Hon LIANNE DALZIEL (Labour—Christchurch East) Link to this
I want to speak on Part 1, because although it is headed “Preliminary provisions” it contains some very important matters.
The first matter is in relation to the interpretation of “productivity-related matter”. I think that provision was improved before the New Zealand Productivity Commission Bill was introduced. The reason it was improved was to try to narrow the focus, but in narrowing the actual wording of the interpretation we were trying to expand what could be considered by the Productivity Commission. Leaving the interpretation as “ ‘productivity-related matter’ means any matter relating to productivity, or improving productivity, in the private sector, the public sector, or the economy as a whole” enables an incredibly broad brush to be applied to the definition of the word “productivity”. The last thing anyone on this side of the Chamber wants is a narrow approach to something that, hopefully, will be an important feature of our political and economic landscape for the future. I really hope the Government of the day takes an equally broad-brush approach to the definition of productivity.
During the Commerce Committee process it was very interesting to hear from Gary Banks, who heads the Australian Productivity Commission. He talked about the history of the development of the commission, and gave some background as to why its legislation focused on a quite specific but actually quite broad range of items. When one looks at the Australian Productivity Commission legislative provisions one sees that there are environmental, regional, and social dimensions to its definition of productivity. I think that is because of the background of the commission, which has come through various stages in its life. Gary Banks talked about the legislation originally coming from the Tariff Board, which is where the industry focus came from. The modern form of the commission came in under the Whitlam Government in 1973, and that was the Industries Assistance Commission. Finally, the Productivity Commission took over from that commission. That description helped me understand why it was better to go down the track that we had agreed prior to the introduction of the bill, which was to leave the definition very broad and open, rather than seeking to define every aspect of productivity that we would want to see applied. But that being said, the definition is not an open invitation for the other side to take a narrow view of productivity. If one of the early tasks of the Productivity Commission is to focus on regulatory matters, compliance costs, and all of those sorts of narrow issues, then we will be very disappointed. We want the Productivity Commission to achieve good things for our country. That is why I have tabled a new purpose clause, but I will not speak to that now, because it comes into Part 2.
The second thing I want to refer to under Part 1 is the definition of “responsible Minister”. I see that the Minister for Regulatory Reform, who is not the responsible Minister, is sitting in the chair. I am disappointed that he is not the responsible Minister—[Interruption] I knew that was going to excite concern from my colleagues, but I do think the Minister for Regulatory Reform ought to be the Minister who takes responsibility for this particular legislation. Then again, there are those who argue that the Minister of Finance has a broader sweep, and that the reason why we shifted the regulatory impact analysis unit from the Ministry of Economic Development to Treasury was to bring about that whole-of-Government approach. We also wanted a department that was capable of monstering other departments into doing stuff that perhaps they did not want to do, so it made sense to shift the unit to Treasury. Maybe that does mean the Minister of Finance is the correct responsible Minister.
I want to use the opportunity to comment on a couple of things that the Minister for Regulatory Reform has done while he has been the Minister, even though deeply involved in the discussions that we had prior to the introduction of this bill—and this bill does come from the agreement between the ACT Party and the National Party in forming the Government. That is to put on record again my deep concern about the decision that the Government took—and the responsible Minister is included in this—to remove regulatory impact statements from the pages at the front of the bill. I find that incredibly disruptive to the process of analysis. It also means that my first reading speeches are nowhere near as good as they would be otherwise, because I have always found the regulatory impact statements to be a great source of information about the nature of the problem, analysis of the different options, and stakeholder engagement as part of the consultation process. Those have all been really important features of regulatory impact statements. Having to find them on the website and download them separately I find very frustrating. I understand, having had discussions with the Minister about it, why that particular approach has been adopted, but I still feel that including even a modified form of the regulatory impact statement that reflected any changes Cabinet had made to the final set of decisions would be preferable. If that analysis were appended to the end of the regulatory impact statement and included with the bill, then the issues that the Government has grappled with in this matter simply would not be an issue. I would be very keen to see regulatory impact statements come back into the published versions of bills. I think a very short analysis at the end of the regulatory impact statement to identify any differences that had occurred as a result of the Cabinet process would certainly be extremely helpful. I think it would add to the quality of the debate in the Chamber, and, certainly, to the quality of my own personal contributions to these debates.
There are a couple of other things that I want to mention in relation to Part 1, because even though it is a very short part it is very, very significant.
Hon LIANNE DALZIEL Link to this
I spent the entire dinner break reflecting on what I had said before the break, and I have decided that it is correct that the Minister of Finance is the Minister responsible for the New Zealand Productivity Commission Bill. I came to that conclusion because if the Minister for Regulatory Reform undertook the role, that would shift the primary focus of the New Zealand Productivity Commission to regulatory matters, and Labour does not agree with that. I discussed it with several colleagues over the dinner break, and I think we are now of one mind that the Minister that the Prime Minister has selected to be responsible for the bill is, in fact, the right Minister.
But it is good to have the Minister for Regulatory Reform in the chair, because I know that he and his party were significant driving forces behind this measure. Although I do not agree with the emphasis on regulatory matters, I do think the emphasis on growing New Zealand’s productivity, enhancing our productivity, and looking at all the different aspects of our productivity in order to improve New Zealand’s economic development is good. So it is important to acknowledge the role that Rodney Hide has played in this matter, and it is good that he can debate the bill from the chair. It is only Thursday night, after all, according to the calendar on the wall, and I have to say that the House being in urgency does reflect a significantly higher level of productivity than is normal in this place.
Hon Trevor MallardHon LIANNE DALZIEL Link to this
It depends. If people have taken advantage of it, and have used the approach my colleague took on the previous bill, the Education Amendment Bill (No 2), which was to get the Government to finally concede that the point he had been going on about for quite some time was correct and to fix that little problem, then it is amazing how much more productive Parliament can be under urgency; otherwise, there is a high risk of a little bit of filibustering. But that is not what Labour members are doing on the New Zealand Productivity Commission Bill. We think it is very important, we do want to see it passed, and we do want to see the current Government utilise it in the way that we intend to utilise it to get the productivity gains for New Zealand that we need.
GRANT ROBERTSON (Labour—Wellington Central) Link to this
It is a pleasure to take a—sorry about that noise. It takes me back to my old death metal days at university—a bit of feedback.
