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BNZ economist Paul Conway says the challenge for New Zealand's political parties is to reframe their thinking and create an economic plan that breaks the shackles of our 'economic geography'

BNZ economist Paul Conway says the challenge for New Zealand's political parties is to reframe their thinking and create an economic plan that breaks the shackles of our 'economic geography'

Paul Conway*
(This article is part of Interest.co.nz's Election Series).

“Productivity” is not the most exciting word in the dictionary. It can sound like something unpleasant that is done to you. But by delivering more for less, better productivity gives us the choice of higher incomes or less time working. It also supports the delivery of government services in an increasingly tight fiscal environment and makes paying down debt easier.

It is no exaggeration to say that better productivity is fundamental in lifting Kiwi wellbeing. That is why we need to talk about it.

Successive governments have tried various initiatives to lift productivity. But we still lag well behind countries we like to compare ourselves with. Relative to the OECD average, New Zealanders work about 10% more hours per person to produce about 20% less output. This is why the average income and wealth of New Zealanders are both below the OECD average.

Putting a pro-productivity policy agenda in place in New Zealand is not easy. Ours is a tricky little economy and challenging to understand. In fact, until recently, the prevailing wisdom was that New Zealand had a “productivity paradox”, which is another way of saying “we have no idea”. But if we do not know the reasons for our low productivity, then policymakers are flying blind and unlikely to adopt policies that are ideally suited to our economic situation.

While clearly a difficult issue, the fact is that after decades of research and debate, we do have a pretty good idea why our productivity performance is subpar. Part of the story is that we are starting with a disadvantage. New Zealand’s “economic geography” – the fact of being a small economy situated a long way from large international markets – has made lifting productivity difficult.

Because of remoteness, most New Zealand firms are not well connected internationally, which slows the diffusion of new technologies into our economy. With tiny domestic markets, most firms are very small and with limited capacity to invest in capital, which is essential for productivity growth. By the same token, many firms also underinvest in “knowledge-based assets” – such as R&D and data – which are becoming increasingly important in driving growth in 21st century economies.

While economic geography has constrained our productivity in the past, we can lessen its negative effects and even turn it to our advantage going forward. The trick is to use our understanding of the reasons for our low productivity as a basis for developing policies ideally suited to our economic situation. The challenge for political parties is to reframe their thinking and create an economic plan that breaks the shackles of our economic geography.

Such a plan would need to include two key overarching themes. The first is a strong focus on encouraging the uptake of digital technologies. Fortunately for us, digital technologies expand markets by reducing the cost of being far away and by making it more likely that Kiwi innovations get noticed internationally. These tools are also fundamental in lifting the performance of small New Zealand firms. Lockdown gave us a glimpse of this potential.

The second crucial overarching aspect of a pro-productivity reform agenda is focus. As a small economy, we cannot aim to do ‘a little bit of everything’ and a great strategy is as much about saying no as it is about saying yes. So, we need to focus on developing a few key engines of growth in our economy. Exactly which industries or economic activities are going to set New Zealand up as a thriving 21st century economy and what can policy do to remove constraints and promote growth in these areas?

Against the backdrop of these two overarching themes, a pro-productivity reform agenda would need to incorporate policy improvements in many different areas. This includes policies that: facilitate investment in physical capital and skills; enhance economic flexibility so resources can easily move into more productive industries and firms; and encourage firms to build the capabilities they need to adopt new technologies and innovate.

More details on the various aspects of this agenda are listed below.

Ultimately, lifting productivity is largely up to the private sector and there are many ways New Zealand businesses can enhance their performance. But to lock in higher Kiwi wellbeing for generations to come, we need policies that are optimal for our economic situation. We must use COVID-19 as a pivot to get on and build a stronger New Zealand economy that delivers for all.

A pro-productivity policy agenda for New Zealand

  1. Do immigration better

Immigration into New Zealand should focus on improving the skills available to New Zealand businesses. We should use our sky-high global integrity to target extremely high-skilled migrants with specialist skills in the areas of our economy that we want to develop into growth engines. The world has changed, and our migration policies need to be reviewed and improved.

