Guest post: One reason for low productivity

We often hear how New Zealand has low productivity – that is, we use more inputs for the amount of outputs we produce compared to other similarly developed countries.

There are a whole host of possible reasons for this but I suggest that one of them is we have far too many decisions being made by committees who have ‘no skin in the game’. These are committees running government owned or council owned commercial entities as well the huge number of committees set up to make all kinds of decisions on health, education, welfare, business regulation, etc.

It seems that nearly every problem faced by government is given to some kind of commission, board, authority or similar body to deal with? The latest in a very long line of such committees was the flag panel. The problem is the decision making of these committees can be drawn out, torturous and expensive.

There is every incentive for these bodies to be inefficient because the members generally get paid by the day and have nothing at risk except maybe their reputations. Even then, they generally appear to want a reputation for being intellectual, risk averse and politically correct. Or sometimes they want to empire build with other peoples’ money and take all kinds of foolish risks like the board of Solid Energy!  

Instead of sticking to high level governance, members of these committees tend to get heavily involved in the process they are meant to be guiding. They can lead staff doing the actual work on a merry chase, going around in seemingly endless circles. It is not unknown for reports to go through dozens of drafts before members are happy. Sometimes they can never agree so months of work is done on a report that is never released!

Ironically, in recent years we have had the Productivity Commission looking at how to improve productivity. I don’t think they have done a bad job but they have exhibited some of the inherent weaknesses of committees mentioned above, and then failed to see those weaknesses in the bodies whose functions they have reviewed. I have seen no recommendations for reforming decision making body structures and incentives. New Zealand being a small country there really aren’t enough quality people to fill all the hundreds of positions that are meant to be filled by ‘wise’ decision makers.

If we really need to have a decision making body for some reason then why not have just one commissioner making decisions with the help of staff? Peter Dunne must learned something about the problems of committee decision making with his Families Commission because, in one of his more sensible moments (if indeed it was his decision), he cut down the number of commissioners from six to one.

If there does have to be decision making committees then their paid time should be strictly limited to a small number of hours for each major decision they have to make. That should hasten the plodding parade of pontificating prognostication we often see, and save lots of money in the bargain!

I’ll leave you with a list of just some of the national committees we have in New Zealand making important decisions and some not so important decisions:

Advertising Standards Authority
Alcohol Regulatory and Licensing Authority
Broadcasting Standards Authority
Charities Registration Board
Children’s Commission
Civil Aviation Authority
Commerce Commission
Commission for Financial Capability
Community Housing Regulatory Authority
Customs Appeal Authority
Earthquake Commission
Education Council
Electricity Authority
Electoral Commission
Employment Relations Authority
Energy Efficiency & Conservation Authority
Environment Court (they have laypersons sitting as technical experts)
Environment Protection Authority
Families Commission
Financial Markets Authority
Health Quality & Safety Commission
Horticulture Export Authority
Human Rights Commission
Independent Police Conduct Authority
Law Commission
Local Government Commission
Lottery Grants Board
Maori Television
National Infrastructure Advisory Board
National Rural Fire Authority
NZ Conservation Authority
NZ Film Commission
NZ Gambling Commission
NZ Geographic Board
NZ Music Commission
NZ On Air
NZ Parole Board
NZ Qualifications Authority
NZ Racing Board
NZ Sign Language Board
NZ Transport Agency
Psychoactive Substances Regulatory Authority
Productivity Commission
Real Estate Agents Authority
Remuneration Authority
Social Workers Registration Board
Tertiary Education Commission
Tourism NZ
Transport Accident Investigation Commission
Walking Access Commission
Waste Advisory Board

 

– “Industry Insider”

 


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  • Seriously?

    The main reason for our relatively low productivity is plain to see, we produce inexpensive stuff. It is not a reflection of a regulatory environment (NZ is often rated one of the easier places in the world to do business), or how hard people work. If you measure the outputs in dollar terms a country that exports milk powder and logs starts behind the eight-ball.

    • SnapperW

      And tourism too.

    • MaryLou

      People do have a bit to do with it, often times I have outsourced work to Australian companies, where NZ companies could have done the work. The hourly rate was higher, what with all their time and a half, double time etc. Nonetheless, work always came back with less alterations required, faster, and always on par pricewise or cheaper. Just so often easier to deal with. And the ease of business matters when you’re small and multitasking.

