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State sector productivity

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

24 state sector productivity whats new green v2


  • Our brief
    1 June 2017
  • Consultation and engagement
  • Issues paper
    27 July 2017
  • Submissions closed 8 September 2017
  • Draft report
    14 December 2017
  • Submissions closed 1 March 2018
  • Final report
    17 August 2018
  • Evaluation
    September 2018
  • Government response
    27 February 2019

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 does the Commission recommend?

The 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


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 here: