News Worthy

23 March 2007 - No. 102

Labour Productivity Growth Lowest on Record

The official productivity numbers released 16 March 2007 are alarming.

Contrary to the government's aim of lifting productivity in the
interests of raising New Zealand incomes to the top half of the OECD
range, the latest statistics show labour productivity growth to be the
lowest on record.

At 0.4 percent for the measured sector (essentially the business sector)
for the year to March 2006, labour productivity growth is the lowest
since the series began in 1988. Multifactor productivity growth was
actually negative at -1.1 percent, also the lowest since the series
began.

One leading commentator has noted that an even more important indicator
was the trend in productivity growth.

There was strong growth in labour productivity of 2.7 percent a year on
average for the period following the reforms of the 1980s and early
1990s and up to the year ending March 2000.

During the government's terms of office, that growth rate has plummeted
to 1.2 percent on average. A similar fall is apparent in the rate of
growth of multifactor productivity.

According to the OECD Productivity Database (September 2006) New Zealand
is seventh out of 29 OECD countries in average hours worked per employed
person, exceeded only by Korea, Greece, Czech Republic, Poland, Hungary
and Mexico.

On the other hand, we are 22nd out of 29 OECD countries in Productivity
- (defined as GDP per hour worked), less than all OECD countries except
Portugal, Czech Republic, Slovak Republic, Korea, Hungary, Poland and
Mexico.

Our Australian cousins

New Zealanders may resent the suggestion of being governed by Australia
but history shows us Australian political influence is not new in this
country.

New Zealand's first Labour Prime Minister of New Zealand Michael Savage
was an Australian, as was the country's Labour Party first leader Harry
Holland.

And Australia's first Labour Prime Minister John Christian Watson was
raised in New Zealand.

It is well known that the Australian constitution contains provisions
for New Zealand to join Australia. A recent Australian Parliamentary
committee made a number of recommendations and the more interesting (and
dramatic) possibilities include:

* Establishment of a trans-Tasman Parliamentary standing committee
to monitor and report annually to each Parliament on appropriate
measures to ensure ongoing harmonisation of the respective legal systems

* The Australia and New Zealand Governments investigate the
feasibility of instituting a legislative mechanism between the two
countries whereby:

* One Parliament could voluntarily cede legislative
competency on a specific matter to the other Parliament for an agreed
period, and

* The resulting regulatory framework could apply in each
country.

* Legal harmonisation of Australian and New Zealand:

* Banking regulation frameworks in order to foster a joint banking
market

* Laws governing non-excludable implied warranties in consumer
contracts

* Telecommunications regulation frameworks, with a view to
fostering a joint telecommunications market.

The 'hot issues' include a common currency, recent suggestions of a
merged defence force and trans-Tasman control on issues such as
medicines and complementary health products.

All of this is highly controversial in the context of the current debate
on national identity.

Political Quote of the Week

"That government is best which governs least." Henry David Thoreau-
American author, poet and philosopher 1817-1862

Dr Richard Worth
National Party MP

ENDS

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