  • Dave

    As an example of how wasteful, I sat on several industry bodies for all manner of things, one a re-writing of a NZ standard. We had to meet in Wellington, as the government dept responsible was in Wellington, and they always had three representatives at meetings. YET, the 6 industry reps all lived on the north shore, up at 4.00 am, 6.00 am flight to Wellington, meeting at 8.30, finish at 4.30, enough time for a 6.00 or 6.30 pm flight to Auckland and home again, or stay another day to conduct business in the capital. We tried to change the meetings to Auckland, as it meant less travel overall, or balance them by alternating, but the government employees refused. the sheer weight of bureaucracy, and the uncooperative approach meant those working for productive enterprise carried the load. One government official refused to travel as he couldn’t pick up the kids if he traveled, yet 99% of parents manage to juggle this to earn the dollars. This same unemployable genius refused Skype as it was too hard to focus

    • XCIA

      We have a most capable colleague in Wellington who attends meetings with government. He is also married to the PPS of one of our more curmudgeonly MP’s of long standing who is revered by most civil servants, so that helps mitigate some of the games they try to play.

  • Tony

    I have not employed anyone for many years and the various compliance issues and Government interference makes me wonder why anyone would wish to run their own business. Owners of small businesses can be in the invidious position of not making the basic wage in a bad year(let alone the living wage). While some businesses become big businesses these are the exception and many businesses struggle for years and their end goal is to sell their business as a going concern and retire.

  • biscuit barrel

    Advertising Standards , despite the name isnt a government body, just an industry based group who only have effect with its members and those who apply its rules.
    Wicked Campers just thumber their noses, as they should

  • biscuit barrel

    Would be interesting which ones have been added in the last 8 years, and which ones have been abolished in the same time.
    I can think Charities Registration Board is one.

    Quite a few not listed Māori Fisheries Trust, Crown Forestry Rental Trust

  • cows4me

    Priceless, the productivity commission looking at productivity, did Monty Python dream that one up? My vote for oxymoron of the decade. Small business in this country gets the crap kicked out of it, take my word for it. Reagan had it right “government is not the solution to our problem, government is the problem”. We laugh about Venezuela but there are way to many useless tits in this country that rely on others to put food on their plates, this deal is getting harder to maintain and it will end in grief. To much government and to little doing.

  • Tiger

    They should get the last committee on that list to evaluate the effectiveness of the committees above it!

  • IKIDUNOT

    It’s part of the NZ phsychy (?)…..too afraid to make the ‘big’ calls eg to take responsibility for xxxx so ‘we’ micro manage and procrastinate till the cows come home (and the ‘go-getters’ have left for Europe or OZ).

  • digby

    I think you need to add into the mix the increasing number of highly paid professionals who perform tasks created by overly complex legislation. Simplify the legislation and get these smart people out doing productive activities. There are a huge number of accountants, lawyers and consultants who are employed performing tasks solely focussed on compliance.

  • Nesher

    The main reason for low productivity in NZ is our socialist Employment Law. While an employer can’t easily replace an employee with a better one (a business can’t fire a person because of his/her low productivity), productivity in NZ is set to be lower comparing to the countries with not-so-socialist employment laws.

  • Big fella

    Low productivity, my brother has a team of guys (4) in Sydney at the moment doing a big job. Anzac weekend means unions have closed the site for 4 days. No work. If anybody gets caught working the site will be shut down for a week. How’s that for low productivity? 16 working days lost for no compensation. Not just here.

  • Rick H

    The best way I’ve ever seen, to increase productivity, was done by one “Homer J Simpson”.
    Upon accidentally typing only a “y”, instead of the usual “yes”, he then yahood, and exclaimed that he had “trippled his productivity”.
    One of the many, golden moments of Homer-J.

    And not one kid who watched that, would have known what had happened.

  • Disinfectant

    The legal profession is one of the biggest brakes on productivity in New Zealand.
    The Law Society (professional union) protects their charge out rates.
    If we had a real market in law, the cost of nearly all activities would drop significantly.

    • TM

      Very good point. I would also love to know how much of the billings of the major law and accountancy firms is from Government (in some form or other including SOE;s etc) and how much is genuine private sector. Because of our obsession with governance you, by definition, need a lawyer to draft agreements and policies etc. Health boards are a classic – because they essentially just ration money – they need very robust and admin heavy processes. If we just had one health board we would save a lot of money to be re-directed.

  • TM

    I think one aspect we overlook in New Zealand is that, whilst we are generally hard workers when at work, we are actually seldom at work.With the exception of small business owners – how many people put in decent long productive hours. How many times have you heard people saying that are so busy, working long hours etc etc, yet try and get hold of anyone in a NZ corporate after 5pm Mon to thursday or after 3 on Friday, or the classic school holiday issue – where key people are “working from home”. We kid ourselves – everyone is trying to look busy but not productive. We are so obsessed with governance that we have boards for everything, ceos, consultants etc etc – but a smaller and smaller group actually working!

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