Commission to spotlight economic reforms

A planned productivity commission is set to lead reforms in key sectors of the economy, along the lines of the electricity industry review that led to sweeping changes last year.

Finance Minister Bill English and Regulatory Reform Minister Rodney Hide said the commission would be in place by April next year and was expected to conduct three reviews a year.

While most work would focus on regulations and the agencies enforcing them, Mr English said the commission could also lead "high-impact propositions" across whole sectors of the economy.

He used last year's electricity review – which led to major changes, including asset swaps between state generators – as an example.

"It may be more appropriate in the future to refer that, say, to a productivity commission ... because they would be a standing body of expertise to deal with what are really quite complex issues."

It will be modelled on the Australian body and will have four part-time commissioners and up to 21 fulltime staff. It will work closely with the Australian commission, and will conduct trans-Tasman reviews.

It will be independent of the Government, but its work in most areas will be directed by the finance minister. It will report to Parliament, but the Government will not be bound by its recommendations.

It will cost $2.35 million to set up and $4.7m to run in the first year and more than $5m a year after that.

The funding will come from 29 government departments and agencies presently providing policy advice on raising productivity.

Mr Hide – who wants big cuts to government spending and red tape – rejected suggestions it added another layer of bureaucracy. "While it's a new agency, it's actually taking over existing funding, so if you like, it's a rearrangement and an establishment of an independent body."

Mr English said the 21 staff would mostly be seconded from other departments. They and the commissioners would be drawn from a range of backgrounds.

National would consult other parties, including Labour, to try and build broad support for legislation setting up the commission, due in Parliament this year.

Labour finance spokesman David Cunliffe said Labour supported the concept, but was concerned the plan was too narrowly focused. "This looks like a regulatory razor gang."

Labour would need to see more focus on improving skills, technology and capital.