Contains questions, findings and recommendations important to raising services-sector productivity in New Zealand, focusing on the adoption of information and communications technology by service firms.
Overview: This is the Productivity Commission’s 2nd interim report as part of its inquiry Boosting Productivity in the Services Sector. The report focuses on two topics that are significant to raising productivity in the services sector:
- stimulating a more competitive environment in the services sector; and
- the successful application of information and communications technology (ICT) by New Zealand service firms.
The inquiry’s 1st interim report – released in July 2013 – focused on developing a better understanding of the services sector, its recent performance, and its role in the New Zealand economy. That report sets out the vital role that services play in the New Zealand economy. For example:
- services account for nearly three-quarters of GDP; and
- the competitiveness of exports depends critically on the performance of the services sector. This is because the services sector contributes more than half the country’s exports, primarily through embodiment in exported goods.
Services-sector productivity, therefore, strongly affects the productivity of the economy as a whole and the wellbeing of New Zealanders.
Yet the sector has underperformed relative to the best international performers. Productivity growth in the US services sector and that of some European countries has driven aggregate productivity growth in those countries. Most services industries in New Zealand have not experienced the same growth in productivity. Growth has been neither strong nor broad-based enough to achieve any significant productivity catch-up in the economy when compared with leading OECD countries. The productivity levels of most New Zealand services industries are below those in Australia and the United Kingdom.