How NZ’s productivity growth might be fostered by finding what makes “frontier firms” tick

We suspect some readers – maybe many – faltered when Finance Minister Grant Robertson announced he has approved the terms of reference “for an inquiry into the economic contribution of New Zealand’s frontier firms”.

Frontier firms?  What are they and give us some examples?

Robertson explained that these are the most productive firms in the domestic economy within their own industry.

“These firms are important as they diffuse new technologies and business practices into the wider New Zealand economy.

“While we do have some world-leading firms, we need them to lift performance and productivity to create a pathway for more firms to succeed on the world stage,” Grant Robertson says.

He referred to work undertaken by the Productivity Commission in 2016 which suggested that New Zealand’s firms – on average – were about one-third less productive than international firms in the same industry. Continue reading “How NZ’s productivity growth might be fostered by finding what makes “frontier firms” tick”

Makhlouf gets credit for his promotion of well-being – but what has happened to Treasury’s well-being?

Ireland has appointed the head of New Zealand’s Treasury department, Gabriel Makhlouf, as the next governor of its central bank.  He succeeds Philip Lane, who is moving to Frankfurt to join the executive board of the European Central Bank as its chief economist.

Confirming Makhlouf’s appointment to the Central Bank of Ireland, Irish finance minister Paschal Donohoe said:

“Gabriel has demonstrated his broad and detailed knowledge of economics, financial markets, monetary policy and fiscal policy, and has the experience of leading a large and complex public service organisation of 10,000 people.”

Before heading New Zealand’s treasury, Makhlouf was chair of the OECD committee on fiscal affairs, the world’s leading tax rule-making body.

According to the Financial Times, this is a priority area for Ireland in light of moves to overhaul global corporate tax rules.

In this country, in its report on the appointment, Stuff said Makhlouf is credited with introducing well-being measures into government Budgets. Continue reading “Makhlouf gets credit for his promotion of well-being – but what has happened to Treasury’s well-being?”

Heartwork and the game that is helping to inject compassion into Budget preparation

Oh dear, what a shame … the Point of Order team missed it.

So did Eric Crampton, chief economist at the New Zealand Initiative.

But Crampton did preview the occasion – he drew attention on April 9 to the invitation to pay a $35 registration fee which would help to promote a small business involving a former Treasury staffer by hosting a Heartwork event and encouraging folks to buy its products.

The promoters were  Fiona Ross, The Treasury Chief Operating Officer, David Dougherty, The Treasury Manager Strategy and Performance, and “24 curious and creative people at The Treasury” who have been “experimenting in the social lab” by “playing and rapidly prototyping with the Heartwork Wellbeing Card Game…” 

After Crampton blogged about Heartwork, a Newshub story prompted National leader Simon Bridges to criticise the card game as “bizarre and actually wrong”, while Jacinda Ardern hastened to explain that she and her ministers had nothing to do with it.

Regardless of this lack of prime ministerial approval, blogger Danyl McLaughlin did attend the session at Treasury and reported on it at The Spinoff. Continue reading “Heartwork and the game that is helping to inject compassion into Budget preparation”

Stats NZ – struggling with its census data – is aiming higher and will measure our spiritual well-being

The public service has gone all touchy-feely as it gets to grips with the well-being message from the PM and her government.  Or maybe it simply wants us to think it has gone all touchy-feely.

This includes the number-crunching Government Statistician, whose agency is struggling to crunch the latest census data, and – good grief! – the bosses of The Treasury, an outfit we thought was hard-nosed about things like government spending and fiscal rigour.

What’s more, as we were drafting this post, ACC Minister Iain Lees-Galloway announced the Government was able to improve the well-being of older working New Zealanders and those working overseas with the passing of the Accident Compensation Amendment Bill.

“The legislation passed last night helps ensure we improve the well-being of New Zealanders by addressing a number of gaps and technical issues in the ACC scheme to help keep the system fair, transparent and accessible for all claimants,” says Iain Lees-Galloway.

The changes are outlined in his press statement,

Meanwhile Stats NZ – still struggling to publish hard census data – has set about trying to measure things such as our spiritual health (which, in the case of the writer of this post, is strongly linked to gin-and-tonic consumption).

