The Rise of Productivity Commissions

In a paper by Dirk Pilat, The Rise of Pro-Productivity Institutions: A Review of Analysis and Policy Recommendations, the Commission is highlighted as one of several commissions that "do not take a narrow view of their mandate and are willing and able to tackle a wide variety of factors and policies that may affect productivity,".

The New Zealand Productivity Commission is one of ten national productivity commissions included in the paper published by The Productivity Institute, a UK-wide research organisation that explores what productivity means for businesses, workers, and communities, how it is measured, and the contribution it makes to increased living standards and wellbeing.

There are 20 productivity commissions operating across the OECD area. This paper reviews what productivity commissions in Australia, Belgium, Denmark, Finland, France, Germany, Ireland, Netherlands, New Zealand, and Portugal have found on the drivers and policies that affect productivity.  The paper also makes some comparisons with the work of the UK Productivity Commission.

Findings in the paper include:

• The set-up of these commissions differs considerably, including mandates, degree of independence, composition (academic, multi-stakeholder or government), reporting, and available resources; all of which affect their role in national policy.
• Their effectiveness is also influenced by the commitment of the government to support their work, and its capacity to review and implement the policy recommendations made.
• Analytical and policy work is quite similar, partly reflected by common challenges – a slowdown in productivity growth, the Covid-19 pandemic, digitisation and structural change, as well as a shared understanding of the main drivers of productivity.

While the commissions reviewed in Pilat’s paper have explored a wide range of issues, there were some key gaps in their work – the impact of climate change, the role of key intermediate inputs, productivity and wellbeing, and productivity of the public sector.

The New Zealand Commission was noted as one of only two commissions that have addressed the topic of productivity of the public sector. This was covered in our 2015 inquiry More Effective Social Services, which examined how commissioning and purchasing influence the quality and effectiveness of social services, and suggests ways to improve these practices to achieve better outcomes for the wellbeing of New Zealanders

Alongside this, the commission was one of only three commissions that had examined the role of frontier firms in the economy. The frontier firms report itself was seen as one of the most comprehensive reports examined and a key indicator of the commission’s breadth of mandate.  Underpinning this was robust evidence using New Zealand’s rich microdata (Living on the edge: an anatomy of New Zealand's frontier firms).

The Commission has also undertaken work to look at some of the issues in the other gaps identified in the paper.

The Commission’s 2018 inquiry into transitioning to a low-emissions economy investigated the challenges and identify opportunities for reducing New Zealand’s emissions to achieve net-zero emissions by 2050. Our final report recommended several actions that have been implemented by government - establishment of an independent Climate Change Commission (2019), feebate scheme to accelerate the uptake of EVs (2021), mandatory climate-related financial disclosures (2021).

The Commission’s soon-to-be-released Productivity by the Numbers outlines trends in New Zealand’s productivity, looking at the latest statistics and longer-run productivity performance. This publication provides an understanding of and generates discussion on the role of productivity in New Zealand and how lifting productivity can lead to improved outcomes for wellbeing of our communities.

Publication of Productivity by the Numbers is integral to our work to educate and promote understanding of productivity-related matters to the wider community and empower change-makers to influence and change policy.

The 2021 edition of Productivity by the Numbers is available for viewing on our website with the 2023 edition due to be published end of June 2023.