Treasury Productivity Papers
Page updated 7 Jul 2011
This series of Treasury Papers focuses on New Zealand's productivity performance and policy. Six papers were released in 2008, one paper in 2009 and one paper in 2010.
Productivity is the biggest long-run determinant of wages and living standards. Our capacity to raise our standard of living depends on our ability to raise output per worker – the amount of goods and services each worker produces and the value they add. However, long-term productivity growth is not yet meeting our aspirations, which means many of our aspirations for a better quality of life are going unmet. New Zealand's low productivity growth is a long-term problem that has been an issue across a timeframe of generations, not general elections.
Raising our productivity performance is the biggest economic challenge facing New Zealand, and will require a sustained effort on a number of fronts. Treasury is publishing its work on productivity performance and what matters for productivity in order to broaden and deepen public discussion on this important topic.
The Productivity Challenge for New Zealand
Productivity is New Zealand's biggest economic challenge
Productivity and labour force participation are the key drivers of economic performance, higher wages and higher living standards. With an unemployment rate that is around the lowest in the world the biggest gains in New Zealand’s future economic performance will to have to come from productivity growth.
For more information, see the speech Putting Productivity First.
Low productivity growth is a long-term problem
The speech and papers address the issue of New Zealand’s long-term productivity performance failing to meet our living standards aspirations. Productivity performance has been an issue going back to the 1970s, as shown by the chart below.
Raising productivity performance requires sustained long-term effort on a number of fronts (for more information see the paper Putting Productivity First).
This work highlights evidence that raising productivity performance requires sustained long-term effort on a number of fronts, and is why Treasury is publishing this work to support the public debate. This work also acknowledges that it is the decisions of firms and individuals that drive productivity and that the role of government to provide a favorable environment for that to occur.
For more information see the paper New Zealand's Productivity Performance.
The Treasury's Work on Productivity
Treasury is publishing its work on productivity performance and what matters for productivity in order to broaden and deepen public discussion.
On 3 April 2008 John Whitehead gave a Putting Productivity First speech, which focused on three factors that are essential for raising long-term productivity performance:
- Investment - cost of capital and financial market underdevelopment.
- Skills - better supporting the long-tail of under achievers.
- International connections - supporting productivity through New Zealand’s place in the world.
Papers in the Treasury Productivity Papers Series
The papers so far in the series are as follows:
- Putting Productivity First - This is the series overview paper, which sets out the productivity challenge facing New Zealand and highlights key issues across the five productivity drivers of: enterprise; skills; innovation; investment; and natural resources.
- New Zealand's Productivity Performance - This paper discusses past and more recent productivity performance, highlighting the long-term nature of New Zealand’s productivity under performance.
- Does quality matter in labour input? The changing pattern of labour composition in New Zealand - This is a more technical Working Paper which accompanies New Zealand's Productivity Performance. This paper examines the changing nature and quality of the New Zealand workforce, and the implications of increasing labour quality for estimates of productivity growth.
- Investment, Productivity and the Cost of Capital: Understanding New Zealand’s “Capital Shallowness” - One of the biggest challenges facing New Zealand is its productivity shortfall relative to other OECD countries; New Zealand is currently ranked 22nd out of the 30 OECD countries in the productivity league table and an hour of work in New Zealand typically generates 30 per cent less output than an hour worked in Australia.
- Enterprise and Productivity: Harnessing Competitive Forces - A number of factors are important for lifting productivity and there are no quick fixes. For some measures the impact may not be seen for decades. Enterprise and the policies that underpin it are one important element in lifting productivity performance.
- Innovation and Productivity: Using Bright Ideas to Work Smarter - Innovation is one of five ‘drivers’ of productivity identified in recent Treasury work to develop a framework intended to help New Zealanders meet the challenge of lifting productivity levels and raising future living standards in a sustainable manner.
- Working Smarter: Driving Productivity Growth Through Skills - The development and utilisation of skills is important in explaining international differences in countries’ long-term productivity and growth performance.
- International Connections and Productivity: Making Globalisation Work for New Zealand - Small, high-productivity economies rely heavily on international connections – the flows of people, capital, trade and ideas between countries around the world.
- Taking on the West Island: How does New Zealand's labour productivity stack up - Joint paper with Statistics New Zealand.