Dennis Wesselbaum: Willis warns of a ‘tight’ budget to come....

Willis warns of a ‘tight’ budget to come, but NZ should be going for productivity, not austerity

Finance Minister Nicola Willis has warned her 2025 “Growth Budget” will be “one of the tightest budgets in a decade”, with plans to reduce spending by billions.

Bob Edlin: Marama Davidson focuses on social inequality.....

Marama Davidson focuses on social inequality, but other factors come into NZ’s poor productivity performance

Green Party co-leader Marama Davidson has a somewhat simplistic view of productivity, as she demonstrated in Parliament yesterday.

At question time, she asked:

Michael Reddell: Is compulsory saving the answer?

Economic growth – and the lack of the sustained productivity growth that underpins it – is again briefly in focus. 70 years of relative economic decline still shows no sign of being durably reversed, but the last few years have been particularly tough and there is an election next year, and so the government’s rhetorical focus has turned to growth. Time will tell whether it is supported by any serious policy changes equal to the magnitude of the problem.

Michael Reddell: Going for growth…..perhaps

The Prime Minister’s speech 10 days or so ago kicked off a flurry of commentary. No one much anywhere near the mainstream (ie excluding Greens supporters) questioned the rhetoric. New Zealand has done woefully poorly on productivity for a long time and we really need better outcomes, and the sorts of policy frameworks that would supports firms and markets delivering better material living standards for New Zealanders.

Professor Robert MacCulloch: New Zealand's Productivity Puzzle -The Plot Thickens.

The author of the world's best selling textbook on economics, Greg Mankiw, is someone I admire for helping students, me included, understand the subject better. Many textbooks on the subject are confusing - his are not. Mankiw is calling for far greatly humility on behalf of those pretending to be economic experts due to the great limitations of our knowledge, particularly around what kind of government interventions work best.

Point of Order: Buzz from the Beehive - 5/12/24

Here’s a tip for tourism operators – hire Indians and “Other Asians” if you want to avoid malcontents

If contented employees are better to have on your staff than discontented ones, then a fascinating message emerges from a just-published survey of hospitality and tourism industry employees and their employment conditions in New Zealand.

Matt Ridley: Britain’s staggering productivity crisis explains so many of our woes

How is it possible that the public sector is no more productive today than it was in 1996, before the internet took off?

Britain has a chronic productivity problem. As the American economy marches upwards in output per person, Britain limps behind. As Ben Southwood, Samuel Hughes and Sam Bowman have calculated, if GDP per hour worked here had continued growing at the rate it grew between 1979 and 2008, we would now be 25 per cent richer and annual tax revenues would be £274 billion higher.

Alexander Plum, Kabir Dasgupta: Why a universal basic income might foster wellbeing but not productivity

Labour or leisure? Why a universal basic income might foster wellbeing but not productivity

The current cost-of-living crisis, high interest rates and the ensuing economic contraction have disproportionately hit low-income households. And for many low-income workers, the future remains uncertain.

On top of that, the rise of artificial intelligence may result in significant job redundancies and displacements. And recent employment data for New Zealand has been grim, with a rise in the number of unemployed.

Dennis Wesselbaum: NZ’s productivity stagnation requires a long-term plan from politicians. Here’s how

In the ups and downs of the global economy over the last decade, New Zealand has had one relatively consistent challenge: persistent productivity stagnation.

Productivity compares the amount of goods and services produced (output) with the amount of inputs used to produce them.

Since the Productivity Commission was set up in 2011, annual productivity growth has averaged at just 0.2% – one of the worst in the OECD.

Michael Reddell: Words and (in)actions

When I wrote yesterday morning’s post, highlighting how poorly both New Zealand and its Anglo peer countries have been doing in respect of productivity in recent times (ie, in the case of New Zealand, Australia, and Canada even worse than usual), little did I know that the Prime Minister was about to announce a bold new economic performance goal. I wasn’t even aware he was giving a pre-Budget speech yesterday.

But there it was

Brian Easton: A Revolutionary Economist

Robert Solow transformed the way we think about economic growth.

When you are in the trenches, you may not always realise what the war is about. Years later you read an account and see more clearly. Thus it was with me in the 1960s when economic analysis went through a revolution.

