Nash Stuart: New Zealand Productivity Commission Bill — Second Reading 
Nash Stuart: New Zealand Productivity Commission Bill — Second Reading 
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STUART NASH (Labour) 
: 
 That speech was wonderful! 
Sandra Goudie 
: She doesn’t mince words. 
STUART NASH 
: The previous speaker does not mince words and there were very few words there to mince. 
I stand in support of the New Zealand Productivity Commission Bill and there are two points I would like to make. The first one and I will make sure it lasts more than 90 seconds because I do have a little bit to say on this is the importance of an increase in productivity—the importance of productivity growth in driving the economy. The second thing I will do is have a little look at the Government’s track record in driving productivity. We hear these words. We have just heard what the Australian Productivity Commission has done. First what has this National Government done in education? It has cut education; second the Government’s increase in GST has disenfranchised the elderly; and third the Government has cut services to the disability sector. But that is just a taste of what is to come. 
Katrina Shanks 
: What planet are you on? 
STUART NASH 
: A different one from that member I am afraid. I am on planet reality. 
Who would not support having a Productivity Commission? Anyone who understands economic growth would support having an economic Productivity Commission. But what are we talking about? When it comes to productivity growth we are talking about productivity but what does it actually mean? Productivity growth is a crucial source of growth in living standards. Productivity growth means more value is added in production and that means more income is available to be distributed—not just to those 650 New Zealanders who earn over a million dollars a year who have just received $1000 a week in tax cuts whereas someone on the median wage receives less than $5 a week. That is not productivity; that is regression and it takes the country backwards. 
If we are talking about productivity at the firm or industry level the benefits of productivity growth can be distributed in a number of different ways. They can be distributed to the workforce through better wages and conditions; that would be good. Imagine giving the workers better conditions. I know that is a foreign concept to members on that side of the House. They can be distributed to shareholders and superannuation funds through increased profits and dividend distributions. Imagine it being distributed to superannuation funds—that is anathema to members on that side of the House. Imagine the benefits being delivered to customers through lower prices—that does not mean increasing GST—to the environment through more stringent environmental protection and to the Government through increases in tax payments which of course can be used to fund social and environmental programmes. All those five things I have mentioned the Government has cut—amazing! 
Productivity growth is important to a company because it means that it can meet its growing obligations to workers to shareholders and to Governments through taxes and regulations and still remain competitive—still remain competitive—or even improve its competitiveness in the market place. Competitive advantage is vital to the growth of the New Zealand economy. What have we seen? We have seen business tax receipts drop by 23 percent over the last quarter. We are talking about a Productivity Commission that will drive competitiveness by a Government that has seen our business competitiveness drop significantly. 
There are essentially two ways to promote growth in output. We either bring additional inputs into production or increase productivity. Adding more inputs will not increase the income earned per unit of input unless increasing returns are discovered but that is a different argument. In fact it is likely to mean lower average wages and lower rates of profit. But when there is productivity growth even the existing commitment of resources generated more output and income—income generated per unit of input increases. Additional resources are also attracted into production and can be profitably employed. 
At a national level productivity growth raises living standards because more real income improves people’s ability to purchase goods and services whether they are necessities or luxuries. They can enjoy leisure improved housing and education and contribute to social and environmental programmes. These are all positive outputs of productivity growth. Productivity is not everything but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise output per worker. 
Let me give members an example. In America World War II veterans came home to an economy that doubled its productivity over the next 25 years. As a result they found themselves achieving living standards that their parents never imagined. Viet Nam veterans returned home to an economy that raised its productivity less that 10 percent in 15 years. As a result they found themselves living no better and in many cases worse than their parents. 
Our own Department of Labour has a special productivity section on its website. It states: “workplace productivity is the key to lifting New Zealand’s living standards and wealth. It is about increasing the value of what we produce by working in more effective and efficient ways.” But now let us inject a dose of reality. The New Zealand Institute’s latest publication is called  
A goal is not a strategy: Focusing efforts to improve New Zealand’s prosperity. 
 That is an interesting name. Well it refers to the fact that the Government’s goal of catching up to Australia is not a strategy to increase labour productivity. Let me outline what the report actually says. 
Katrina Shanks 
: Please do. 
STUART NASH 
: OK I will for that member—I will. The report states that in regards to improving productivity there are basically five things that the country needs to do to increase productivity. It needs to increase entrepreneurship. Hold a second—but this Government has cut funding to education mainly adult and community education from where entrepreneurship comes. The second one is innovation. Innovation is hugely important. The report states: “innovation effectiveness is the principal determinant of labour productivity and GDP per capita for advanced economies like New Zealand.” This Government cut the research and development tax credit. In fact I think it was the first act this Government did. It cut the research and development tax credit. 
David Shearer 
: Guess what Australia’s done. 
STUART NASH 
: What has Australia done? 
David Shearer 
: They have introduced New Zealand’s tax credits. 
STUART NASH 
: They have introduced New Zealand’s tax credits. The second one is skills and talent. Yet what are we doing to our education system? The third one is investment. What have we done to the New Zealand Superannuation Fund—the Cullen fund? We have stopped contributions. A goal is not a strategy. 
Jonathan Young 
: Come on that was only three. You said six. 
STUART NASH 
: That was five. This document outlines what the Government needs to do in every pillar in increasing productivity. But that Government has in some way shape or form pulled down destroyed withdrawn funding from or just got rid of it. It is an absolute travesty. 
Hon Rodney Hide 
: A what? 
STUART NASH 
: A travesty. This Government formed a sort of forerunner to the Productivity Commission. It was called the 2025 Taskforce. I would like to outline a couple of the ideas mooted in its first report. It is probably worth noting that Dr Don Brash headed that commission. He suggested a limitation on some universal benefits. These included industry loans and subsidies for early childhood education. He wanted to get rid of those. Secondly he recommended that the Government reduce operational spending to 29 percent of gross domestic product by 2012-13 or slash and burn. The third thing he recommended was using the New Zealand Superannuation Fund to pay back borrowing and changing the age of entitlement. Changing the age of entitlement means increasing the retirement age. Mr Key said: “We campaigned on some core commitments and we’ll be breaking those commitments if we did that so we’re not going to.” Well he said that about increasing GST and he did it. 
A Productivity Commission needs more than words. Words do not provide money for companies involved in innovation. Words do not train entrepreneurs to be skilled managers and leaders. Words will not get our businesses trading overseas. Kooky ideas like the majority of those of the Productivity Commission will do nothing to increase productivity. A goal is not a strategy. I am hoping that the commission will breathe life into productivity but I will not be holding my breath. 
I support this bill because I support the idea of a Productivity Commission. I support the idea of a commission that works along the same lines as the Australian Productivity Commission but I am fearful that the measures—this just annoys me; it makes my blood boil—that this Government has instigated will make no difference whatsoever.