  1. Improve the matching of skills to jobs

A skilled labour force is critical in lifting productivity. Our skills and education systems need to be of the highest quality and more responsive to demands coming out of the labour market. We need to “win the race between skills and technology” to futureproof New Zealand workers and ensure that the benefits of new technologies are spread widely across the population. Otherwise digital transformation will lead to greater inequality.

  1. Strengthen the economic return from science and innovation

The overarching objectives of the science system need to be clearly articulated. There needs to be a strong focus on creating rich, dense innovation ecosystems in areas relevant to the growth engines in our economy.

It doesn’t really matter if government support for innovation comes in the form of a tax credit or a grant – most countries use both. It’s about what works. So better monitoring and evaluation of innovation policy would improve its effectiveness.

  1. Improve the tax system to encourage productive investment

Tax is a hot political topic – particularly during an election campaign. The core philosophy of our tax system is “low rate, broad base”, which is good in principle but not applied in practice. A more consistent tax treatment across asset classes could lift savings, improve the composition of investment and spread capital ownership across the population. Our tax system needs to be doing more to improve our economic performance.

  1. Improve the housing market

Our housing market has been a source of increased inequality and reduced wellbeing for many New Zealanders over many years. Numerous reports have been written and recommendations made with the aim of improving the institutional, legislative and regulatory frameworks used in the design and implementation of the urban planning system. We just need to get on and do it.

More affordable housing would lift productivity by allowing more people to live where their talents are most valued.

  1. Improve the provision and functioning of infrastructure

Hopefully, the new Infrastructure Commission will help with this. A good start would be a well-understood pipeline of public infrastructure projects. Clear frameworks around the use of private capital, pricing and funding models that reflect actual costs, use and impacts would also help.

  1. Lift competition, especially in parts of the services sector

This is about reducing the costs to consumers and businesses from searching for and switching between service providers to get the best deal. Comparison websites, information disclosure and reasonable contract termination arrangements all have a role to play.

  1. Encourage collaboration

Given the small size of most New Zealand firms, collaborating to solve common problems is essential in creating clusters of world-leading firms. This is not about anti-competitive collusion, but about working together to improve industry performance. While this is largely a private sector challenge, Economic Development Agencies have a key role to play. Collaboration across research institutions, such as universities, and businesses could also be strengthened.

  1. Improve public sector productivity

Government activities account for a large share of the economy but measuring and lifting state sector productivity has never really been a priority. Without private sector disciplines, pressure on the public sector to lift productivity can be lacking. This needs to change.


*Paul Conway is an economist working at the Bank of New Zealand. He was previously the Director of Economics & Research at the New Zealand Productivity Commission. Paul has also worked internationally at the OECD and with the World Bank.

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80 Comments

The key factor that NZ is a developed country is because that it is a direct and full colonized country by Anglo-Saxon, who led the first (by UK), second (UK and US), and third (US) industrial revolution.

The technology advancement is the sole reason that separates the developed and the developing, highly productive and not productive.

For NZ, its productivity will always be at the tail of other developed ones no matter what it does.

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Political, legal systems, and access to education also help to differentiate developed vs developing nations.

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He's right, but it would require investors and the Reserve Bank of NZ to let it happen.

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Yup. The full potential of the R&D tax credit tax can only be unlocked when coupled with a tax on wealth/capital gains.

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We should use our sky-high global integrity to target extremely high-skilled migrants with specialist skills in the areas of our economy that we want to develop into growth engines

There has been a sharp rise in interest from those looking to move to NZ due to the public image created around our Covid response.
Immigration NZ received requests from 5k potential investment/business visa applicants in a matter of 3 days back in May. There is scope to update the criteria for contractor visas, given high-income individuals already working on contract remotely would like to do so out of NZ.