We suspect the statisticians have other forms of spiritual health in mind as they pump resources into their well-being measures, presumably diverting them from the less consequential task of producing census results.

Michael Reddell, at Croaking Cassandra, is appropriately scornful: 

The Government Statistician can’t manage a census competently, and won’t tell us (let alone MPs) just how bad the situation is (about a census taken more than a year ago), but today – aiding and abetting the government’s Wellbeing Budget branding – she was out with the final list of indicators to be published in this brave new world.   It goes under the label “Indicators Aotearoa”, and in addition to not being able to run a census, she seems –  in common with many public servants –  to have forgotten the name of the country: New Zealand.

Among the list of indicators –  many of which are already published (and thus you wonder what value there is in one set of bureaucrats prioritising them and putting them in one place) –  was this snippet.

indicators

I don’t have too much problem with suicide rates.  They are reasonably hard and somewhat meaningful data (but comparisons across time and across countries are hard).

But the other three made almost no sense.

Take that “spiritual health” indicator –  well, there is no indicator yet, but an aspiration to have one.  Real resources are being wasted on this stuff.    Who knows what business it is of the government to be measuring “spiritual health”, whatever it means?  And, strangely, it appears that the Government Statistician believes that only the “spiritual health” of Maori people (or was that “Maori society”?) matters.  Are we back in taniwha territory again…?

Reddell sent us to look at the Stats website which explains:

Indicators Aotearoa New Zealand is being developed by Stats NZ as a source of measures for New Zealand’s well-being. The set of indicators will go beyond economic measures, such as gross domestic product (GDP), to include well-being and sustainable development.

The well-being indicators will build on international best practice, and will be tailored to New Zealand.

This work supports many cross-government initiatives and international reporting requirements, including the Treasury’s Living Standards Framework and the United Nations’ Sustainable Development Goals (SDGs).

Indicators Aotearoa New Zealand will be delivered by Stats NZ and will support the government’s ambition to use a well-being approach to strategic decision-making.

Indicators for which we have information will be populated with data when we release our website in late June 2019. 

The selection of indicators to be reported on from June this year (in an attempt “to understand the most important aspects of well-being for New Zealanders”) significantly was not driven by the availability of data.

The initial set of indicators includes gaps in data, ranging from a complete absence of data to limitations on the ability to break information down to useful and meaningful levels for different communities.

Stats NZ is working with stakeholders to prioritise understanding data gaps and how they can be addressed. We’re feeding this information back to Government for their consideration.

The indicators signed off by the Government Statistician include:

Culture
Engagement in cultural activities; inter-generational transfer of knowledge; te reo Māori speakers

Health
Health equity; health expectancy; mental health status (psychological distress); amendable mortality; self-reported health status; spiritual health; suicide

Identity
Language development and retention; sense of belonging

Knowledge and skills
Core competencies (non-cognitive skills); early childhood education (ECE) participation; educational attainment; inequality of educational outcomes; literacy, numeracy, and science skills of 15-year-olds

Land
Active stewardship of land

Leisure
Leisure and personal time; satisfaction with leisure time

Safety
Domestic violence; experience of discrimination; harm against children; injury prevalence; perceptions of safety/feelings of safety; victimisation

Social connections
Contact with family and friends; loneliness; social support

Subjective well-being
Ability to be yourself; experienced well-being; hope for the future; life satisfaction; locus of control; sense of purpose, whānau well-being

Human capital
Health expectancy; literacy, numeracy and science skills of 15-year-olds; te reo Māori speakers

Social capital
Generalised trust; institutional trust; volunteering

The Treasury’s contribution to the push for compassion comes from the development of its Living Standards Framework (LSF) to help it advise governments about how the policy trade-offs they make are likely to affect everyone’s living standards.

The LSF looks across the human, social, natural and financial/physical aspects of those things that affect our well-being – the ‘four capitals’. It is a tool that emphasises the diversity of outcomes meaningful for New Zealanders, and helps the Treasury to analyse, measure and compare those outcomes through a wide and evolving set of indicators.

