File pic Photo: 123RF
The government and business sector need to do more to build top ranking, world leading firms to help lift the country's productivity, the Productivity Commission says.
A follow-up report by the Productivity Commission said not much had happened since its original report two years ago, New Zealand Firms: Reaching for the frontier (Frontier Firms), which looked at the most productive firms in the economy.
The commission was asked to do the followup on progress made to date to a more sustainable and inclusive economy, or whether "more radical change is needed".
Ganesh Nana Photo: Supplied
Commission chair Ganesh Nana said the way policy currently operated would not deliver the desired results.
"The current course will not shift the productivity dial. However, the chances of success can be materially lifted by improving existing initiatives and programmes, building on the progress made in several areas."
He said the policies and practices of the most productive firms offered important ways to lift New Zealand's overall performance.
"Raising the performance of these firms closer to the global productivity frontier, as well as having them grow larger, and diffuse innovation through the rest of the economy can make an important contribution to lifting the well-being of all New Zealanders."
Collaboration needed
Among the major problems was that key groups such as researchers, businesses, scientists, universities, communities and Māori were not connected and working together to produce the innovation which would help lift productivity.
Nana said government policies to date had put some building blocks in place which were "promising", but initiatives to date had "fallen short" and there were large gaps that needed to be addressed.
"These include a collaborative process for selecting a small number of focus areas; two-tiered governance arrangements with appropriate membership and decision rights; and substantial funding for each focus area."
Nana said much of the current approach was still wedded in the past, underfunded, and top down driven.
"Industry Transformation Plans lack sufficient resources, co-investment by business, connections with researchers, and enough focus and ambition to spark transformational change. In addition, material decision making for Industry Transformation Plans, National Research Priorities, and other processes remain largely centralised and top-down, rather than being collaborative and devolved."
The commission made six recommendations:
- Adopt a better process for selecting focus areas
- Improve governance arrangements
- Increase funding for focus areas
- Facilitate Māori leadership and voice
- Make sure efforts are aligned
- Embed a monitoring and evaluation system
"Implementing all the recommendations in this follow-on review together will create conditions for successful innovation ecosystems that support high-performing frontier firms. This will require bolder efforts and a sustained long-term approach," Nana said.