Chris HipkinsNo, I do not mind feedback; not usually from Mr Hipkins, though.
We strongly support in principle the notion of having a productivity commission, as my colleague Lianne Dalziel has said. From my perspective as the spokesperson on State services for the Labour Party, it is a good thing. Some eyebrows might be raised on the other side of the Chamber at that statement, but I think that productivity in the State sector is a big issue. Obviously, I believe that we need a strong, healthy State sector that provides high-quality services to New Zealanders, and one issue it struggles with from time to time is productivity.
It is a conundrum for New Zealand as to why we have consistently not been able to lift our productivity rates. Throughout the last 20 or 30 years we have struggled to see productivity rise, we have lagged behind other OECD countries, and questions have been asked. Productivity was at the heart of the agenda of the fifth Labour Government, which aimed to raise skills and improve innovation in order to do the things that we thought would help lift our economy and improve our productivity. I think that a commission like this one is useful. If we look at Part 1, these are obviously the preliminary provisions, and the bill goes into more detail in Part 2.
The particular matter I will discuss is the definition of “productivity-related matter”. As my colleague Lianne Dalziel has said, a difficult balance needs to be struck between a definition that enables plenty of scope and one that at same time is not so broad that we cannot have a good mandate for the commission. The definition of “productivity-related matter” in Part 1 is “any matter relating to productivity, or improving productivity, in the private sector, the public sector, or the economy as a whole”. It is very important that we have managed to break out the private sector, public sector, and the wider economy in that interpretation. Members on this side of the Chamber are very attracted to the kinds of reports that the Australian Productivity Commission has made. It has made a very wide range of reports, including some on issues that people might not have traditionally seen as being about productivity but about how the Australian economy and society are developing. We think there is potential for the New Zealand Productivity Commission to do that.
“Productivity-related matter” in clause 4, “Interpretation”, has been defined pretty widely. From our point of view that is a good thing, but the issue with our having done that with regard to the commission is that each Government that comes along may have a different view on exactly how it will interpret a definition that is fairly wide.
Obviously, Labour has its own concerns—which we will be raising in Part 2, when we come to talk about the Productivity Commission in detail—including the fact that we already have someone appointed to run the commission at this time. That person is Murray Sherwin. He is a respected public servant of many years’ standing, but in all honesty, from a personal perspective, I do not see his appointment as being particularly ambitious for this commission.
Not very exciting at all, I say to Mr Mallard. That is correct—not ambitious, not exciting. Murray Sherwin is a competent public servant; he is not the kind of person, in my opinion, who would drive the Productivity Commission to be the thing that it could be. It has the potential to harness a lot of different views from across the community, the private sector, and the public sector and to bring them together to face the challenge. My colleague Shane Jones has often asked what it is about the New Zealand economy that needs to be picked up and kick-started, and I am sorry to say that Murray Sherwin—as competent a man as he is—will not be doing that, leaving aside the question of whether having someone appointed before we have even gone through this process is appropriate.
I would like to think that what will come out of the House tonight will be an enduring agreement about the importance of having a productivity commission. Certainly, in terms of National and Labour, there is consensus that this is a good idea. Mr Hide has been championing it as part of the coalition agreement between ACT and National. Its time has come, but the interpretation clause tells us that there is a lot of room for manoeuvre when it comes to what constitutes a productivity-related matter. Members on this side of the Chamber certainly look to the Australian Productivity Commission. We look to some of the issues it has looked at, including issues in the environmental space, which are very, very important. I am not so sure that Mr Hide would see those things as being quite as important, but Labour can support this part.
Hon SHANE JONES (Labour) Link to this
Kia ora anō tātou, Mr Chair. Such is the importance attached to the New Zealand Productivity Commission Bill, that it requires attention that is likely to take us into Sunday, which will still be Thursday. This modest contribution is to reward the hard-working members on this side of the Chamber, and to alert the members on the other side of the Chamber that when they play loose and fast with the rules of the House they can expect to suffer.
I direct members’ attention to clause 3, “Purpose”, which states that “The purpose of this Act is to—(a) establish the Commission as a Crown entity for the purposes of section 7 of the Crown Entities Act 2004;”. A number of commissioners will be created under the Crown Entities Act 2004. My colleague Grant Robertson has already drawn the Committee’s attention to the fact that one of the favoured sons of the failed ideologues of the 1980s and 1990s has already been appointed to lead what runs the risk of turning into a discredited organisation, in very much the same way as Don Brash’s exercises with Dr Bryce Wilkinson and others have brought a great deal of opprobrium to those who are associated with trying to sensibly and credibly boost productivity and lessen the gap between us and our Australian cousins.
The Productivity Commission derives its powers from the Crown Entities Act, and it is evident from a cursory glance at that Act that commissioners are able to secure additional assistance—that is, through associate commissioners—or secure resources to undertake studies or examinations that might be called for from time to time. When we think about the purpose of the Act, we need to think about the people who will be there to give life, meaning, and form to the purpose. Under the current administration, it is evident that the narrow cast of ideological activists that it will draw from makes us doubt whether this organisation will achieve very much at all. At the end of the day, productivity is about people, and to date there has been a huge degree of disinterest on that side of the House in actually investing in people.
We have seen cuts—I mean, hypothetical—but I ask whether productivity can be increased at the same time as starving the most vulnerable group of New Zealanders—that is, the future workforce and their families—of the resources to ensure that they are suitably educated. How can we advance productivity whilst at the same time squeezing and starving resources from those avenues of the State’s resource base that are directed towards giving very good literacy and numeracy skills, civic skills, and social relations skills? All of that is actually being deprecated at the moment. It is a joke to think that we can create the Productivity Commission whilst at the same time not focusing on the building blocks of what is the greatest asset our country has. There is no productivity unless we invest in people.
