ACT leader David Seymour says Productivity Commission has been 'hijacked'

Public Policy / news

ACT's David Seymour says whether the Productivity Commission should be continued is 'an open question'

5th Sep 23, 4:49pm by Eric Frykberg

The ACT Party thinks its own favoured child, the Productivity Commission, has proven a disappointment to its parent.

The party says the Commission has been "hijacked" and its current leadership is not right for the job.

The Productivity Commission was set up by the John Key Government in 2011 on the insistence of the ACT Party.

The party, which was led by Rodney Hide at that time, refused to support National on confidence and supply without getting the Commission established.

The current ACT leader, David Seymour, says the Commission has done some useful research which his party can draw on.

"But I think the Productivity Commission has frankly been hijacked," he says.

"The way the Productivity Commission has been staffed and directed in the past five years means I think that it is an open question about whether you would actually continue it."

The Commission was formerly led by a former deputy governor of the Reserve Bank, Murray Sherwin, but he was replaced three years ago by Ganesh Nana, an economist from Business and Economics Research Limited (BERL).

Seymour initially declined to name personalities, but then indicated Nana was not the right man for the job.

"I wouldn't have appointed Ganesh Nana as the Productivity Commissioner. That is basically due to a difference of view about what economic priorities New Zealand should have."

"I haven't thought about appointing (another) person, I am just thinking about the policy goals we have."

Seymour made no further comment on Nana, but the two have very different histories. Nana once told Stuff that New Zealand was "sold a lemon" on Rogernomics. His organisation also produced a report on economic disadvantage for some people and castigated New Zealanders' unwillingness to "shift the dial."

By contrast, Seymour is a child of Rogernomics.

Other Productivity Commission reports have looked at a wide variety of subjects, such as a low carbon economy, trade, housing affordability, local government and advocated moving away from an "ad hoc" immigration policy.

The Commission is declining to comment on Seymour's criticism.

It says agencies like itself with a statutorily independent role will often need to continue to perform that role through pre-election and post-election periods, and should undertake their role in a way that does not involve entering the political debate.

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51 Comments

by sit23 | 5th Sep 23, 5:00pm 1693890005

From it's title, I would have thought that the Commission might have spoken out on productivity and other things related to that. It would appear to have opinions on all sorts of things which have nothing to do with encouraging Kiwis to be more productive. That is obviously a leadership problem. The boss's opinion on Rogernomics is of no interest to anyone, and David Seymour is exactly right to express reservations about his leadership.

by rolande | 5th Sep 23, 5:41pm 1693892462

It was like that from right at the start. It's first review was on housing affordability (kinda related to productivity), it saw through the specuvestors and oligopolies, and saw the councils as having the smoking gun because of land supply. Was a very convenient finding for the government of the day.

by powerdownkiwi | 5th Sep 23, 6:13pm 1693894421

Productivity is really energy-efficiencies - as this reporter has been told.

The energy in a barrel of oil - $80 US? - is equivalent to 4.5 years hard human yakka. That means labour is noise, statistically.

But still we peddle the myth, and still report it unchallenged.

EROEI has peaked and is falling; energy per head peaked in 1980; efficiency gains run into diminishing returns and Thermodynamic limits - so surprise, surprise, they've plateaued.

Ask the question, Eric.

by Zwifter | 6th Sep 23, 2:18am 1693923492

Nobody asks the question PDK because the reality is, nobody wants to hear the answer.

by murray86 | 6th Sep 23, 8:14am 1693944846

Yes and no. I would suggest vested interests have hijacked the dialogue. Plenty are asking the question, and getting answers the vested interests don't want discussed.

But i think PDK is too vested in the physics to see and understand the politics. I find it ironic that the article describes Seymour as a 'child of Rogernomics' and cites Nana as saying 'NZ was sold a lemon in Rogernomics'. I find myself in agreement with Nana, and surprised that Seymour cannot see that NZ was most productive when the banks were highly regulated, and now when they are relatively unregulated, are at our least productive. How then does he see a solution to the productivity problem?