Read more about the Treasury’s approach to living standards here: The Treasury Approach to the Living Standards Framework

But hey – Eric Crampton, on the Offsetting Behaviour blog, tells us what else they are up to.

He draws attention to an invitation to pay a $35 registration fee for an event at Treasury,  which is helping to promote a small business involving a former Treasury staffer by hosting the event and encouraging folks to buy its products.

We are teased to attending by a flyer which is headed:

Imagine surprising Aotearoa with a strain of compassion so delightful that it re-wires our collective consciousness!  

Come and join us in our social lab

The Treasury promoters are Fiona Ross, The Treasury Chief Operating Officer, David Dougherty, The Treasury Manager Strategy and Performance, and “24 curious and creative people at The Treasury” who have been “experimenting the social lab”.

They have

 … created a “compassion starter culture” – a network of people who want to create a more compassionate culture in Aotearoa, starting where we are – in our workplaces.

We’ve been playing and rapidly prototyping with the Heartwork Wellbeing Card Game* – now available publicly.

We know that the intention for what we want to create has a huge power.

We don’t have all the answers. And we can’t do this mahi alone.

So we’d like to invite you into this social lab.

So we can grow an even more beautiful, and more resilient strain together.
We’ll share what we’re learning while we’re still metabolising.

Fiona Ross will tell attendees about what she’s been learning from her experiments with the Heartwork cards in her work as Chief Operating Officer of the Treasury.

We don’t know much about Heartwork cards.

We do know a full house (three of a kind with a pair) beats a flush in a poker game.

And we are sure too many New Zealanders are not as flush as they would like to  be.

We must wait to see how their lot will be improved by Treasury’s fascination with compassion and Heartwork cards.

MBIE’s job numbers raise questions about political neutrality and professional scepticism

A Ministry of Business, Innovation and Employment mandarin’s intervention on the issue of the $3 billion Provincial Growth Fund’s job creation raises further questions about public service neutrality and propriety.  This follows hard on the heels of the IRD’s constitutional transgressions.

The NZ Herald yesterday yesterday drew attention to the conflict with two observations:

  • National’s Paul Goldsmith says only 54 jobs have been created from funded Provincial Growth Fund (PGF) projects so far.
  •  Regional Economic Development Minister Shane Jones told Parliament late last year that 9000 jobs had been created.

The Herald proceeded to check out the MBIE website which shows more than 10,000 jobs are expected to be created as a result of Provincial Growth Fund (PGF) announcements made last year.

Seven thousand of these – almost 70 per cent – are estimated to come from just one project: The East Bay of Plenty Regional Development Project Implementation. Continue reading “MBIE’s job numbers raise questions about political neutrality and professional scepticism”

The case for a sugar tax is sweetened if NZIER report is overlooked

When Prime Minister Jacinda Ardern said New Zealand would  not join the countries that are signing up for a war against drugs – as championed by US President Donald Trump – she said her government has an agenda that is focused on addressing issues around drug use.

“We have a number of challenges that are quite specific to New Zealand and the type of drugs that are present, but also I’m taking a health approach.

“We want to do what works, so we are using a strong evidence-base to do that.”

Whether she will similarly use a strong evidence base to decide on how to reduce sugar consumption is a moot point.

Questioned a year ago by Mike Hosking on Newstalk ZB, she said reducing sugar is a priority of the new government. Continue reading “The case for a sugar tax is sweetened if NZIER report is overlooked”

A French lesson: those film industry subsidies could become an instrument of gender-balancing policy

Announcing the Government’s backdown on capping film subsidies, Economic Development Minister David Parker said without the subsidies, the film industry wouldn’t exist.  

We suppose he meant it wouldn’t exist in New Zealand.

The subsidies are reckoned to result in  studios getting cash payments of up to 25% of their local spending on productions, amounting to $575 million since 2010.

The Government had considered cutting them after questions were raised about what taxpayers are getting for this money, according to Radio New Zealand.  But it was persuaded by officials and the film industry that the subsidies needed to stay. Continue reading “A French lesson: those film industry subsidies could become an instrument of gender-balancing policy”