The nature of our people is changing. The school-age population is getting browner, with more Pasifika, tangata whenua, Māori kids, and Kiwis of Māori descent. There are also more children of Asian descent and more children from other ethnic minorities. I only hope that when the Minister moves forward with the Productivity Commission—fortunately it will be for a mercifully short period of time; the results of the next election will rescue us from this narrow-mindedness—he will take into account, in terms of the qualities of the appointees, such things as ethnicity and the experience of working at different levels of the economy, not just at the big end of town. It is the big end of town—characters who thought they were masters of the universe, especially in the financial community—that has brought us to our knees. When I hear the media raging about the most recent lapse of judgment in our world, the Māori world, I like to remind them that the last time I checked the $7 billion worth of wealth meltdown, I did not see any rūnanga or hapū involved in that.
No. Well, they are unlikely to utter that because that requires a level of humility and modesty that we do not ordinarily associate with that end of town.
Anyway, I come back to isolating the point that when we establish a commission, we have to focus on the quality and the range of skills that those people have. We need those who know about the emergence of entrepreneurialism and how to feed the culture of entrepreneurialism. We need those who are skilled in capital formation, but, most of all, we need those who are skilled in what enables people to find a reservoir of enthusiasm, eagerness, and tenacity to continue to learn.
When we look at some firms and companies—because we will need to take a micro look, not a macro look—we will see that productivity-related matters will go down, and we will have to consider the culture that exists between the owners of the firm and the providers of the capital. When we have a set of toxic labour relations and a set of rules that are squeezing further and further and increasing the pain on the labour force whilst not focusing on the obligations and the duties of the owners of the capital or the directors of firms, we cannot perpetually make more miserable the providers of labour and imagine that we are to grow wealthier.
We have seen a level of belligerence and hostility towards the leaders of the labour movement in New Zealand. We have seen it recently in terms of the treatment dished out to Helen Kelly in the recent episode to do with the give-away to the Hollywood billionaires. It is a timely reminder that a Productivity Commission will only be as good as the spread of people who occupy the positions. They must command respect in the eyes of the Ministers of the future.
It would appear that the Savings Working Group, comprising a number of notable New Zealanders, has already lost a fair degree of confidence in the Minister of Finance, the Prime Minister, and other senior Ministers of the current Government, because issues that it ought to be looking at—that is, notions of compulsion, types of obligations, etc., in savings—have already been written out of the script. This suggests that this Government hears, sees, and senses something that does not immediately fit with its plan—and, of course, we all know that there is no plan.
The Prime Minister, I acknowledge, was a successful currency trader and a pragmatist. So there is no coherent plan; there is just a haphazard set of disconnected events where the Government takes a position, closes out, and rapidly moves on to the next position. Unfortunately, exercising stewardship over the economy, as Mr Mallard and other members more senior than me will point out, requires an overarching vision, a strategy, a narrative, and, whether or not we like it, a plan.
This commission will not advance any plan, because we already know that the types of things it will look at come from a very narrow ideological straightjacket—that is, that the State is bad and it must be shrunk. How do we shrink the State? We know that the Productivity Commission will be charged at looking at whether the State should be shrunk by shrinking revenue. Then, once revenue in a macro sense is decreased, the State has fewer options to take an activist role where the economy might be suffering from market failure, inject a degree of public investment, or ensure that the public interest is addressed.
If the people who come into this organisation are disconnected from the way the vast bulk of small to medium sized firms operate and the way the vast bulk of New Zealand families live, then we can rest assured that it will be a continual story of a narrow range of ideas being forced upon us and our families, and that will just not do.
In relation to what defines a productivity-related matter, the Productivity Commission will look at private sector productivity issues, public sector productivity issues, and the economy as a whole. Well, the economy as a whole cannot be understood by focusing just on economic rationalism, because people are not just economic utility-maximising rats. At the same time, they are social creatures, so it is important when we look at productivity—and this will depend on the quality of the people coming forward—to take account not only of human capital but of natural capital.
The CHAIRPERSONHon LIANNE DALZIEL (Labour—Christchurch East) Link to this
I want to start the contributions on Part 2 of the New Zealand Productivity Commission Bill for a number of reasons. Obviously I have been involved in the discussions on the legislation establishing the Productivity Commission, and I chaired the Commerce Committee and had the opportunity to hear submissions.
I place on record again my disappointment at the number of people who actually submitted on the bill. Everyone on both sides of the House has agreed that this legislation is quite important, yet 13 submissions were received and we heard seven of them. I was very disappointed that Business New Zealand did not want to be heard, because I had asked the select committee clerk to arrange for the Council of Trade Unions and Business New Zealand to get half an hour each, one after the other, so that we could actually engage with both and get a real sense of where their points of commonality are. They had been working very closely together on productivity for a number of years when Labour was in Government, and I felt that that work would flow through into a really good discussion at the select committee. Then I found out that Business New Zealand did not want to be heard. Unfortunately, I have to report to the House that it gave quite a narrow submission. I was disappointed. The Council of Trade Unions gave a very good submission and really talked about what made a difference in terms of looking at productivity.
As a result of that submission, I have three amendments to Part 2, one of which relates to the purpose of the commission. The first amendment is to rewrite the purpose clause. I do not know why—and I actually kick myself now because I cannot understand why—we used the word “principal”. Clause 7 states: “The principal purpose of the Commission …”. I have rewritten it to say: “The purpose of the Commission is to facilitate policy development, practical activities and research which will boost productivity on a sustained basis in order to support the overall well-being of New Zealanders, through the development of a high wage, high skill, sustainable economy that delivers benefits on an equitable basis to New Zealanders, having regard to a wide range of communities of interest and population groups in New Zealand society.”
Anyone who has read the original bill will know that that amendment not only picks up a lot of the language we had within that clause but also starts to define what we are trying to achieve. There is no point looking at productivity in a narrow sense if we do not get that benefit shared on an equitable basis. We might see a productivity improvement and a greater disparity in terms of the sharing of wealth in our nation, and we know that that would minimise or reduce our productivity over time because the outcomes would be so inequitable. I think we have to recognise New Zealand for what it is, and what communities of interest make up New Zealand. We also have to recognise that productivity has a very broad definition.
The second set of changes relate to subclause (1) of clause 9, “Commission’s functions”. This provision extends the commission’s functions. The two functions in the bill as reported back are “(a) … to hold inquiries and report to the referring Ministers about productivity-related matters; and (b) on its own initiative, to—(i) undertake and publish research about productivity-related matters; and (ii) promote public understanding of productivity-related matters.” Going back to my amendment in terms of the purpose, I have talked about practical activities and research, as well.