To me it is very clear that banking regulation must return to what we had before the gold standard was dumped. Where banks are not allowed to create money, especially without restraint. There is much more to this but really beyond the scope of this debate.

Edit; I note Luxon in an interview saying his response to productivity is Kiwis working harder, which suggests to me he doesn't understand either. I would suggest working smarter is the need, not harder.

by kiwi_overseas | 5th Sep 23, 5:06pm 1693890386

Seymour’s view of productivity is too narrow.

Sure, we can have a really productive economy by having slave labour and further subsidising businesses, extracting more fossil fuels and using the environment as a sewer.

However in a grown-up country, Productivity has to seek to improve wellbeing (net economic+social+environmental outcomes) per capita, not have just a narrow neoliberal view focused on gdp per capita.

There are many productivity issues in NZ, like lack of capital, too many small businesses, banks with too much risk weighting towards housing, and many capital lazy monopolies and oligopolies, and no population strategy. We need to get on and address these issues.

by kiwikidsnz | 5th Sep 23, 5:29pm 1693891792

"However in a grown-up country, Productivity has to seek to improve wellbeing (net economic+social+environmental outcomes) per capita, not have just a narrow neoliberal view focused on gdp per capita."

GDP pc is what pays for everything else. It's not a "narrow neoliberal view" it's the wellbeing foundation.

by kiwi_overseas | 5th Sep 23, 5:33pm 1693891994

Yeah - nah.

by kiwikidsnz | 5th Sep 23, 6:42pm 1693896167

So, describe zero GDP & compare / contrast with current...

by Kate | 5th Sep 23, 9:39pm 1693906792

Better yet, compare/contrast GDP per capita rankings with Happiness Index rankings.

Here's a teaser;

2023 US GDP per capita USD$63,953; US Happiness Index ranking #15th

2023 NZ GDP per capita USD$46,936; NZ Happiness Index ranking #10th

by HSL | 6th Sep 23, 6:56am 1693940204

GDP you can measure, happiness is subjective and depends on who, when and how you ask and what they mean by happiness. A wealthy country has more opportunities and facilities, as well as better services so people should on average be happier I.e. disabled services are better in the US then sub Saharan Africa. Sort so similar to wellbeing….what does it actually mean and how do you measure it?

by Pa1nter | 6th Sep 23, 7:35am 1693942543

Happiness is subjective, but it's also usually binary (you're either happy or you're not), and a lot less related to opportunity and services than we like to assume.

I'm of the opinion that happiness declines with abundance. Mostly through observation mind, but it does seem like the wealth of choice in our culture makes happiness more fleeting than the opposite.

by HSL | 6th Sep 23, 7:56am 1693943806

There is some truth in that, as people will always want more however wealth enables a country to provide the basics for life I.e. if you have no functioning police force and the gangs are out of control chances are this is a threat to your happiness.

by Pa1nter | 6th Sep 23, 8:10am 1693944648

The fear of it is a threat to your happiness.

But if you're talking western countries, they've never been safer. Yet anxiety is at an all time high.

Obviously if you're somewhere war torn or ravaged by hunger, you have material suffering, making happiness harder to come by. But in general terms, the resources we in our culture deploy to make life that teeny tiny little bit better, have a diminishing return on happiness.

The happiest people I come across are generally semi-agrarian people, with strong cultures and a lack of material abundance.

by Final Account | 6th Sep 23, 9:19am 1693948798

'Don't die today, don't die don't die toooo-dayyy!"

by kwbrn | 6th Sep 23, 9:20am 1693948858

There are only 9100 gang members in NZ not hundreds of thousands that you would expect considering the amount of news coverage. 3000 of these were deported from Australia since 2015.

