EY's David Snell assesses Grant Robertson's first Budget and concludes there's much more to do to boost all-important productivity growth

The OECD says NZ does have a skilled workforce; the trouble is many of our best leave and are replaced by an excess of low wage immigrants. No trouble with immigrant experienced engineers, academics, doctors but our dept of Immigration has low wage bakers and chefs as 'skilled' immigrants. But only 28% of immigrants are 'skilled' even by INZ standards; the rest are family, refugees, etc. Because of our lack of infrastructure these cheap immigrants are displacing Kiwis with skills the rest of the world values by putting up house prices and damaging quality of life (congestion, over-crowded schools, etc).
So ensure immigrants earn well above average wage - it is the simplest long term solution to productivity.

The best way to improve productivity up is to force wage rises. This will
A) Retain skilled staff in the country
B) Force companies to increase productivity to be able to pay for the higher wage costs and produce more per unit of labour cost
C) Close down those enterprises that cannot meet the productivity challenge, thereby release labour and resource for those that are productive. (Obviously this will happen in a self balancing way and if enterprises are overly effected then more labour will be released to the work market and counteract the upward wage pressures)

The best way to do this quickly is to severely constrain immigration to the few work categories that can truely afford to pay high wages as opposed to a source of cheap compliant labour that just perpetuates our low wage low productivity economy.

Surely IRD should be compelled to pursue any tax collection that can be done so economically? If they can spend less than a dollar to collect a dollar they should do so.

The remaining tax liabilities they should attempt to sell on to private collectors.

As long as New Zealand's dominant business sectors chase low production costs rather than high customer value, our productivity per capita will be stuck in the mud. As they pursue this low-cost strategy (in effect attempting to compete with the third or developing world), New Zealand businesses have ever-increasing demand for minimum- or low-waged labour and limited or reducing need for highly educated, highly skilled people.

One result is that New Zealand doesn't get the benefit of its investment in education. This is an enormous structural problem. The well-educated leave - I have heard a previous education minister say that 80% of New Zealanders living overseas are degree holders. By comparison, many new immigrants (in my personal experience) barely have secondary education. I'm aware of the stated ambition of someone - a person with almost no English language ability - to work in a nail bar.

The outcomes?.New Zealand exports high productivity capability to the rest of the world. And overloads its infrastructure importing a low productivity economy.

To improve productivity, the first and foremost thing need to be done is to have a sizable and highly productive industry -- be it aircraft manufacturing, high speed rail manufacturing, weapon manufacturing etc.

If you do not have such a industry or industries, you only talk about improving productivity at margin at the best.

I love being in NZ but you guys work really inefficiently. So much hand holding!!! In our shared office we get considerably more work done (all our clients are over seas) than our office colleagues who all also work in digital media and IT. We maybe a max of 1-2 hours per month on the phone to clients (and we have a much bigger client list than any of the NZ companies we work alongside), they on the other hand spend huge amounts of time in meetings and on the phone. Mostly addressing unproductive issues. They don't get paid any more for all these meetings and phone calls, it's not time spent on building anything.

And I have experienced this in so many fields. We have a NZ accountant... we spent several hours on the phone and he wanted to meet in person too. All things that we could easily have done via email in much less time. It was perfectly pleasant but utterly unproductive. Our UK accountant is brilliant but we've never met him. We don't need to. We know he's a great accountant, he gets the job done, he doesn't need to hold our hands and we don't need to hold his.

I am used to buying everything online. But sometimes that just isn't possible in NZ. So I have to go into an actual physical shop, waste a bunch of time parking and queuing. This week, what I needed wasn't in stock, so I had to order it in store. When it arrived in the shop, there wasn't an automated system to ping me an email to say it was ready for collection, they actually called me and wanted to arrange the collection time... this shop just has 3 people standing about every day!!! So then, I had to spend several minutes on the phone, which interrupted the work i was doing. It doesn't sound like much, but it all adds up, to a lot of wasted time.

My experience is that NZ working culture is very relaxed, personal and informal compared to others. There are upsides to that, but productivity isn't one of them.

Do I detect a nasty business bashing edge in the rhetoric? One of the main problems is not knowing what the IRD will think, so businesses employ an army of accountants to tell them. The accountants then guess for them. Simplifying the rules is much better than ad hoc deductions. The IRD has enormous power to rule a specific expense as a capital cost and thus not deductible.

Bill English did enormous harm by abolishing depreciation allowance for buildings. It was a horrid fudge for vote buying purposes and effectively a tax increase for all businesses. It laid waste to the avowed concept of developing principles and sticking to them.

When will people get it into their heads that businesses are our customers? As individuals we tend to see businesses as arrogant quasi monopoly suppliers, but as citizens they are the country's customers. Without them we have no jobs and no tax income.

My experience with these sort of schemes is they are very time consuming for your best people, and any concession is largely wasted because of this.

Low productivity is a result of low interest rates and low wages. High productivity arises when capital equipment is worth installing in order to reduce the wages bill. So reduce immigration to manageable levels and stop incentivising low productivity occupations like making beds, serving coffee and selling houses to new people at inflated prices. Introduce debt to income controls so the Aussie bankers can't drain us dry of capital. Help business make profits so they can afford to expand. In short, get real New Zealand, stop deluding yourselves.

There are 2 systemic issues:
1) The high immigration rate means there is ever increasing consumer demand for company products. At the aggregate level there is no need to be efficient, i.e. more productive.
2) World wide interest rates have trended down since the 1980s lowering the rate of return required. This means more lower productivity companies exist