I was quite impressed when I went through the point system INZ uses to assess visa applicants. like the business being in a list of high-value sectors, doing something new, number of Kiwis hired, export potential, etc. We should borrow some of those criteria for our skilled migrant visas.

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I'm dubious about whether that would produce much benefit, because the skilled stream is diluted so much by other streams like partnership visas. Also, if they were genuinely high skilled they would qualify for parental visas, diluting it even more.

Business/investor visas have been a failure so far. There was some research showing that most of the money was put into Government bonds until the investor qualified for residency, after which I expect the money ended up the residential property market.

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There are multiple categories of investor visas, the ones you allude of should be .

I am sure INZ can run an economic model on the net long-term fiscal benefit from a migrant bringing parents, partners and dependents along, and set the wage threshold accordingly. They should also factor in the infrastructure costs associated with bringing those extra people in.

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Simpler to start a dutch auction for skilled residency visas.

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>I am sure INZ can run an economic model on the net long-term fiscal benefit from a migrant bringing parents, partners and dependents along, and set the wage threshold accordingly. They should also factor in the infrastructure costs associated with bringing those extra people in.

Like they did when they brought in 300,000 mainly low skill migrants in the last decade and left us with massive housing, transport and health infrastructure deficits.

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Don't need to do modelling. Using Data Matching it is possible to evaluate the benefit to NZ

Known Data points
Visa Number, IRD Number, Passport number, Arrival or Commencement Date
We are just not using it

1. Visa type and skill classification from INZ
2. IRD all arrivals have to obtain an IRD number
3. Customs - date of arrival - passport number
4. Payday Filing - weekly, fortnightly, monthly earnings
5. Gross Earning by industry - from payday filings
6. MSD welfare payments
7. Number of Visas issued, currently in country, not earning or unemployed
8. Extent of welfare received, by year for 5 years
9. If no income from Payday Filings must be in business, tax paid
10. How many have established businesses
11. What type of business - industry - turnover from IRD

Evaluating all of the above the economic success of the immigration can be obtained.

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You are leaving out many points relevent to measuring the economic success of immigration. How much money is sent back to country of origin. How many children do they bring and how many do they have in NZ. Are they intending moving to Australia. etc.
There is even the simple question - who is an immigrant? I once found myself talking to a man attempting to repossess my 2nd hand car - a friendly chat and when i sked him where he was from he said Samoa but I discovered he had been born in NZ about 40 years ago and had 7 children all born here. meanwhile he was surprised to discover I was an immigrant (from UK 10 years earlier) and had assumed I was a Kiwi.
Maybe an immigrant is anyone who is resident but not a citizen - a roughand ready definition.

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Only have to obtain residency now to be called a New Zealander

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Interesting article. I would single out infrastructure and housing.

When driving around Ireland last year I was amazed by how good it's motorways are now, by comparison our highway infrastructure is decades behind and in very poor repair. The housing shortage is restricting New Zealanders from pursuing higher paid careers in major cities.

That said these issues have been pressing for a decade or more and we've made no progress as such.

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We seem to have trouble building motorways. Have you driven on the Auckland Southern recently? That 1 lane upgrade has taken 7 years and is still underway. There rarely seems to be more than five workers on it!

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Look at the Manawatu Gorge that was closed in 2011 disrupting a state highway. From what I can see work has yet to begin in earnest, a decade later.

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Even the Waterview connection opening date kept slipping, with no real explanation as to why. And that's once these things are actually approved, which usually is years after they're actually needed. See also: Light Rail in Auckland - meanwhile, the North Western is clogged even at level 2.5 and the Northern Busway is less than a decade away from being at capacity. We should be upgrading it now, instead of waiting until it's been bursting at the seams for a few years before sods are turned.

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Thats unfair, there are also 12 traffic trucks, 2000 cones, and 22 signs.

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We have trouble with a lot of things that need deep and competent managerial expertise. That's one of the issues there's not enough talk about IMHO - we need to seriously upskill our management workforce (productivity commission acknowledges it but then doesn't put forward ideas for doing so). Number 8 fencing wire doesn't cut it when you want to be highly productive.