Does HSL thing every brown face is a gang member?

by Kate | 6th Sep 23, 11:18am 1693955935

HSL. They deploy a very sophisticated model in calculating the Happiness Index - check it out - all very quantitative in its approach. Looks across many, many indices. Not subjective (i.e., surveying individuals) at all (again, last time I looked). Example, suicide rate per capita is an indices (last time I looked) - incarceration rate per capita - educational achievement stats, etc. etc.

by Pa1nter | 6th Sep 23, 11:43am 1693957430

Some of the Nordic countries get evaluated as being the happiest, while also having some of the higher suicide rates on earth.

Then again, they chomp down anti depressants like they were peanuts.

by interesting1234 | 6th Sep 23, 6:37pm 1693982223

Then again, they chomp down anti depressants like they were peanuts.

I can’t say NZ is a lot different in that regard as anti-depressants are dished out like tic tacs here. Having see many of my age group have them through teen years and 20’s the effectiveness is questionable.

by QuickFox | 6th Sep 23, 8:00am 1693944039

Is there not a better analysis of GDP, net income ratios of some sort. GDP is too broad perhaps.

by powerdownkiwi | 5th Sep 23, 6:17pm 1693894669

kknz - no, GDP in NOT repeat NOT the foundation for wellbeing.

GDP is added to if a war demands activity; GDP increased when they 'rebuilt' Christchurch - back to where it was before. Any REAL count would have been negative, then come back to zero. GDP was invented for a short-term reason, and it always had issues. Why so many folk worship it, is beyond me.

Supply of resources, and energy, per head - is the only measure of wellbeing. The rest is wishful thinking...

by Kate | 5th Sep 23, 9:40pm 1693906847

Thanks, saved me the effort!

by solardb | 6th Sep 23, 10:21am 1693952495

If you pay me $ 20 to dig a hole, and i pay you $ 20 to fill it back up , we've just raised GDP by $ 40.

by alphabeatrium | 6th Sep 23, 11:59am 1693958343

Except this is a really inane example. I don't know about you, but I spend my money only on things that make me better off. If I spend $20 I expect to receive at least $20.01 in subjective benefits from it, or I wouldn't do it. This is the whole basis of voluntary exchange.

by Palmtree08 | 5th Sep 23, 6:54pm 1693896885

Don't agree. Environment existed before humans discovered the hamster wheel, as did society. Economy also existed before humans discovered exponential growth through burning and trashing.

by kiwikidsnz | 5th Sep 23, 7:24pm 1693898690

The world population increased threefold sInce WW2, there's no going back to before the hamster wheel short of armageddon...PDK in 3,2,1...

by Palmtree08 | 6th Sep 23, 1:16pm 1693962968

That party is done, resources squandered, sense of entitlement exploded, but planet Earth same size. Every living thing on this planet has had to collapse to make room for human overgrowth, many providing essential ecosystem services. Excepting domestic livestock,pets, rats and roaches etc. There's only a handful of options left now. None attractive. Personally I prefer sizing the human super organism to the planets yearly solar energy budget and rate of natural resource replenishment. Getting there will require pain, but at least we can choose. The others, collapse and extinction and the Borg collective techno utopian attempt to become separate from our biology in a metal encased pseudo existence, which will resemble hell, on the journey to collapse.

by M0ralHazard | 5th Sep 23, 7:43pm 1693899808

Its even worse than that. They have been focused on plain GDP rather than GDP per capita

by Kate | 5th Sep 23, 9:48pm 1693907335

Sheesh.

But that aside, if that is their measure - then has it increased or decreased since they have been in existence?

If not, have government(s) ignored some/most of their recommendations?

Surely these are the question to be asked in measuring their worth - not what the perceived ideology of the head honcho is.

