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Frontier Firms follow-on review

An illustration of people traversing two mountain ranges viewed close-up under a magnifying glass

New Zealand Productivity Commission

Date published

1 May 2023

This report details the Commission’s findings and recommendations in its follow-on review of its New Zealand firms: Reaching for the frontier (Frontier Firms).

A follow-on review was requested by Government in their response to the Frontier Firms inquiry report.  The Commission was asked to undertake a follow-on review “to determine if New Zealand is progressing towards a more sustainable and inclusive economy, or whether more radical change is needed”.

The Commission assessed the Government’s policies and programmes relating to the Frontier Firms inquiry, and to lifting New Zealand’s productivity against the recommendations made in the final report of the inquiry. We undertook a ‘helicopter-level assessment’ of whether the Government’s reform agenda is having the intended effects. We reviewed initiatives undertaken, how far these have progressed, and the general direction of travel to assess what progress has been made and look at the development and implementation of policy to lift New Zealand’s productivity performance.

The Commission’s follow-on review noted that while some aspects of existing government processes and initiatives are promising, key elements needed for a successful focused innovation policy are lacking. These include a collaborative process for selecting a small number of focus areas; two-tiered governance arrangements with appropriate membership and decision rights; and substantial funding for each focus area.

While some progress has been made in developing industry policy and the research, science, and innovation strategy (Te Ara Paerangi: Future Pathways), we believe these efforts fall short in several ways - Industry Transformation Plans lack resources, co-investment by business, connections with researchers, and enough focus and ambition to spark transformational change. In addition, material decision making for Industry Transformation Plans, National Research Priorities, and other processes remain largely centralised and top-down, rather than being collaborative and devolved.

The Frontier Firms follow-on review report sets out the Commission’s key findings on the Government’s overall direction of travel, along with recommendations for improving the chances of success. This is supported by a detailed observations report on individual policies and programmes.

The Commission recommends six key areas for action. These recommendations are a package - interlocking and interdependent, all of which must be in place for success.

  • Use existing initiatives to choose focus areas.
  • Establish two levels of governance.
  • Commit significant, long-term funding to the focus areas.
  • Align broader government and business efforts with the focus areas.
  • Facilitate Māori leadership and voice.
  • Embed evaluation, to enable learning and adaptation.


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