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I am dubious about the productivity gains you get from better motorways. People commute to work during their own time so the only gain you get there is from people being less stressed. In terms of goods, you've got the bottleneck of shipping so saving an hour here or there ain't going to do much. Time could be saved getting to face-to-face meetings but we're doing less of that anyway. Much better public transport and congestion charging would help during the workday. Goods transportation will be helped when there are autonomous electric trucks that can work overnight.

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The time people spend commuting is not a dead-weight loss. They're not compensated for it by their employers, but that doesn't mean it doesn't have value to the wider economy.

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It widens the geographical area people can access employment opportunities as well.

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We seem to not make progress on a lot of things that are obvious. that's kind of my point. We know how to do a lot of this stuff. Could we please just get on and do it.

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As voters we're also guilty of taking our eye off the ball on long-term progress. We can't keep blundering along debating projects on a case-by-case basis, it's too slow and limiting for a country of this size and population. We should be having a debate about how much to spend on developing a motorway network, not whether a road should take route A or B.

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I agree that we really need to lift the quality of the national conversation on our economy. I guess that's what I'm trying to do with these OpEds. But that's pretty slow going too I must admit.

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Keep up the great work. Unfortunately I do not expect the next government to be one of action regardless of the outcome.

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I was gonna offer all Politiacians, Public Servants and Bankers a weekend over time job working on Infra Structure...........we have more than enuff work to finish, what they started, but never finished.

And I ain't joking.

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Housing is the elephant in the room, but for a different reason than stated.

Why invest in new plant and materials, training, business, software or innovation when buying a crumbling villa offers better returns? Maybe after paying your exorbitant mortgage, there's little left to invest at all. The housing market is a parasite sucking the life out of our economy.

The source of the problem - the government. Housing is not a free market, supply is strictly controlled. Complicit are the banks, who drain billions through interest payments.

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Exactly. Which is why the TAX system needs to be fixed. Fix the tax system to encourage productive investment rather than speculation on residential housing and you change the game. Productivity growth will flow as a result.

There is only one party that understands this and wants a wholesale change to the tax system.

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Agree https://www.top.org.nz/top_s_fair_tax_reform_expert_reaction. NZers are a selfish bunch though. Seems like people would rather be slum lords over the great unwashed, than have a healthy thriving middle class and productive society. Short term thinking at best.

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A special tax rate of 70% for income from rentals would do it coupled with a limit to the write-offs you can make. Rentals get sold off, house prices slump, and it becomes cheaper to buy than to rent. Everyone wins, especially the landlords who sell off their homes before the price crash.

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"Everybody wins" except tens of thousands of young people who worked themselves to the bone to actually be able to put a roof over their head, who face 30 years of the same just to get out of negative equity?

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It is funny how it is speculators who love pushing this rhetoric. We are not naive. We know your game.

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"My game" is I own a house, one house, that I live in. My rhetoric is that I'm a home owner who doesn't want to end up with massive amounts of negative energy, after putting off things like having a family so I could get a stable roof over my head. I know it's hard to get your head around, but not everyone who doesn't want to end up financially ruined if house prices drop through the floor is an evil speculator swimming in a pool of gold like Scrooge McDuck.

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Most are, they get people like you to fight their battles for them. They convinced you to buy and now hide behind your argument whilst creaming it.

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No one "convinced me to buy". I'm getting old and I can't sit on the sidelines forever with my life on hold waiting for a correction that at this rate will never happen.

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When you bought did you think about all the people being left behind who couldn't afford the price you could pay and who are suffering exponentially now that house prices are rising? They are the big losers and their lives are going downhill as prices are rising. There are many thousands of them. If prices went down and they could buy then ALL their lives would be improved. The speculators are the BIG winners, thats a fact and they love hiding behind your argument.

