Public sector productivity: a $40 billion mystery

Murray Sherwin

The New Zealand Productivity Commission today released its draft report - Measuring and improving state sector productivity.

 “The state sector spends more than $40 billion every year on public services. Measuring productivity is essential for knowing if the money is being well spent.” Says Chair of the Productivity Commission, Mr. Murray Sherwin.

“Constantly improving productivity across an economy is the essential source of improved incomes and wellbeing. While most businesses have a pretty good idea of their productivity performance, the public sector is much less likely to focus on its productivity. In part, that is because it can be harder in the public sector to measure what is being produced.”

“The Commission has worked with government agencies to develop a number of case studies. These illustrate the methodological issues encountered when measuring the productivity of public services. We found that much of the data required to measure productivity already exists. It can be dispersed and not readily accessible but those matters can and should be fixed.”

The draft report is available online and seeks stakeholder views on lifting state sector productivity.

“Measuring productivity is not an end in itself. Rather it’s a starting point for discussing better ways of doing things. Stimulating innovation in the state sector is key to improving productivity. There are many examples of local innovation but they don’t tend to spread very far or fast. This needs to change if we want a more efficient and effective state sector.” 

The inquiry terms of reference asked the Commission to provide guidance on how to measure productivity in “core” public services (health, education, justice, social support) and provide advice on developing the systems, culture and capability to measure and improve state sector productivity.

Submissions on the draft report are due 1 March 2018.

Media contact: Sally Aitken
0275 437 465

About the New Zealand Productivity Commission

The Commission – an independent Crown entity – was established in April 2011 and completes in-depth inquiry reports on topics selected by the Government, carries out productivity-related research, and promotes understanding of productivity issues.