The practical activities that I am seeking to add under clause 9(1) are: “(c) support initiatives which develop practical productivity projects and provide an overview of the range of tools/models available to maximise multifactor productivity in workplaces;”. I did think, after having reflected on what the New Zealand Council of Trade Unions said in its submission, that workplace productivity is an important component of the total view. If the Productivity Commission is to provide some grunt in this area it really needs to lead the way. A range of tools are available, and they differentiate between the public sector and the private sector. There are different drivers in both sectors, and I think they need to be reflected in the way in which the Productivity Commission operates. I think that part of the reason for specifying these initiatives as an activity of the Productivity Commission is to ensure that it becomes the single point of entry—the Government portal to productivity. I think that is a hugely advantageous position in terms of the credibility of the organisation long term. That is the first paragraph of the amendment.
I seem to have called the second paragraph of the amendment “(e)” instead of “(d)”, but that is just a little typo. It states: “(e) run inclusive events/workshops on productivity and have educational tools and other information on its website;”. Again, that kind of brings it together as a portal where people can go for a one-stop shop approach to productivity.
The next paragraph of the amendment states: “(f) organise events and activities as appropriate with the Australian Productivity Commission;” Everyone knows that I am a huge admirer of the Australian Productivity Commission, and I have this hope that one day it will be an Australia - New Zealand Productivity Commission. The idea of putting it in legislation so that those events and activities are authorised by statute appealed to me, so I thought that was a very good amendment.
The final paragraph is to “(g) produce an annual report on productivity”. Unless we actually require the Productivity Commission to annually report on these matters, where are the benchmarks? Where are the measures against which we will look for the success that we believe this model could bring?
My final set of amendments is on the terms of reference. I would specifically put into the terms of reference in clause 12 a new (1B), which states: “In setting the terms of reference for an inquiry the referring Ministers must first consult with Business New Zealand”—it does not deserve that consultation, because it did not front, but there we go—“and the New Zealand Council of Trade Unions to ensure that the concept of social partnership is embedded in the work of the Productivity Commission.”
I think that language signals a really important aspect of the difference between the 1990s and today. In the 1990s the concept of social partnership was completely lost. The Employment Contracts Act took the word “union” out of legislative being, so industrial relations were to operate without the word “union” being included. Collective bargaining was around contracts, not agreements, and there was no real understanding of how important these things were to the concept of productivity. Without embedding that relationship into the work of the Productivity Commission, I cannot see any other way of ensuring that we get to the best in terms of our workplace contribution to that productivity growth.
I played with the idea of locking this concept of social partnership into workplace productivity issues, but the more I thought about it the more I thought that I would take workplace productivity out of it. The social partnership is fundamentally critical to all issues relating to productivity. I hope the Minister looks at that amendment and thinks very carefully about whether it might improve the way in which the Productivity Commission may operate.
Finally, I propose to add to clause 12 a new subclause (4): “Ministers and the Commission shall ensure that terms of reference require a range of models to be used in any research and analysis.” The Minister may well say that that is taken for granted in the way in which we have changed the legislation as it has gone through the Commerce Committee. I would really like to know, as a matter of law, that the commission will be required not to take a narrow focus on various models of measuring productivity and productivity gains over time.
The final thing will say in this contribution—and I may want to come back to it after listening to my colleagues’ contributions—relates to the process around selecting the members of the commission. I follow on from a comment that my colleague Shane Jones made. I do not believe that the selection of the chair-designate was a very good process. We were informed by letter on the Thursday before the appointment was made finally, and we were advised that this was the appointment the Government was going to make. It is not an appointment that I would have chosen, but that is by the by; I am talking about the process.
I hope that, going forward, the Government thinks very seriously about getting a more balanced approach to the commission. I think that would sustain it through changes in the Government over time. I also think that if this process is adopted it will not be sustainable over time. I hope the Government takes that particular comment on board in determining who else will be on the commission.
Hon RODNEY HIDE (Minister of Local Government) Link to this
I will respond to those amendments proposed by the member. I thank the Hon Lianne Dalziel for her work as a Minister and her commitment to improving New Zealand’s productivity, and, also, her work as the chair of the Commerce Committee and the contribution that she made there. I pick up, first of all, her proposed amendment to clause 7. The member will appreciate that the purpose clause is couched very broadly to enable the Productivity Commission to conduct inquiries and research into any productivity-related matters that will improve the welfare of New Zealand. It encompasses everything that the member’s proposed amendment includes. The proposed amendment is just another way of skinning the same cat; it does not actually change anything, and, therefore, the Government will not be agreeing to that.
Let me now deal with the Hon Lianne Dalziel’s suggested changes to clause 9(1), which relate to the functions of the commission. The first of these subclauses would appear to give the Productivity Commission new hands-on support for workplace productivity improvement projects. That would fundamentally change the character of the Productivity Commission, which is to provide independent analysis and advice on productivity-related matters. I should also note that this is specifically not a function of the Australian Productivity Commission. It would be a new and novel approach. Proposed paragraphs (e), (f), and (g) of clause 9(1) would appear to specify activities that the Productivity Commission is already able to undertake through existing clause 9(1)(b)(ii), which is to promote public understanding of productivity-related matters. The Government does not see any need to provide this level of specification in the bill.
In respect of the proposed amendment to clause 12, the bill enables the Productivity Commission to consult widely. Clause 13(1A)(b) states that the commission may “consult with any persons, bodies, organisations, and agencies it considers necessary to ensure that a wide range of views is available to the Commission to assist it in preparing its reports.” The expectation is that as an independent body it will identify those who are likely to have a particular expertise or contribution that may assist it in relation to specific inquiries referred to it. Identifying two specific bodies in the bill, such as this proposed amendment would do, is not consistent with the philosophy of widespread consultation and engagement.
In relation to proposed subclause (4) of clause 12, the Productivity Commission model is predicated on the commission having the requisite expertise to make a call on the appropriate methods and the models for its inquiries, and the approach that it takes will be amply tested through consultation that the commission may undertake, including through consulting on draft reports. This is an aspect of the bill that was strengthened by the select committee, for which I do thank the honourable member. I thank her very much for the contribution.