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I'm well aware, thanks, I missed out on numerous 'affordable' housing ballots before I managed to buy a house. The fact that speculators are hiding behind my argument doesn't mean it's not a legitimate point, or that you get to pretend it wouldn't be abjectly ruinous for people who had the nerve to buy homes to live in. Now if you want to accept that, then you can talk targeted relief for first home owners still living in their first home, which might help. But you don't get to pretend that isn't going to have massive consequences because there isn't an easy answer.

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Government meddling is the problem, not the solution. The same demand and supply would still be in play in your proposal, the only difference is the government taking a cut, increasing cost.

The solution is to allow supply to meet demand, by reducing government involvement. Release land, taxes, fees, red-tape. If the demand is genuine (i.e. shelter) then first home buyers benefit from more affordable housing. If the demand is speculative (in Auckland, I suspect this is the case), those speculators will take a haircut.

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I think it's ultimately a reflection of who votes. Unfortunately, older people with houses vote a lot more than younger people without houses.

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Always make me wonder whether people should/would/could become more altruistic/compassionate with their views as they age and vote with a more utilitarian view as opposed to self interest. In that case it wouldn't matter whether the young or old were voting, as the old would have the wisdom to do what is right for the future, for the country as a whole. Might be wishful thinking.

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I think that people often just don't see the big picture. That's why we need national conversations on a lot of this stuff. I don't think anyone really wants to do wrong by their kids.

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I am that older person with a house. I will be selfish and vote for any party that permits my four NZ children an opportunity to buy a property or at least pay a reasonable rent. If all house prices in Auckland halved I would lose half a million in theory but remain in the same house but at least 3 of my adult children in their thirties would have some hope of buying their own property.
It is a mistake to assume elderly people only care about themselves. Similarly many young people have parents and grandparents and would vote for govt investment in reasonably priced sheltered accommodation for us retirees.

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Yup. Imagine if we had the cheapest housing in the developed world rather than the opposite. All the capital that could be freed up to invest in businesses, technology, etc. Not saying the present system doesn't generate business opportunity, as those who are flush with equity start businesses, but the cost is that those who don't have assets get sidelined and the one thing we are all meant to appreciate is the that your geniuses, your grounding breaking scientists and your entrepreneurs can come from any background. Fact is, a credit-driven monetary system builds wealth for some and increasing barriers for others.

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Me and a friend are exactly in this position. We have a couple of great ideas about starting a business, which we have been trying to get off the ground for a few years. Problem is neither of us have the ability to invest in it - housing (mortgage and rent payments) are sucking up so much of our money, we have no ability to move from our positions. Goodbye potential IT business worth 10s of millions of years to the NZ economy. We have talked about moving overseas and doing it somewhere else.

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Sorry to hear. The very definition of a wage slave.

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Yep. Banks don't want to lend serious money unless you have a property.
So yeah, young people can't start capital-intensive businesses unless their parents are wealthy or they've lucked out somehow. Sure sounds like a recipe for a vibrant, innovative business community.
I'd institute enormous tax credits on R&D and punitive ones on investment housing (unless it's new-build or intensification) and have the Reserve Bank set a limit to how much credit they will extend for residential property investment -- having to be matched dollar for dollar by investment in productive activity beyond that point unless they want to find their capital elsewhere.

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Have you tried to get Angel funding through IceHouse: https://www.theicehouse.co.nz/startup-entrepreneurs
Not sure if it would be relevant in your case, but maybe?

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Requires that you get a pitch sorted, which means you create a pilot product. Unfortunately working 60-80h weeks to pay the rents of the retired owners of properties we live in (oh, and their Super through tax) means that we don't have the time to actually build it.

Luckily my friend found a private investor through family friends which freed up his time to start his idea.  Since writing this article he now has a growing fin tech business employing around 10 IT staff and looking to take the first international step. In his words though "Man I got lucky finding that guy"... only a year later and he is almost at break even already.  Aiming for 10s of million in revenue around 5 years away and is likely to get there given the oppourtunity and lack of market in his space (he is creating a product which people don't really know they need, until they start using it).