DS needs to think smarter and beyond ideology.

by rastus1 | 6th Sep 23, 8:44am 1693946683

To many small businesses? Most small business owners I know are far more productive than the big competitors - farming comes to mind.

by sharetrader | 6th Sep 23, 9:18am 1693948701

really i find small farmers are less productive because they are less likely to outlay funds to by new technology farter just keep on doing things the way they have always been done, i can say this as a shareholder in 2 diary farms down the bottom of the south island , rather than forgo a few years of profit to invest in a wintering shed like they use in scandinavian countries we truck some of our herd up to the top of the SI .

the numbers show we would pay it off in 5 years of no profit but that is the way we have always done it so we will carry on that way

by Pa1nter | 6th Sep 23, 9:36am 1693949795

Most of the agriculture I work in and around are constantly looking at and deploying new systems.

I guess someone small doing it at a hobbyist level could be stuck in their ways.

by rastus1 | 6th Sep 23, 9:48am 1693950503

You are not corporate then, so could be considered 'small'. How about sheep and beef. The family owned holding less efficient than the corporate owned? I think not.

Id also suggest you 'big' farming model is unhelpful and shows the destructive side of 'big'. Dairy killed off many family owned farms in Southland. Beef, lamb, venison, wool, velvet producing diversified family farms killed off by a dairy invasion (along with the waterways). Farms suited to the environment.

Have family with a small business. It can murder the big boys on price, quality, service - every point, and does. However the threat of the big boys noticing forever looms. These big boys show no innovation, do the job same way year after to year and are light years behind - but will crush a competitor if they choose.

So I don't buy the too many small business thing. These small businesses are gold.

by Squishy | 5th Sep 23, 5:17pm 1693891072

Given their recommendations are widely ignored by all corners in politics I don't think it matters much.

by blobbles | 5th Sep 23, 5:37pm 1693892232

That's exactly right. If governments had done most of what the productivity commission have been suggesting over the past 20 years, we wouldn't have had a massive productivity drought. Instead they have almost completely ignored all their recommendations and, unsurprisingly, ended up with low productivity.

Seymour is a hack for libertarian interests that believe productivity can only be achieved by business. When in fact most large technological changes of the past 100 years have gone through universities or been government funded (space/internet/microchips/medical advances etc). Companies only tend to make incremental changes to things that already exist, important, but not the major source.

by singautim | 5th Sep 23, 6:35pm 1693895730

Of course technical changes are most likely to originate in universities. (Universities with STEM departments). All but the smallest countries have universities but developing technical ideas into profitable businesses occurs in just a few places. Britain invented many technical improvements for cars that were then adopted by German and Japanese companies; Britain invented and built the first computers but the profits were made in America. Geoffrey Hinton the god-father of AI studied in Cambridge and Edinburgh but the money in AI goes to America and China. NZ should be doing more stealing ideas from foreigners - for example the profitable Kiwi fruit was once a Chinese gooseberry.

by RickStrauss | 7th Sep 23, 10:13am 1694038424

MPs have property portfolios. Those portfolios weren't going to pump themselves.

Productivity was put on a back burner while MPs and their mates gorged on the wealth of following generations via manipulating the housing market.

by Peter M | 5th Sep 23, 7:29pm 1693898952

Abolish the Commission then and engage The New Zealand Initiative on a performance monitored contract I would say.

by Due Diligence | 5th Sep 23, 8:04pm 1693901089

Pretty sure Geoff Simmons, former leader of TOP, until recently worked at the Productivity Commission. This is a guy who in all seriousness believes that the way to encourage more productive use of assets is to tax said assets on an annual basis, because the asset owners will then be better incentivised to use the assets in a way that generates more income in order to cover the tax burden. INSANITY.

The Productivity Commission should be dissolved and then rebuilt as a fit for purpose entity. Sounds drastic, but I really think it is necessary.

by E46 | 5th Sep 23, 11:33pm 1693913610

Any specific type of asset or just all assets?

by Due Diligence | 6th Sep 23, 6:40am 1693939249

All assets. When Geoff was leader I asked if I would be taxed for my boat. The answer was that if the boat was over a certain value it would be taxed. This was a few years ago, they have subsequently dropped this policy.