Hon MARYAN STREET (Labour) Link to this
In recent times I have come to the House and railed against bits of legislation. I have been saying, in particular, that this is no way to run a country. The New Zealand Productivity Commission Bill, however, I am really pleased to speak to, because I think it is a good way to run a country. I think the bill will provide for the possibility of independent and contestable advice being given on one of the issues that has dogged us for at least the last decade and a half, as we have wrestled with New Zealand’s underperforming productivity.
This is an area that I have been involved in intimately in my life before I came into Parliament. We were constantly looking at how to make the provision of services in the health sector, in that instance, more efficient and effective, and more productive, by the association jointly of employers and employees in the workplace: by the association of professional health practitioners, service providers, and the managers of the district health boards or the entities that preceded them.
The issue of productivity has been vexing this country for some time, and no Government has been able to crack it in a sustainable way. That is why we are pleased to join with the Government on this bill, especially as it has now had its purpose expanded by the work of the Commerce Committee. I commend all members of the select committee, including my colleague the chairperson, who has put a lot of work into making sure that this legislation hits all the right buttons. This model is a very good one for working through issues that are beyond political tribalism. I can be as tribal as the next person. I know where my politics come from; I know what I believe. But this is one of those things, one of those moments, where it is entirely possible, and not beyond the wit of this Chamber, to come up with a system and a process that benefits New Zealand and has the fundamental well-being of New Zealand at heart.
The fact that the purpose of the New Zealand Productivity Commission was expanded by the select committee is a good thing. Notwithstanding the Minister’s comments just now on my colleague Lianne Dalziel’s amendment to clause 7, it is good that the purpose has been expanded to include the words “having regard to a wide range of communities of interest and population groups in New Zealand society.” I think also that there is merit in my colleague’s amendment that states: “in order to support the overall well-being of New Zealanders, through the development of a high wage, high skill, sustainable economy that delivers benefits on an equitable basis to New Zealanders …”. I think the addition of those words would simply strengthen the legislation and strengthen the purpose of the commission.
Beyond that, given that I understand that the Minister has signalled that that amendment will not succeed, I ask that he looks at my colleague Lianne Dalziel’s amendment to clause 12. Here, we come to the heart of the matter. Lianne Dalziel has proposed a new subclause (1B), which states: “In setting the terms of reference for an inquiry the referring Ministers”—not the commission, I say to the Minister, but the referring Ministers—“must first consult with Business New Zealand and the Council of Trade Unions to ensure that the concept of social partnership is embedded in the work of the Productivity Commission.” This is where we get to why this is a particularly good model. If we have peak organisations in this country that equally have a vested interest in productivity, why do we not combine their efforts and their common interests in what has been, since the 1980s, called social partnership?
The previous Labour Government attempted to embed a modus operandi, in our 9 years in Government, of social partnership. I commend it to the National Government, not because it is something we supported but because it is something that would benefit and create some stability for all New Zealanders. There are some issues where we do not need to have policy swings from one end of the spectrum to the other with any change of Government, and this is one of them. We are as concerned about New Zealand’s productivity as the members opposite. I do not doubt their concern about it, and I hope that they do not doubt ours. If we are to ensure that the greatest productivity can be extracted, for the best possible outcome—that is, the well-being of, and the equitable distribution of the benefits of productivity across, New Zealanders for the sake of everybody’s advancement—then this legislation is a tool that will allow that to happen, if we understand that it does embed principles of social partnership.
The principles of social partnership are very easy. They are simply respectful ones. They involve the recognition that there are communities of interest in New Zealand that deserve to have representation at the highest level. And in that representation, they deserve to have their views and their interests spoken about, and to be engaged with, so that areas of commonality can be found, as there were over the 9 years that we were in Government. There were substantial areas of commonality between Business New Zealand and the Council of Trade Unions. Let me give one example of that: skills training. This Government abolished the Skills Strategy and has done very little in that space since it came into office, but the Skills Strategy is exactly the area of common ground that one could characterise as the best kind of social partnership. So embedding the notion of social partnership has very practical outcomes. Not only can it be applied in the upskilling of the labour force, which is clearly required by all evidence to date and clearly required if New Zealand is to become more productive, but it can also provide greater stability for moving forward in this country.
Productivity does not need to be something that is addressed by tribalism; it can be addressed jointly. If we are mature enough, in fact, to have a Productivity Commission that will provide contestable and independent advice to Ministers, then we are mature enough to embed in our processes and our legislation the notion of social partnership. This is not a quaint, left-wing notion; this is about moving modern, mixed economies forward, and whatever pedigree the notion may have had does not matter now. What matters is that this bill and the amendments that my colleague Lianne Dalziel has put forward really serve to embed the idea of a cooperative social partnership that can benefit, in this case, the productivity of this country.
There are extremely practical issues here that would have very practical effects. Upskilling is one of them. Also, the promotion of the idea that events and workshops on productivity and educational tools and things of that sort might be paraded around the country, in a jointly sponsored effort by the major social partners in this endeavour to increase New Zealand’s productivity, is a very sensible suggestion directed towards achieving that end.
PESETA SAM LOTU-IIGA (National—Maungakiekie) Link to this
I will take a short call on Part 2 of the New Zealand Productivity Commission Bill, and echo the comments that have already been made about the way our Commerce Committee has worked on this particular bill. There was a lot of agreement as to the direction of productivity in this country—one of the major issues, certainly, that our country faces going into the future.
I will refer specifically to the amendments from the member Lianne Dalziel. Although I agree with most of the comments of the Minister in the chair, the Hon Rodney Hide, I must say that Lianne Dalziel’s amendment to clause 7 would fundamentally change that purpose clause. The amendment adds the words “the development of a high wage, high skill, sustainable economy that delivers benefits on an equitable basis to New Zealanders,”. I contend that we cannot have that type of provision, because she is suggesting, by this amendment, a guaranteed equality of outcome. I suppose that one of the fundamental differences between members on that side of the Chamber and those on this side is that this is not about guaranteeing equality of outcomes; it is about guaranteeing equality of opportunities. There is no way that we can guarantee that all the benefits derived from certain productivity advances will deliver benefits across the board, so I think that that amendment goes too far.