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Bang on right.
Being a small country of 5 million, we can't afford to sideline a major part of our population from generating economic opportunities; this will only increase our reliance on foreign workers in the future.

More young Kiwis (about two-thirds) are graduating school with below average math and literacy skills than ever before, 98 percent of these belong to the poorest households in the country. Even from a purely economic perspective, this poverty trap is costing us several millions in wasted financial and human resources.

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Same comment as always from me.

Productivity is nowadays an energy-efficiency - human labour stopped comparing 200 years ago, which is about where economics is, development-wise.

Efficiencies are nudging up against the Laws of Thermodymanics, entropy included. Thus the levelling-off globally. The fact that we are (energy-requiringly) more distant from anyone than anyone, probably explains our comparitive diffo.

Sigh, we need a physicist, not an economist.
https://www.interest.co.nz/opinion/96178/first-two-part-series-murray-g…

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"Do immigration better" - NZ needs to move more immigrants into leadership roles to realise their value better. The home-grown corporate spinsters are often the most significant impediments of unleashing the full potential of our workforce. The good thing is I can see the positive change is happening.

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'Do immigration' better should start with fixing our education system. Immigration should limit permanency to high-skilled workers who have qualifications and years of expertise in a field where a steady stream of Kiwis aren't entering or can't be incentivised to enter.

It should not be a quick-fix for failure in education and training policies.

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Targeting high-skilled individuals, but I'd like to see this counterbalanced with the issue that we aren't very good at paying locals with skills in line with our escalating living costs. Part of this has been the great hidden inflation of housing, even though living and transport costs are now accounting for bigger and bigger chunks of take-home pay. Locals who have also developed skills have also usually taken on student debt to do so, so I'd suggest there's some vague moral imperative to not rush into wage-suppression by skilled migration if we're expecting them to pay it back. Otherwise we'll end up with the perverse outcome of our local skilled workers fleeing to better-paying shores (see: Australia) and importing migrants at the expense of the local workers, who are still here and trying to make ends meet.

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We could put all efforts into training and developing all of the existing New Zealanders to their full potential. From remedial learning of the 3R's to highly technical professional training. Real career pathways and upward mobility for all. Instead, we just want to import a ready minted human unit to do whatever job needs doing. From fruit picking to CEO. Meanwhile, 40% of the population continue to subsist through a combination of low productivity/low wage jobs and transfer payments.

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Agree. I'd like to see us aim to be world leaders in online education. It would dovetail nicely with the film industry. Imagine all that creative talent working on course content when they're in between making films? Plus, it would provide insurance for a covid like event happening again.

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Let us talk over Zoom.

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Why be productive when you can simply speculate on asset prices?

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Yes, and to Chuck it back to the writer, as he alluded to in #4,5, how productive is it for banks to shovel money at housing. Instead of pointing the finger at government policy maybe a long hard look at citizen bank.

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The incentives of the current model are wrong - we want productivity but working for income is inferior (at least the last 30 years or so) to simply borrowing debt and buying assets. Hence why we find ourselves up shit creek, with a pile of debt, and poor productivity - yet it is high producitivty that will be required to solve the debt problem/i.e. generate earnings to service that debt, and if that doesn't work we will need high inflation (which could well hurt asset prices if the cost of debt rises) so holders of debt may all try to get rid of it and it will all become one giant mess.

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Austerity and a large dose of reality will also go a long way to solving the debt problem. Best to front-load the bankruptcies of the highly leveraged and zombie business owners starting the 3 year clock on their journey back to solvency asap. Also beneficial for our financial system as a catalyst for early adoption of whatever comes after the current Fiat QE framework. Necessity is the mother of invention (and productivity), and right now we've got a landlord class who's only need is lower interest rates, increased leverage, and becoming fat on the backs of wage slaves.

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If you think about it - our banks are most probably insolvent/zombie companies right now - its only external inputs via fiscal and monetary policy that is keeping them afloat. So we have artificial inputs keeping our largest and most leveraged companies afloat. Its completely insane - our whole economy is fake or a fraud.