My insight came later when reading the budgets in the 1960s of Minister of Finance Harry Lake about whom I had been asked to write. The speeches expressed an ambition to increase economic growth, but the analysis was around capital investment only, which sounds very incomplete to today’s economist. Reflecting, I realised Lake was using the explanation I had been taught in my economics courses.

Mike Hosking: We need more productivity

My policy of the week, and this may or may not become a thing for the next couple of weeks depending on the quality of what we see, goes to Act and their productivity ideas.

That’s not to say a tunnel in Wellington isn't a solid idea, but it's not hard to announce a tunnel.

Productivity is one of the great handbrakes on allowing this country to be great. We have talked about it for years and failed at liftoff every single time.

Josie Pagani: Don’t waste a good crisis, fix productivity

“Productivity isn't everything, but in the long run it's almost everything.” Left-leaning economist Paul Krugman wants us to worry about it more. Without it wages do not increase, we build less stuff, fund fewer health treatments, and learn less.

This is a column about productivity. No, wait! Don't go. I admit, the word “productivity” sounds less cuddly than “wellbeing” – a word we hear too often, but only Treasury and life coaches can define. See also “Circular Economy” and “Mindfulness”.

Productivity refers to a real concept: The amount of valuable products and services created with the stuff we put in. Productivity growth is about getting more from fewer inputs.

Point of Order: Education in crisis, in part because of falling attendances......

......it’s a problem NZ does not have on its own

Education is in crisis in New Zealand — that has become a headline which will be all too familiar to readers of Point of Order. This week, Newshub’s AM show featured it with the catchline on how attendance rates in schools had fallen from 66.1% in term 4 of 2019 to just 50.6% in term 4 of 2022.

Economist Cameron Bagrie told AM’s Ryan Bridge he is “horrified” by the figures and they will have significant real-world consequences in a few decades.

Point of Order: Govt’s plan for lifting productivity and wages entails a $30m investment and a role for the state as a partner

One economic measure which Ministers of Finance can’t brag about is productivity growth. It has been an issue of concern for decades.

In the 2022 IMD World Competitiveness Ranking, New Zealand suffered the biggest drop in rankings among 63 nations compared on measures which include business productivity.

New Zealand dropped in all competitiveness rankings. We ranked 46th for technological infrastructure and 27th for scientific infrastructure, while our track record on productivity and efficiency landed us in 48th place.

Alwyn Poole: Education and the supply side of inflation

Yesterday this headline was in the NZ Herald: Missed opportunity: $3 billion lost in NZ each year due to lack of productivity.

There are two broad sides to determining the general price levels in an economy – the demand side and the supply side. Inflation can be caused by over pumping the money supply making interest rates low and spending relatively easy. Government spending can also play a huge part and there is no doubt that this government, under Grant Robertson, has borrowed [and] spent appalling amounts of money.

Roger Partridge: Minister’s new Fair Pay Agreements claims don’t compute

Persistence looks set to pay off with one of Labour’s 2017 election manifesto promises: to reintroduce compulsory sector-wide collective bargaining across the country. Dubbed “Fair Pay Agreements,” the Government’s plan is to take New Zealand back to the system of awards that dominated industrial relations for most of the 20th century. 

Yet, try as they might, successive Workplace Relations and Safety Ministers have been unable to make a credible case for Labour’s radical FPA proposals. 

Back in 2018, the terms of reference to the FPA Working Group from then Minister, Ian Lees Galloway, argued there were multiple “problems” with New Zealand’s labour market settings. There was just one issue with the former Minister’s claims. None of them stacked up. 

NZCPR Weekly: Improving Productivity and Wellbeing

Dear NZCPR Reader,   

In this week’s newsletter we look into New Zealand’s productivity problem, our NZCPR Guest Commentator Michael Reddell shares his suggestions for lifting productivity and economic success, and in this week’s poll we ask whether you think productivity will improve under the new Labour Government.

*To read the newsletter click HERE.
*To register for the NZCPR Weekly mailing list, click HERE.  

Stephen Franks: NZ’s productivity mystery not mysterious to me

I’ve been musing on the official puzzlement about our country’s woeful lack of productivity improvement. 

It turns out that for years our productivity has barely improved. In other words we are generating too little more per head than 20 years ago. Our GDP has grown, but disappointingly little more than population growth.

We have a whole Productivity Commission to agonise over the issue.