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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