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Totally agree. The whole system is broken. We should sort it out now and let it fail rather than keep inflating the bubble with more dire consequences.

I'm long on Bitcoin, but it is also the greatest form of protest there is against the status quo of QE right now. As government Fiat starts to fail around the world this decentralized immutable store of value is looking better and better.

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We need to talk about productivity....

Please talk about Housing productivity only......

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Productivity? Productivity of what exactly, more landfill? It's time to show all the economists the door and usher in new thinking.
There is a certain madness to conventional thinking, which, summed up, seems to say, "run faster, to stay in the same place".

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Productivity is a ratio actually. So it's not about infinite growth and all that. It's about an economy that works for everyone. Get with the programme.

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Ok, that explained exactly nothing

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Yes, we're well aware it's a ratio.

We are also aware it's physics ratio - which no economist understands (Daly, Georgescu Roegen and Keen the perhaps exceptions).

We are coming up against the lid of thermodynamic limits, and we are more energy-requiring travel from anywhere, than anyone. That is why your precious graph is flattening-off. Get with the programme and, more importantly, tell the rest of that 'Productivity Commission' that we need to re-set, remeasure and recalibrate.

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Yes there is a ratio
It is the ratio of Labour to Capital
What was the NZ ratio in 1980 and what is it today in 2020
NZ is going in the opposite direction. When you can recruit subcontinentals at $3 per hour to do work. At what point does the cut-over occur where it becomes economic to substitute capital for labour. Not that its relevant but there are more liquor shops in Manukau City than anywhere else in NZ. All operated with manual labour at $3 per hour. Try mechanising that.

In 1980 I joined a major NZ conglomerate of 100 subsidiaries. They set out on a journey to transform itself from a labour intensive operation to a capital intensive operation. It would exit all businesses that it couldn't be the dominant player. It recruited executive CEOs from a global head-hunting drive and set out to become a multi-national business. The drive was relentless. The company grew. The conglomerate failed. It is no more.

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Sadly, the longer I live here-now i7 years- the less impressed I have become with many aspects of NZ inc. It's a wonderful place for those who, like me, can afford it. The weather, the beach, the year round golf and the coffee here in Mt. Maunganui are great and I would not go back to Scotland to live. BUT, I am fortunate not to have bought one of the many thousands of crappily built and leaky homes. Roads take forever to build and then need resurfacing shortly afterwards. Infrastructure is a sick joke, waterways are just sick, the cost of living is ridiculously high and so on.

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I hear you. It doesn't have to be that way. with a decent economy that delivered for all Kiwis, NZ would be the best place in the world hands down. And the really annoying bit is that we know how to make that happen!

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Boring article. All this stuff has been talked about on several occasions over the last 10 to 20 years.
And the author's employer has been part of a sector that has been a big part of the problem.

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Those aren’t very compelling reasons to not want a better-performing economy.

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There's nothing in your article that hasn't been canvassed many times over the last 10-20 years.
Of course it makes sense, but so what if NO government is remotely interested in taking it seriously.
Again, your employer has been part of a sector that has lobbied government over a long period of time to provide much of the policy platform you are arguing against.

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So out of all the political parties, who is most likely to deliver the kind of changes proposed in this article?

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Memo to Paul Conway

quote "lifting productivity is up to the private sector and there are many ways NZ businesses can enhance their performance"

In my experience working at the coal-face for multi-nationals, public companies and small businesses - working in the field of re-engineering business processes - most businesses are re-engineering themselves constantly

Can you provide a list of re-engineering initiatives undertaken by NZ governments over the last 20 years
Then rate them by level of success

In my career the smartest guy I ever worked alongside was an "industrial psychologist"
Ever seen an article written by an industrial psychologist here on interest.co.nz ?

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Might be a short list.
I will start - Kiwisaver.

