well staffed that is empowered to take a long-term view that has a strategic perspective and in so doing is above day-to-day politics. I think there is broad agreement around the House that that would be an extremely welcome addition to the country’s economic architecture and would potentially be in the public interest which is potentially a very good thing. Labour stresses the importance of the breadth of the mandate the long-term strategic view the independence of the Productivity Commission from the Government of the day and importantly the fact that it must be able to work from a full and proper definition of productivity. 
I will now speak about some areas where I think there remains work to be done to establish agreement. At the most fundamental level I believe consensus turns upon the respective definitions of productivity that are employed across the House. The classical definition which I think the Minister and I would agree comes from the old Economics 101 or 102 Cobb-Douglas production function for the aficionados there is that productivity is a function— 
Aaron Gilmore 
: That’s priceless. 
Hon DAVID CUNLIFFE 
: I thank Mr Gilmore; I am glad someone remembers it. Aaron wrote it; sorry. Mr Assistant Speaker I withdraw and apologise for an omission. It was the “Cobb-Douglas-Gilmore” production function so ably associated with the Hon Tim Groser who wrote the first corollary to it. We appreciate the esteemed input of those giants upon whose shoulders the Government now stands. But I come back to the point. Cobb-Douglas says that productivity is a function of capital skills which lead to a thing called multi-factor productivity and technology. In other words a broad and holistic view is required. The New Zealand Treasury—and the Ministry of Economic Development on a good day—agrees with that and extends the definition to include entrepreneurship and the use of natural resources which is particularly important for an agriculture-based economy like New Zealand. We think that that is perfectly fair reasonable and sensible and that there is now a literature that goes back a long way that has a strong evidential base which can allow us to have a good evidence-based bipartisan discussion about what is good for New Zealand. 
The same broad conception is exactly what underlies the Australian Productivity Commission. The Hon Lianne Dalziel read from the Australian Productivity Commission legislation and I will again quote from the commission’s legislative instructions: “Improve the productivity and economic performance of the economy; reduce unnecessary regulation; encourage the development of efficient and competitive Australian industries;”—so it has an industry focus—“facilitate adjustment to structural change; recognise the interests of the community; promote regional employment and development; have regard to Australia’s international commitments; and ensure Australian industry develops in ecologically sustainable ways.” That is big-picture thinking and it reflects the full range of the factors that are internalised in the “Cobb-Douglas-Gilmore” production function. 
I cannot help but point out that that stands in sharp contrast to the opening speech made by the Minister in charge of the bill Bill English. He talked about three functions of the commission. I lament the fact that all three were couched in terms of deregulation. The concept of regulation and deregulation is a bit like having a hedge. We need a hedge to keep the barbarians out or down sometimes but we want to prune the hedge so that it does not overgrow the garden. That is regulation in a nutshell. We agree with the fact that we have to keep pruning the hedge; otherwise the good old Civil Service has a tendency to add layers. That is bipartisan. But it is not bipartisan to take that a step further get the balance wrong and say that the primary—let alone entire—function of a Productivity Commission is to be some kind of razor gang against red tape in disguise. 
I note that the ACT Party was not able to get its regulatory razor gang up in another context. I believe well enough of the Minister Rodney Hide. I am prepared to give him the benefit of the doubt. I am prepared to go into this process with my colleagues believing that he has an open mind that he will read the literature that he will listen to the submissions as will Bill English and that this Parliament working together for the good of New Zealanders will come up with a commission and legislation that is above day-to-day politics that puts the long-term national interests first that picks the best out of the Australian model and that takes the best lessons from the literature including the third volume of thoughts according to Aaron Gilmore or Lord Maynard Keynes. I get the two mixed up. I think it was volume 3 of Gilmore. I believe we must do this outreach— 
Phil Twyford 
: Keynes was better looking. 
Hon DAVID CUNLIFFE 
: Keynes was better looking but Gilmore was more famous. We are truly honoured that he has sought to grace this Chamber with his presence today for this debate. 
I say to “Sir Aaron” as no doubt he will soon be known to all that we appreciate his condescension to come to the House on this matter and regret only that his colleague “Sir Timothy” is not able to similarly grace the Chamber today— 
Aaron Gilmore 
: I’m absorbing his presence. 
Hon DAVID CUNLIFFE 
: —but I know that “Sir Aaron” speaks for both and that he taught him everything that he once knew. 
In summing up I point out that this potentially is a very important step forward for New Zealand. Those listening at home will note that there is a degree of levity and good humour in the House because MPs contrary to public opinion enjoy the opportunity to agree with each other on some things. We are not hired killers. We do not come to Wellington simply to run each other down. Across the House we do want to put the national interest first and do what is right for New Zealand but sometimes we disagree about how to get there. 
Here is the opportunity for Parliament to agree on something that is bigger than politics. We are three-quarters of the way there already. We agree on the nature of the problem we agree on most of the definition of productivity we agree on the potential advantages of having a bipartisan or multipartisan enduring commission that rises above the day to day and can do the mahi which is good news. All that we have to agree on now essentially is the balance between the functions of the commission. I am prepared to go into the select committee with my colleagues believing that wisdom will prevail that we will hear from submissioners in a democratic process and that the Government will go to Cabinet with an open mind willing to listen to those submissions. 
But I offer this word of caution to the Government: if this is not that good-faith process if the consultation that we have valued is not honoured by a fair and balanced assessment of those submissions and if Cabinet does not listen to the best of the literature and the best of those submissions and show good faith on further revisions then the Opposition will more in sadness than in anger not be able to support this bill through to the second and third readings. Like my colleague I hope that will not be the case. I hope that we can reach out across the Chamber and do something that is patently good for New Zealand and put the national interest ahead of politics. Thank you.