We made an amendment to clause 7 in order to have regard to “a wide range of communities of interest and population groups …”; I think that that was sufficient to suggest that the commission did not take on board one particular model of productivity. I thought we worked well on that clause. I do not think that the additions to the clause add anything; I think they actually detract from that purpose clause.
I move to clause 9(1). As the Minister has already said, some of the member’s suggestions for new paragraphs (e), (f), and (g) of clause 9(1) can actually happen regardless of whether they are inserted in a clause. I do not think it is appropriate to insert those specific provisions in the clause, because the role of the commission is not to run workshops. I do not believe that the commission will have the resources for those types of operational matters. If we go back to the first principles of the bill, we see that the role of the commission will be to promote research, do the research, do the analytical work, work according to the terms of reference, and produce work that will advance productivity and policy-making, both in the private and public sectors, so that amendment would not be helpful to that.
Finally, the amendment that would insert new clause 12(1B) requires Ministers to “consult with Business New Zealand and the New Zealand Council of Trade Unions …”. Again, there is specificity in the clause, but what happens if the New Zealand Council of Trade Unions no longer exists? What happens if Business New Zealand no longer exists?
PESETA SAM LOTU-IIGA Link to this
That is the member’s contention, but I think that if we start demanding, or at least requiring, in a clause that a Minister consults directly with certain organisations, it makes that clause unworkable. We should think again about whether we should demand a social partnership. That is not to say that we disagree with a social partnership; I think that that is important. But to require it in legislation specifically, I think, is going too far.
We do not agree with these amendments. We think the bill as it came out of the select committee was a good bill, and we look forward in the third reading to speaking about our bill.
Hon SHANE JONES (Labour) Link to this
Kia ora, Mr Chairperson. It actually is necessary to inject a wee bit more of a positive tone into this debate after that rather impoverished contribution from the member currently representing Maungakiekie.
Well, Maungakiekie is a proud tangata whenua name, blighted at the moment by—but let me come back to the New Zealand Productivity Commission Bill. I would like to pick up one of three things that the Minister in the chair, the Hon Rodney Hide, has said. A key part of the Minister’s narrative has been the reduction of red tape and unblocking the bureaucratic imbroglios that stop firms and investors from achieving the sorts of outcomes that he would like to see. I acknowledge that that is the rhetoric and the political narrative that this Minister has. But to do that it is necessary to focus in a very, very sharp way on what some of the problems are and what some of the snarl-ups are.
How the commission develops its procedures will depend on whom the Minister, the Government, and the Crown appoint. We are starting with a rather dismal view not really directed in a personal way at the character who is going to be the initial leader of the organisation, as we know that he will not become separated or dislocated from this ideological baggage. We know that to be a fact, but we are going to have to deal with that burden. But if we are going to consult in terms of clause 13(1A)(b), “consult with any persons, bodies, organisations, …”, I think it would be good if the Minister and his colleagues dedicated some attention to finding people who can actually liaise with a wide array of organisations.
I have in mind here our Māori organisations, because this is a Government that is only too happy to parade its rhetoric up and down the country about how the emerging Māori economy represents something of a positive platform to grow the overall economy. That will happen when they are no longer as disengaged as they have become under this Government and its lacklustre partners in the Māori Party. It is going to increase the level of importance that we have the right woman or man capable of building bridges into that area, because there are some significant institutional problems there, not the least of which has to do with the land tenure system, with access to capital, and with the importance or forming the right partnerships.
It seems that the Minister of Agriculture, David Carter, has presided over the allocation of grants and capital into the agricultural sector in a wretched way. According to my colleague from the West Coast, Damien O’Connor, it almost looks as if vested interests are being—yet again—rewarded. It is important that the Productivity Commission has people who can turn their attention towards the sector. Without the introduction of science-based capital, innovation, and clever research that is designed to meet the specific, distinctive institutional problems in that small segment of our economy, I think the commission could turn into something too ideologically narrow, or too full of puffery.
One of the redeeming features of the terms of reference concerns the commission working jointly with other agencies, including overseas agencies. I imagine that is an opportunity for the Productivity Commission to focus on what is happening in Australia. We already have enough of our Kiwis in Australia enriching the Australian economy. We need to get the right blend of people on the Productivity Commission, and emulate in our economic thinking what Australia has been able to do. The Australians do not deprecate or marginalise representatives from the labour movement, but integrate their perspectives into a broad plan to build the people as they build the economy. The member from Maungakiekie is quite entitled to speak against the very sensible amendment from my colleague the Hon Lianne Dalziel, the chair of the Commerce Committee, but what he reflects is a very parched view about the underlying accord that we think is very, very important.
Yes, the word parched does strike me at this hour of the night, but it is still Thursday—it is still Thursday, etc. I think I might need it at about 5 to 12, actually. Anyhow, underlying what the member from Maungakiekie was saying was the view that there cannot be meshing together of the perspectives of those who are in control of capital and the perspectives of those who are proxies for the voices of labour—the voices of people. Yes, those people who are making investment decisions have to bear in mind the rights of shareholders. We have learnt about, and seen, a less atomistic approach being taken in Australia. It is less divisive than what we are seeing from our colleagues on the other side of the House.
So in that sense, when the commission may be working jointly with other agencies, including overseas agencies concerned with improving productivity, it will come down again to who and how many people—people who are not captives or cheerleaders for that narrow range of vested interests who do not want to see a Productivity Commission—challenge the growing gap of haves and have-nots in New Zealand. In that sense, when there is a dismissal, and a jettisoning by our colleagues over there of that very useful contribution made in the form of an amendment, then we have every right to be concerned.
The commission’s work will actually not deliver any serious change unless the Government or the politicians of the day have faith and confidence in the quality of their work. Although Mr Wilkinson and Don Brash are hewn out of similar ideological matter, as represented on the other side of the House, they have been tossed aside. So we can see that National is prepared to throw even its own to the sharks. It reminds me of a great white shark coming out of the sea where there is a placid seal moving on the top of the ocean. Out comes the great white shark and snaps open its jaws, and down its gullet goes the seal. That is what happens to people such as Helen Kelly, who bring forward suggestions and contributions. I think she would be a fantastic contributor in that organisation. It is evident that those prospects are very narrow, because personal agendas are likely to intrude in terms of the kinds of characteristics a person will be expected to show, and also in relation to the areas of concern to productivity that will be focused on. That is a matter of some concern to us.
