ProdComm update: December 2017


The Commission has had another busy year.  We’ve completed two inquiries - New models of tertiary education and Better urban planning, published several research papers on productivity-related matters, and continued to work with our partners to raise the quantity and quality of research into New Zealand’s productivity performance.

We are now knee-deep in two new inquiries - state sector productivity and transitioning to a low emissions economy – as well as research on spatial productivity (regional development).

Measuring and improving state sector productivity

The previous Government asked the Commission to undertake an inquiry into how the New Zealand state sector can effectively measure and improve the productivity of core public services with a focus on health, education, justice and social support. 

The Commission has just published its draft report and welcomes submissions. The draft report demonstrates that we can measure productivity and explains why we should. In response to the terms of reference, the report:

  • Provides guidance on how to measure efficiency/productivity in public services, taking into consideration measurement issues and how imperfect measures are most appropriately and usefully employed.
  • Considers the appropriate role of efficiency/productivity measures in public sector performance frameworks and the capability and systems that are needed to better measure, understand and improve productivity.
    Read the draft report on our website

Transitioning to a low emissions economy

The low emissions inquiry seeks to answer the question of how New Zealand can maximise the opportunities and minimise the costs and risks of a transition to a low emissions economy.

The Commission released an issues paper in August which generated a significant response with 130 submissions received. This response underlines the deep and diverse interest in climate change policy.  The Commission has completed over 90 engagement meetings and is busy working on the draft report which is scheduled for release in April 2018.    
We have two substantial and important pieces of contract research underway. One is with Sapere Research Group exploring the implications and options for moving to further reduce emissions in New Zealand’s electricity system. We have seen from other countries how easily these systems can be destabilised when policy-makers do not give sufficient consideration to system stability and reliability.  A specific issue for New Zealand relates to how to deal with dry years that constrain hydro generation. Other significant issues are how the overall system is regulated to meet objectives of system stability, capacity to meeting demand from electric vehicles and electrification of industrial heat, and how to make demand more responsive to supply pressures.

The other significant research contract is with a consortium led by Vivid Economics, the UK based consultancy that developed the Net Zero in New Zealand report for the cross party parliamentary group GLOBE-NZ. Vivid will be working with Motu Economic and Public Policy Research and Concept Consulting to further develop their earlier work and its various scenarios.

GLOBE-NZ was chaired by former Green MP Kennedy Graham who, in that role, worked closely with Vivid as it developed its Net Zero in New Zealand report. The Commission is pleased to have been able to secure Kennedy’s services separately to help it with its work on the inquiry.

The Commission recently met with the new Minister for Climate Change. The Minister indicated he did not intend to modify the terms of reference and we should continue our current inquiry process.

Read more about the inquiry and watch the animation

Research papers on innovation

The Commission recently completed its research into innovation and firms’ performance and published two papers on the impact of R&D grants and the links between innovation and productivity. These papers and the summary look at the direct impacts of innovation and R&D grants on the performance of New Zealand firms. Both papers and a summary are on our website under Research.

Spatial productivity (regional development)

The Commission is conducting research on spatial economics (regional development). The purpose of this research is to is to better understand the reasons for differences in income and population growth rates across New Zealand’s cities. Papers will be published in 2018 and the Commission hopes to use this work to build a robust evidence base for regional development policy. The Productivity Hub will host a conference on regional development in 2018.

The ongoing impact of the Commission’s work.

The Commission’s previous research and inquiries continue to have an impact. The Commission’s Boosting services sector productivity 2014 recommendation to enable the Commerce Commission, under direction, to undertake market studies was enacted in law and the Commerce (Cartel and Other Matters) Amendment Bill includes a new regime for shipping, a response to a recommendation in our 2012 international freight services report.
Joint research with AUT Explaining ethnic disparities in bachelor’s qualifications undertaken as part of the New models of tertiary education inquiry will be published in the prestigious academic journal: Studies in Higher Education.

Briefing to the Incoming Minister

The Commission has published its Briefing to the Incoming Minister. The briefing outlines the Commission's role, our current work programme and lessons from the Commission's work to date.

GEN Conference speech December 2017

The Commission’s Chair, Murray Sherwin, gave the opening address at the recent GEN Conference in Wellington. The speech, Responding to Global Challenges: New Zealand’s Productivity Deficit, touches on past and current global challenges, New Zealand’s productivity challenge and opportunities for the future. Read the full speech on our website