Clendon David: New Zealand Productivity Commission Bill — In Committee Third Reading 
Text is incorporated into the Bound Volume 
Clendon David: New Zealand Productivity Commission Bill — In Committee Third Reading 
[Sitting date: 09 December 2010. Volume:669;Page:16374. Text is incorporated into the Bound Volume.] 
DAVID CLENDON (Green) 
: 
 Kia ora koutou. I must say it is a pleasure to speak to such a full House this evening and some could unkindly suggest that such a good turn-out from Government members suggests they might have too few opportunities for entertainment on a Saturday night and too little else to do with their lives. But I am sure that that is not the case. 
The New Zealand Productivity Commission Bill is a bill that the Green Party would have liked to support but there are two compelling reasons why we could not. One of those was that the bill particularly in its original drafting was clearly intended to be a tool of the Minister of Finance a creature of the Minister. It was clear from the language about the direction or the frame of the terms of reference that the notion of independence would have not been real. To be fair the bill has improved in that regard considerably. 
For the second and I think compelling reason not to support this bill one can reflect on the last contribution from the chair of the Commerce Committee Lianne Dalziel. In 10 minutes she gave a very succinct and very powerful analysis of many of the reasons for low productivity in this country. The reality is that we actually know the reasons and we know the problems and we also have a handle on some of the potential solutions so arguably the last thing we need is another Government body to do research. That might be a useful addition at some point but there are a great many things we could do in the meantime that do not require $5 million a year 25 public servants and extended investigations to do. 
It has been noted that there is some irony in the fact that the solution to the perceived problem of lack of productivity has been a legislative—or indeed a bureaucratic—solution to what is seen as an economic or social problem. It is just ironic that that has come from the party that is so overtly the party of pro-business anti-Government one might say. 
One of our major concerns with the wording and content of the bill is the lack of prescription about what the Productivity Commission ought to do. That is a two-edged sword. The lack of prescription the very broad-brush statements about the purpose and capacity of the commission could be a form of freedom and it could indeed create an opportunity for the commission to do wide work across a wide range of topics and a wide range of communities; it could do a great deal of innovative and creative work. But in the absence of any requirement for it to do that the very breadth of those statements the very breadth of the purpose could equally as well make this commission the creature of the Minister. 
Nowhere in the bill unlike in the Australian example—and we have heard a great deal about the extent to which this commission and this legislation is modelled on the Australian example—do we see reference to regional development. Critically we see nothing about ecological sustainability which is one of the requirements in front of the Australian Productivity Commission. There are statements in the Australian legislation that talk about overcoming indigenous disadvantage about ecological sustainability and about promoting the understanding of issues bearing on community living standards. 
Those are serious and major issues which could as well be confronted and dealt with in New Zealand as the Australian commission is required to deal with them. It would be a very brave and a very well-resourced commission that would undertake investigation into something like overcoming indigenous disadvantage in New Zealand. It would require significant resources. It would require the blessing of the Minister at least. We feel very strongly that in the realpolitik world no such mandate would be given no such capacity would be allowed to the commission to do that necessary and useful work. 
It is interesting that there is no definition of productivity in the bill and we know that that word is amenable to a whole range of definitions. In the briefing papers made available to the select committee there was a notion that productivity was intended to be defined broadly to capture effectiveness efficiency and innovation. Clearly innovation is a critical factor in turning round our economy in creating more well-being and in getting some sustainable growth. Productivity is one of the issues that will inform that. Innovation can come from large organisations. It very often comes from quite small very tight well-driven and well-managed organisations. There are lots of examples of it within the small-business enterprise sector. 
John Hayes 
: Get on with it. 
DAVID CLENDON 
: I tell Mr Hayes that 10 minutes has been allotted. I understand his enthusiasm to leave but I ask him to please bear with me. 
There are some inspired tinkerers in this country. We have the likes of Mr John Britten the late-lamented Mr Britten. There have been numerous examples where very talented individuals have created opportunities have created work and have created benefits in this country. 
In talking about the need for the commission it is interesting to reflect on some of the statistics about labour productivity that came from Statistics New Zealand earlier this year. It is interesting to note that between 1986 and 2008 New Zealand’s labour productivity overall grew faster than Australia’s to the extent that New Zealand over that time saw something like 2.5 percent growth in labour productivity whereas in Australia it was 2.1 percent. 
When one drills down into those numbers a little one finds the trap of “averaging” of course. We know that New Zealand’s productivity grew 3.2 percent a year compared with Australia’s 2 percent between 1986 and 1996. The situation reversed somewhat from 1996 to 2008 where New Zealand’s labour productivity dropped to 1.9 percent and grew in Australia to some 2.3 percent. We can engage with some of the potential explanations for that turn-round and they have been touched on earlier this evening—for example the fact that in the 1980s we saw massive unemployment emerge in this country. That is one way to increase productivity but it is not a useful way it is not a sustainable way and it is not a way we ought to emulate or go back to. 
Peter Maire former chief executive of Navman one of New Zealand’s major technology company successes has identified the value of and the fact that the old Public Service the old much-maligned Public Service actually had a major role in providing skills for the economy. A great many of the people we now find working on superyachts and in the manufacture of high-quality superyachts in New Zealand owe their basic training to the Navy. There are still people in senior positions in Telecom in Gen-i who did their basic training with the old Post Office. Nowhere in our economy have we got those same large-scale training grounds. That is leading to a fall-off in our skills base especially in the technology area. 
In the 1990s in New Zealand—about the point that the relative growth in productivity changed between New Zealand and Australia—there was a deliberate and sustained effort to drive down incomes in New Zealand to cut salaries wages and benefits. At the same time Australia invested heavily in labour programmes and in easing out and building strength into the economy in a way that did not happen in New Zealand. 
I have made the point that we know what some of the solutions to the problem are already. We do not need long-winded investigations. At this point it is hard to see the necessity to establish an organisation that is dedicated to finding out what the problem is. We already know what many of the problems are. Under-investment in research is a major difficulty in this country. We continue to be burdened. Our education sector has a millstone around its neck which is called the Performance-based Research Fund. It rewards academics who do research that can get published in esoteric international journals but it positively punishes academics who do work that is of practical value here in New Zealand. Academics who undertake practical grounded research that informs practice in New Zealand are not rewarded whilst academics who do esoteric research get published in a journal that may be read by 20 people around the world—that is being rewarded in a way that other things are not. 
I will comment briefly on the appointment of the chair of the commission. We do wonder why the Government would appoint a chair before the legislation has been passed. That man has a long and honourable career; he has a 35-year career in the Public Service. But one wonders why the Government would put at the head of a commission that will require new thinking innovation and engagement critically with the private sector and with the business sector a person who is heading towards the end of his career with 35 years in the Reserve Bank Treasury and briefly in the Ministry of Agriculture and Forestry. Where is the skill set that will develop a culture of innovation of challenge? Because that critically is what a Productivity Commissioner will need. It will need someone who will push the boundaries—who will break the boundaries. With all due respect to a long and honourable career in the Public Service that is not where I would have gone searching for such a leader. For those many reasons we will not support the bill.