I want to come back to what I said before, which is that the commission has the ability to grow beyond three or four members, in the sense of appointing associate commissioners. I hope that those discrete projects flow from what firms, population groups, and communities of interest are telling the commission, and that they do not flow from the brainwaves of the current Minister or some of his colleagues. [Interruption] I want to be positive. I feel that I will be able to make a better contribution with a negative connotation at 1 minute to 12. I think I will reserve it until 1 minute to 12—on Thursday.
GRANT ROBERTSON (Labour—Wellington Central) Link to this
I want to talk about Part 2 of the New Zealand Productivity Commission Bill, and, having given a relatively positive speech on Part 1, I will now do the opposite of my colleague Mr Jones and be a little bit more negative about this part. As we have gone through the debate, and Lianne Dalziel has put forward her amendments, the Minister in the chair, the Hon Rodney Hide, has responded to them largely in a negative way, which has highlighted my concern. We have an agreement in principle that the Productivity Commission is a good thing, and we think it will be very useful for the future of New Zealand, but its usefulness will be in part about its durability in terms of being able to cope with the changing fortunes of political parties and some of the different agendas pursued by political parties. I think that the changes Lianne Dalziel has brought forward, in particular the change to clause 12, are examples of where the durability of the Productivity Commission could be enhanced, and that is through the notion of effectively developing the idea of social partnership within the Productivity Commission’s terms of reference.
On this side of the Chamber we find it quite surprising that the current Government has not chosen to pursue the tripartite work that was going on in the skills area. Obviously, the Skills Strategy, which Business New Zealand and the New Zealand Council of Trade Unions have worked on with the Government, was a successful strategy. It was an example of social partnership in action, skill development, and the enhancement of skill. As my colleague Shane Jones has said, productivity is about people. One of the key drivers to productivity is enhancing skills and increasing training. Why this Government has chosen not to invest further in the Skills Strategy and, indeed, in keeping the skills forum going is a great surprise to us. From our point of view, this amendment to clause 12 is actually about ensuring that there is some durability and that there is some inclusion and involvement of the key participants—the New Zealand Council of Trade Unions, and Business New Zealand—in terms of, in this case, workplace productivity and productivity generally in New Zealand.
It is of great concern to members on this side of the Chamber that the Government is not prepared to pick up this kind of idea. It makes us wonder about the scope of the commission and how it will be used. There is an awful lot of power in the hands of the responsible Ministers. Of course, that is as it should be. Parliament is sovereign, and Ministers of the executive come to us and we hold them to account. Elected representatives should be controlling the direction of this work. But we want the commission to be able to work as broadly and as inclusively as it can, and we want the commission to be able to challenge the Government, and to challenge all the ideas and concepts that any Government is putting forward, and, in particular, the Government of the day. So it is disappointing from our point of view that there has not been a willingness in the Government to pick up the amendment to clause 12. But perhaps we should not be surprised. We should not be surprised, because the Government has largely ignored things in the skills area where that social partnership programme was working really very well indeed.
Of course, there have been other issues around skill development—the cuts in adult and community education, for instance, and the restriction on tertiary education places. None of that bodes especially well for a commitment to the core element of productivity, which is that of raising skills. But the opportunity is here for the Government to pick up Lianne Dalziel’s amendment and get Business New Zealand and the Council of Trade Unions on board. I do not buy Sam Lotu-Iiga’s argument that somehow or the other this could be difficult because the names might change or something like that. We change things all the time in law when that takes place. This is about embedding social partnership in the Productivity Commission and it is very disappointing that the Government has chosen not to pick that up.
I want to go back from clause 12 to the whole question of the membership of the commission in clause 10, which has been alluded to by a number of members. I draw on the example of the Treasury board that was recently put in place by Secretary to the Treasury, John Whitehead, no doubt talking with the Minister of Finance, Bill English. There was a great palaver about how this would be an excellent example of how Treasury would be able to reflect the community’s interests and those affected by the fiscal policies and the overall policy framework that Treasury is responsible for. The names of those on the Treasury board came out and it was just the usual suspects. It was the usual board members, the professional board members, and we had concerns about one of them in particular and that person’s links with the broader National Party. Generally the people who were appointed represented a very narrow range of people. They certainly did not represent the broader community.
Our concern when we look at clause 10 on the membership of the commission, as others have said, is that Mr Sherwin’s early appointment does not bode well. He reflects a particular ideological mindset, but, more than anything else, I think he represents a narrow idea of what this commission could do. As with the Treasury board and the commission, we should be thinking broadly. I remember thinking when the Treasury board was being appointed “What about appointing someone like Diane Robertson, the Auckland City Missioner?”. What about saying that we actually care about the impact of Treasury’s policies on real people, as Shane Jones said—not the big end of town; the other end of town? I really would encourage the Minister as we go forward in this process to find a way of getting a commission that is reflective of the very broad nature of productivity that we have been talking about tonight. Again, it does not bode well that the question of social partnership is dismissed so quickly, because I am quite sure that when we look at the commission’s membership it will be a concern. That has been a concern for a number of members of the Labour caucus. We support the idea in principle but we have concerns about the way it will be implemented, and certainly Mr Sherwin’s appointment is a very bad start in that regard. We want to make sure, as the commission is appointed in full, that it does not fall into that trap.
I will refer in my remaining time to the other amendments that Lianne Dalziel has put forward, particularly on the purpose of the commission. She is correct to identify the area of practical activities and I think that the commission could usefully take that up. There has been some very good work done by the partnership resource centre out of the Department of Labour in the last few years. It was an initiative set up by the fifth Labour Government and has drawn together the skills of people from the union movement and from the private sector around how to improve workplace productivity.
Jonathan YoungI will have to have a look at that. I can certainly introduce Mr Young to some of the people who have been involved in it. There are some private sector outfits. I know that Air New Zealand and one or two others have been involved and have really enjoyed their links with the partnership resource centre. Let us broaden out this definition so that the practical activities, which are like pilot projects that the partnership resource centre undertakes around productivity, could actually be part of the commission’s work. I think Lianne Dalziel is on to the right point there, and—again—with the amendment that comes in under clause 9 on productivity projects. This is where the commission could have a more detailed mandate and a more detailed and practical ability to take on those projects. I think it is unfortunate that the Minister has ruled out accepting those amendments, because I think they broaden out the definition. Yes, we absolutely want research, and obviously we want the inquiries done, but we need to start moving a little beyond those to some practical projects that could be taken up.