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Ultra fast broadband initiative

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Vision and Visionaries. NZ lacks visionary leaders

Dont need a great deal of smarts. Outcomes are a product of the sum total of doing many productive things with excellence. But do them. 35 years passed by since Roger Douglas came to prominence. He had a vision. He executed it. I wasn't here when Ruth Richardson strode the stage so cant comment. Douglas was lauded around the world by world leaders for 10 years. Then the local naysayers climbed in and rewrote history and ridiculed his achievements.

Douglas and Richardosn are two elder statesmen who had vision. As elders of the nation that expertise should be consulted at every turn.. All successful societies defer to and consult with their elders. IMO Douglas is the last of the visionaries here in NZ. I would be picking his brain constantly.

Philip Temple in ODT wrote - "When Muldoon was tipped out in a "landslide" in 1984, we experienced one of the most socially damaging regimes in the history of NZ. Rogernomics or neoliberalism was applied, without warning, even more severely than Reaganomics in the United States and Tory Thatcherism in the UK"

Because I was not here during his downfall I searched for some historical writings on it. Yes, in retrospect his actions were damaging. But he had little choice. In subsequent decades one can look back and say the actions of National and Labour have been socially damaging. The housing crisis under 9 years of National have been socially destructive. The inertia and passive in-actions of the last 20 years have been far more socially destructive than Rogernomics.ever caused in 6 months.

A result of the search was an interesting article written by Branko Marcetic a Canadian from Toronto. He describes clearly the massive calamities that befell Muldoon and Douglas as a result of the United Kingdom joining the European Union in 1972, severing the economic-umbilical-cord to NZ coupled with the 2 oil crises of the 1970's. The Covid-19 Pandemic crisis is of a similar magnitude to the 1970's. NZ needs visionary solutions right now. It does not need debates and conversations.

Branko Marcetic
An essential read for the 40% New Zealander's not born in NZ
A brief history going back to 1945
Neoliberal reforms have widened inequality and undermined the country's self-image as an egalitarian paradise
https://www.jacobinmag.com/2017/03/new-zealand-neoliberalism-inequality…

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Government after government has been a failure. They have not been willing to make the hard strategic choices.

1) Do immigration better - yes NZ needs a population policy aimed at maximising total welfare/capita growth (inclusive of gpd/capita)

2) Improve the matching of skills to jobs - a centralised clearing house of available jobs and salaries (like a stockmarket) would go a long way to improving transparency to job/skills demand in the market.

3) Strengthen the economic return from science and innovation - fine if its done from a NZ Inc approach and based on a business case approach

4) Improve the tax system to encourage productive investment - the tax system favours (safe free) housing investment ahead of savings (= investment) and riskier business investment. This has to change.

5) Improve the housing market - all zoning and density restrictions in the RMA need to be removed and simply be replaced with national environmental standards. NZer's have simply bid up land prices which is one the most inefficient uses of capital possible.

6) Improve the provision and functioning of infrastructure - all local & central government infrastructure provision should go through socioeconomic business case assessment.

7) Lift competition, especially in parts of the services sector - The HHI index needs to be given more weight by ComCom in decisions. We have too many monopolies & oliogopolies. ComCom needs the power to break up the supermarkets etc.

8) Encourage collaboration - fine if its for exporting the services/products.

9) Improve public sector productivity - absolutely. All local government spending should go through proportionate socioeconomic business case assessment. (Companies are constrained by financial business cases and the regulatory costs e.g. carbon price, the public sector needs to be similarly constrained by socioeconomics)

10. We can do other things like make sure the right price signals are in place. E.g. add congestion tolls - reduces peak demand - reduces the need for future infrastructure - frees up funding for other initiatives with high socioeconomic benefit/cost ratios

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10 - Or, more likely, it doesn't reduce peak demand, just loads more cost onto people who don't have the flexibility to change their travel patterns, and no one ever builds the alternatives. I can't think of something with more socio-economic benefits than eliminating the time lost in congestion. Without building infrastructure to give people the alternatives, you'll still have the congestion, it will just be costing the people who don't have a choice about whether they're stuck in it more and more.

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