EDITOR'S INSIGHT: What is the big deal about productivity?

Productivity is about doing more with less and is routinely prescribed as the main path to prosperity.

The Productivity Commission’s latest report, Boosting Productivity in the Services Sector, seems a contradiction to this principle. The meaty part is a book-length 150 pages, with appendices and other material super-sizing it out to 212 quarto-sized pages.

That’s a lot of reading, and who has time to do that these days?

So I waited for a few summaries and analyses. None was forthcoming, nor was an op-ed that might examine the key issues.

Law firm Chapman Tripp came to the rescue with a handy summary of the aims, which I will repeat here to save time:

• Where do you think the greatest potential to lift service industry productivity lies – in a more open occupational licensing regime, through more customer-driven competition, or through greater technological innovation and uptake?

The commission plans to explore two of these three areas in detail and has produced the mammoth report for guidance on which two ill be chosen.

What’s more this is only part of the exercise. More is to follow with a second report due in January next year before a final one to be completed and released in April-May 2014.

Public submissions are sought on what the commission should look into, while at the same time it notes what it isn't dealing with.

One is the public sector – such as education, health and social assistance – which lack market-related data or have existing government programmes to boost productivity.

Other central government or council provided services, such as electricity, gas, water and waste, are also excluded.

So what, briefly, is it all about and why should we worry?

The problem, at least according to comparable data, is that New Zealand and better-performing Australia have been lagging among OECD countries for decades.

Most of this is put down to a lack of investment in IT – compared with, say, the US and Finland – in favour of retaining low-cost labour, which is goood for employment.

Politicians like to promote productivity because it looks like something they can fix by spending a lot of money, mostly from taxpayers.

Read what Labour's David Cunliffe and Australian Prime Minister Kevin Rudd say to see what I mean.

You can glance through a lot of the report covering the serice sector industries and be not much the wiser. But every now and then are gems:

• The Motor Trade Association says the Consumer Guarantees Act, as it affects cars, has driven the sales of used models into the consumer-to-consumer market, where little protection exists for buyers. In 2012, 70% of cars sold were in this sector.

• The Australian Productivity Commission found (2011) the costs of collecting GST on goods imported from online vendors would need to be considerably less if there was to be any net benefit of reducing the threshold (in NZ, $400).

Chapman Tripp provides this summary for those interested in making submissions (by August 23):
• Is there an appropriate balance between the costs and benefits that stem from the occupational licensing regime in the services sector?

• How can consumers be stimulated to drive greater competition in New Zealand services markets and is there a role for the government? Is there scope, say, to use the information required by the new KiwiSaver periodic disclosure rules to develop a variant of the ‘What’s my number’ campaign for the KiwiSaver market?

• Are there barriers to the successful application of information and communications technologies (ICT) and how can these be addressed? For example, are concerns about privacy and security inhibiting the adoption of cloud computing?

Near the end, the report wraps up with 19 questions that explore the needs for regulation and licensing; reasons why there is not greater investment in technology, such as the aversion to cloud computing; and whether the lack of compeitiveness in the domestic economy holds back export growth.

Answering these from your own experience should be sufficient for a submission and save all that reading. Now that's productivity.