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  • Robert MacCulloch

A Productivity Commission not focused on Productivity?

Finance Minister, Grant Robertson, has announced, via the Beehive Website, that "Cabinet has agreed to the appointment of Dr Ganesh Nana to chair the Productivity Commission". In light of past media coverage along the following lines -"BERL chief economist Ganesh Nana says a capital gains tax will ensure the farming sector lifts its economic performance", as reported by Radio NZ - this appointment is unlikely to find favor with the business community. Robertson added, “I want to ensure that the Commission, like the Government, looks beyond GDP to find its measures of success, and has the wellbeing of current & future generations of NZ'ers front of mind as it generates new knowledge and advice".


The word "productivity" is understood by economists to measure how efficiently inputs, such as labour and capital, are used to produce a given level of output. A common measure is GDP per hour worked. A country with high productivity, defined in these terms, has high average wages and is able to afford, for example, a higher quality health-care system. Better health-care adds to well-being. Higher paid workers can also spend more time with their families, rather than long hours at work trying to make ends meet.


Consequently, the focus of a "Productivity Commission" should be on how to achieve higher output per worker, not concern itself with how that higher output is allocated by private individuals or the government to secure higher levels of well-being. That risks taking decision-making away from we, the people.


As a result, in my view, the Minister of Finance erred when he wrote "I want to ensure the Commission, like the Government, looks beyond GDP ....". It is not for unelected bureaucrats in the Commission to act "like the Government" . The Commission's focus should simply be on how to help increase Kiwi pay for each hour of work.


see:


https://www.beehive.govt.nz/release/dr-ganesh-nana-chair-productivity-commission


https://www.rnz.co.nz/news/political/80092/capital-gains-tax-would-lift-farming-sector-economist