ACT and National have agreed to set up a new Productivity Commission with statutory independence and a budget of around $5 million a year, Finance Minister Bill English and Regulatory Reform Minister Rodney Hide said yesterday.It is intended to do researc
ACT and National have agreed to set up a new Productivity Commission with statutory independence and a budget of around $5 million a year, Finance Minister Bill English and Regulatory Reform Minister Rodney Hide said yesterday.
It is intended to do research and give advice to help the Government create policy that will assist the economy to grow.
The new organisation is modelled on the Australian Productivity Commission though on a smaller scale with three or four commissioners and around 20 staff. The Australian version has almost 200 staff.
It will cost $2.3 million to set up next year once legislation is passed.
Money and staff taken from 29 departments, mainly from Treasury and the Economic Development Ministry, would be used by the commission, which was expected to work closely with its Australian cousin.
No new money would be allocated to the commission.
The ministers envisaged it holding two or three inquiries a year into areas the finance minister was concerned about.
Mr Hide said it was important that the body was set up in law to ensure independence and credibility.
National agreed to look into the idea of commission and Mr Hide said they were won over by the evidence it could make a positive contribution to the economy.
The commission will report to Parliament, but the Government will not be bound by recommendations and the experience in Australia is that reports get a very mixed response.
Mr English indicated the New Zealand model would have narrower brief than the Australian version, which has included inquiries into biodiversity, looking at the economy and reporting on measures to boost growth and create jobs.
Mr Hide did not want to suggest possible areas for investigation saying that might give the impression that the Government had prejudged the commission's agenda, while Mr English suggested it could perform a continuous review of regulations that dragged on the economy.
Statistics NZ this week said labour productivity fell by 1.5 percent in the year to March 2009 with a fall in output - that is, real GDP - of 2.2 percent, while workforce hours fell 0.7 percent. The long-term trend has had labour productivity growing by 1.9 percent annually since 1978.
The productivity statistics cover the part of the economy referred to as the 'measured sector'. Industries excluded are government administration and defence, health, education, and commercial and residential property services.
Mr Hide said in the long run increasing productivity was the key to increasing wages and living standards.
Business New Zealand Chief Executive Phil O'Reilly welcomed the commission saying his organisation had advocated for its establishment.
The Government intends to pass the legislation this year and set up the commission by April 2011, both ministers hoped to gain bi-partisan support for it.