To conclude my contribution at this time on Part 2, I say that it contains some very good points, but there are a number of clauses that could be enhanced. If we do not get this right, then the Productivity Commission runs the risk of being seen as pursuing a particular agenda. I hope it is not Mr Sherwin’s old agenda—it should not be, because we all believe that this is a good idea. We need to give the framework to ensure that the Productivity Commission can be durable across Governments and has the ability to undertake practical work in developing social partnerships. That is missing from Part 2 at the moment, and that disappoints me because in general this is a very, very good idea.
KATRINA SHANKSHon LIANNE DALZIEL (Labour—Christchurch East) Link to this
I want to go back to the Minister’s comments when he ruled out the changes to clause 12(1B) that I am promoting, because I think he has misunderstood what the clause was. He went on to refer to clause 13 of the bill, which talks about who the Productivity Commission consults with. The reason I have moved clause 12(1B) is to make sure that it is the referring Ministers who consult with Business New Zealand and the New Zealand Council of Trade Unions when they are setting the terms of reference for an inquiry. There is a very important reason for this, and it goes to the regulatory impact statement, which of course I have downloaded off the website, now that it is no longer available in the bill as introduced. It says this about the consultation that was done on this bill: “Discussions were held with a small number of New Zealand senior public servants, current and past politicians and informed commentators from consultancies and academia. Discussions were also held with the APC, VCEC and Australian Treasury.”
Hon LIANNE DALZIEL Link to this
Is that not a really good start to social partnership! That is the reason I want the concept of social partnership embedded in the setting of the terms of reference. Of course the Productivity Commission will talk to the Council of Trade Unions and Business New Zealand—that is a given. Everyone knows that it will do that. I am not seeking for any parameters to be put on who the Productivity Commission consults with. It will be putting out discussion documents and hearing submissions. It will then put out a draft report, as the Australian commission does, it will hear further submissions on that, and it will be ultimately reporting to the Minister after in-depth consideration and inquiry into these matters.
If the social partners and if our trade union movement, those who represent the workforce, and Business New Zealand, which represents those who run our businesses, are not somehow embedded in the very proposals for the terms of reference for the inquiry, then what are we going to get out of it? That is what concerns me. The consultation on this legislation has not been as inclusive as it should have been. In fact, we are told in the regulatory impact statement that the consultation confirmed the Australian experience—which is not surprising, since more Australians than New Zealanders were consulted—and it was judged that further consultation in New Zealand would quickly reach diminishing returns. I think that is a little bit of an insult, given the huge contribution that both the Council of Trade Unions and Business New Zealand made to productivity development in the entire period that we were in Government. For 9 years they were regarded as partners that sat at the table and were engaged in ongoing consultations with a range of Ministers. I was one of the Ministers they were engaged in discussions with. I think it is very unfortunate that the Minister dismisses the amendment on the basis of the commission’s procedures that have nothing to do with the clause that I am seeking to amend.
The other thing I would really like the Minister to do is talk about the contributions from the different Government agencies that have been selected for contributing to the costs of setting up the commission and its ongoing running. When one looks at the level of contribution, the largest contribution comes from Treasury, which is not surprising; the Ministry of Economic Development, which is not surprising; and the Department of Labour. Why is the Department of Labour the other large contributor? Because workplace productivity is one of the major drivers of productivity. It is not the only one, and it is not supposed to be the only focus. But even the contributing ministries make it absolutely clear that the Government itself sees workplace productivity—I mean it is micro and macro, but the micro is the workplace, and the Government itself has said that this is one of the three top contributors from departmental budgets for the setting up of the commission and its ongoing running costs; it is so obvious that the Government itself sees workplace productivity as a key driver to our productivity gains over time. So why on earth would the social partners not be included as part of the setting of the terms of reference?
The CHAIRPERSON (Hon Rick Barker) Link to this
I think that is a fair question. The question is that the question be now put. Members of that opinion will say Aye, of the contrary opinion will say No. The Ayes have it. The question will be put.
The CHAIRPERSON (Hon Rick Barker) Link to this
I gave the member the opportunity to call for a party vote. I said the question will be put. I declare the vote, and if the vote is not challenged immediately for a party vote, we move on.
The question was put that the following amendment in the name of the Hon Lianne Dalziel to clause 7 be agreed to:
The purpose of the Commission is to facilitate policy development, practical activities, and research which will boost productivity on a sustained basis in order to support the overall well-being of New Zealanders, through the development of a high-wage, high-skill, sustainable economy that delivers benefits on an equitable basis to New Zealanders, having regard to a wide range of communities of interest and population groups in New Zealand society.
A party vote was called for on the question,
That the amendment be agreed to.
Ayes 25
Noes 62
Amendment not agreed to.
The CHAIRPERSON (Hon Rick Barker) Link to this
I say to members there is a very good reason for votes to be conducted in silence. I know it is difficult to constrain oneself when severely provoked.
The question was put that the following amendment in the name of the Hon Lianne Dalziel to clause 9 be agreed to:
(c)support initiatives which develop practical productivity projects and provide and overview of the range of tools/models available to maximise multifactor productivity in workplaces:
(d)run inclusive events/workshops on productivity and have educational tools and other information on its website:
A party vote was called for on the question,
That the amendment be agreed to.
Ayes 24
Noes 63
Amendment not agreed to.
The question was put that the following amendments in the name of the Hon Lianne Dalziel to clause 12 be agreed to:
(1B)In setting the terms of reference for an inquiry the referring Ministers must first consult with Business New Zealand and the New Zealand Council of Trade Unions to ensure that the concept of social partnership is embedded in the work of the Productivity Commission.; and
(4)Ministers and the Commission shall ensure that terms of reference require a range of models to be used in any research and analysis.
A party vote was called for on the question,
That the amendments be agreed to.
Ayes 24
Noes 63
Amendments not agreed to.