Also, land is not special, it is an asset just like any other. Georgism is a backwards cult with a very small number of very vocal and very obsessed adherents.

by rastus1 | 6th Sep 23, 8:53am 1693947205

You got it all wrong.

An asset tax will drive investment into productive assets, lighten the tax burden on the productive sector and discourage those such as land bankers.

Or put it another way - rid NZ of the scourge of property flipping and speculation in non productive asset owning activities.

by Due Diligence | 6th Sep 23, 12:36pm 1693960575

We want to encourage investment in cutting edge factory equipment to boost productivity, so let’s tax cutting edge factory equipment (along with almost everything else) on an annual basis. Genius. 🤪

The only place it would drive investment is overseas.

by rastus1 | 6th Sep 23, 12:55pm 1693961744

Are you okay? You make no sense.

by Due Diligence | 6th Sep 23, 3:04pm 1693969472

You stated that that an “asset tax will drive investment into productive assets” and then have the gall to tell me that I’m the one making no sense?

Explain to me how you think a tax on assets, which under TOP’s prior policy included factory machinery, would drive productive investment. Geoff’s view was that if you tax people on their factory equipment they will be forced to use it more efficiently to earn more money and cover the tax burden. This is nonsense.

He advocated for this when he worked at the Morgan Foundation too, referring to it as a Comprehensive Capital Tax (CCT). Read “The Big Kahuna”.

by E46 | 6th Sep 23, 6:02pm 1693980155

I actually agree with you that a capital tax on everything would be dumb and have negative effects.

Where I disagree is lumping in land with those other assets you listed like factory machinery and technology. We can create factory machinery, tools, and technology but we fundamentally cannot create more land, it holds a natural monopoly, and the land was here well before we were, and will be there long after we are gone, it's not a product of human creation or ingenuity it's more akin to air or water, and as fundamental to human life as those two are.

With our current ownership structure and tax setup, taxing it wouldn't have the negative effects we would see with other assets as you can't destroy it, remove it from the country, or change its utility. An LVT creates no deadweight losses and doesn't have the same negative effects other taxes have (e.g GST, Income taxes, property taxes, etc.)

by KH | 5th Sep 23, 9:14pm 1693905288

That Commission was "Wellingtonised". Thus useless.

The civil servant slugs were never going to let it work.

Seymour hopefully will give it a "Stop Notice". Just stop, go away.

by Kate | 5th Sep 23, 10:06pm 1693908365

Murray Sherwin was a deputy governor of the RBNZ - possibly a civil servant 'slug' as you suggest?

Ganesh Nana was a research director of BERL, a private sector economics firm.

Perhaps their differences (if there were any) were in methodology.

Funny thing is, Rodney Hyde of ACT always railed against QUANGOS, but in this case, he established a new one!!!

by kiwikidsnz | 6th Sep 23, 4:01pm 1693972883

The differences are more to be found in political persuasion, with blindspots acceptable to the mainstream parties orientations. Labour's appointment of Nana was criticised by more than a few at the time.

Hey Productivity Commission, leave 'social justice' alone | Stuff.co.nz

by Uncle Bulgaria | 6th Sep 23, 11:41am 1693957262

He really talks a lot of reactionary nonsense. We've been hijacked by emotional button pushers like this all our lives and here we go again.

by The_Golem | 6th Sep 23, 3:08pm 1693969707

Apart for generating endless reports that have been ignored by governments of all stripes, what has the Productivity Commission actually achieved?

It might be that most of parliament and the public service simply don't understand the idea of productivity: it's a blind measure of how efficiently we do things, and the things done can be beneficial, green, prosocial and all the rest: it is not an inherently malign measure.

An illustrative example: a few weeks back on the AM show, a minister was asked: "what are you doing to improve productivity?"

The minister's response was: "we've increased the minimum wage!" with a big smile.

To the repeated question the answer was the same, with a certain hardening of the minister's expression, while the host looked increasingly nonplussed at the gulf of understanding about a such a simple question.