State sector productivity

The Productivity Commission has completed its inquiry into state sector productivity and produced two final reports – one focused on measuring productivity, the other on improving public sector productivity.

The inquiry

The Government asked the Commission to provide guidance and recommendations on measuring and improving productivity in public services, especially education, health, justice and social services.

The Commission interviewed multiple current and former senior state sector leaders, carried out case studies to demonstrate how to measure productivity in public services, and commissioned research to better understand how innovation (which is the engine of productivity improvement) occurs and spreads in public services.

What did the inquiry find?

  • State sector productivity isn’t regularly measured because there is little demand from state sector leaders for measurement, therefore little effort is put into building the capability to measure
  • Budget and performance management processes don’t reward productivity improvement
  • There are some promising developments, particularly in the use of data and evidence to better understand the effectiveness of programmes
  • Innovation is the key to improving productivity but state sector organisations often lack the characteristics that encourage innovation

What needs to be done now?

  • Treasury, State Services Commission, ministers and government agency chief executives all have roles to play in:

              -  setting clearer expectations for productivity gain

              -  building capability to measure

              -  reporting on core public service efficiency

              -  raising the bar on the quality of new spending proposals in the budget

              -  funding results and outcomes rather than inputs

  • The state sector needs to build agencies’ capability to measure productivity

Final reports

The two inquiry reports measuring state sector productivity and improving state sector productivity have been presented to the Government and we look forward to the response.

Please see below for useful documents available to download, including the final reports, Cut to the Chase 4-page summary, A3 summary and case studies.


An independent evaluation of the Commission’s performance has been undertaken to understand whether the inquiry had the right focus, the right process, whether the engagement and delivery of message was effective, and analysis, findings and recommendations were of high quality. The evaluation results are available to download - independent expert review, focus group and participant survey.

Government response

The Government has provided its response to the reports - read the Government's response here.