Government to close the Productivity Commission, former chair Murray Sherwin feared it became politicised

Former Productivity Commission staff are sad, but unsurprised, Act managed to convince its coalition partners to disestablish the agency it helped create in 2011.

The Commission’s former chair Murray Sherwin feared the independent Crown Entity had become politicised, with former Finance Minister Grant Robertson appointing the openly left-leaning economist, Ganesh Nana, to lead it from 2021.

“The tone at the top matters,” Sherwin (who was appointed Productivity Commission Chair under a National-led Government) said.

“I’ve always felt that for these bodies to survive over the longer haul, they need to be able to survive changes of government. That means you can’t afford to have the leadership of the bodies going too far towards one side [of the political spectrum] or the other.”

Nonetheless, Act leader David Seymour said his push to get rid of the Productivity Commission wasn’t about Nana, whose appointment preceded a mass exodus of staff from the relatively small organisation.

“It’s not about the personnel. It’s a question of what problem is the organisation solving in return for taxpayer funds,” Seymour said.

“We believe a regulation ministry could solve much bigger problems for the same funds.”

National and NZ First agreed to fulfil Act’s wish to create a new Ministry for Regulation at the expense of the Productivity Commission.

The department will assess the quality of new and existing legislation and regulation, including by doing reviews in specific sectors like primary industries, the finance sector, early childhood education, and healthcare occupational licencing – according to Act’s coalition agreement with National.

Seymour didn’t campaign, ahead of the election, on culling the Productivity Commission, but did comment on how it had been “hijacked”.

“The way the Productivity Commission has been staffed and directed in the past five years means I think that it is an open question about whether you would actually continue it,” he said.

Act specifically campaigned on getting rid of demographic ministries, including the ministries for women, Pacific peoples, Māori development, ethnic communities, Crown-Māori relations and human rights.

Accordingly, Seymour said he would’ve gone further than just scrapping the Productivity Commission if he could.

“But in this government, we’re supporting the position that’s agreed by all coalition partners,” he said.

“It’s fundamentally about economics. I know there are some very talented people in the Productivity Commission, and so I think there is every chance there will be people who end up working for the Ministry for Regulation.”

About 20 people are currently employed by the Productivity Commission.

Nana declined the Herald’s request for an interview, but a spokesperson said the Commission was working with the Treasury and Public Service Commission on the mechanics of disestablishing the entity.

“Our single priority is looking after our staff and their wellbeing,” the spokesperson said.

“We are doing all we can to support them through this incredibly difficult and uncertain period.”

Robertson didn’t accept the assertion his appointments to the Commission at least partly led to its looming closure.

In addition to appointing Nana – who previously spent 22 years at the consultancy Business and Economics Research Limited (BERL) – he appointed Bill Rosenberg a commissioner.

Rosenberg is a former policy director and economist at the Council of Trade Unions, whose recent research interests have focused on labour, income distribution and health funding.

“I don’t think Ganesh Nana or Bill Rosenberg are any more or less political than any of the other people who had been appointed,” Robertson said.

He backed Nana, saying he was a “widely respected and experienced economist”. Indeed, BERL has done quite a bit of work for Labour in the past.

Robertson also made the point that he directed the Commission to view productivity through a wider lens than it previously had, in line with the Government’s focus on wellbeing.

Two former staff members the Herald spoke to on the condition they’d remain anonymous were insulted by the way Nana pushed this wellbeing approach on them, dismissing – in their view – the work they’d previously done.

They felt it was clear Robertson didn’t want Sherwin at the helm of the entity.

Robertson didn’t hold back criticising some of the work produced by the Commission under the National-led Government.

Similarly, Sherwin was critical of what had become of the Commission after he left, saying there was a “distinct shift in the ideological underpinnings” of its work.

He was disappointed by the new government’s decision to scrap the Commission, but believed quality regulation was an important part of the equation.

“That’s where you shape the incentives that either encourage people to invest and save and do the other things that are necessary for a high productivity economy,” Sherwin said.

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the Parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.