Are lots of intangible areas where the benefits have

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are lots of intangible areas where the benefits have been substantial, too. I talked about shopping hours. I talked about the quality of telecommunication services, a range of things. When you look at the change in trend productivity growth, it's not nearly as obvious that the reforms have worked. You're left scratching your head about why that can possibly be the case because there are literally scores of examples of large organizations, both in the public and the private sector, operating with half or less the staff they had back in the prereform period. So it isn't quite clear why the aggregate productivity numbers don't show that up. It may be something to do with the fact that we also had a big reduction in unemployment from 11 percent to about 6 percent in the period when you'd expect to have seen the most dramatic productivity improvement. Almost by the nature of the case, the people we were bringing into employment in that process were relatively less productive than the average already employed. But what the cause of the apparently poor productivity performance is I don't fully understand. REGION : If I remember correctly in that speech, you said you were also perplexed about the results of education. BRASH: You've obviously read the speech. Yes. I listed two or three points which I felt were Interview with Donald Brash - The Region - Publications & Papers | T... ?...
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uncompleted business, and I mentioned that there were clear indications that we were not educating people well enough for a modern high-tech society. Having said that, the numbers aren't significantly different from those of the United States, the United Kingdom or Australia. So in that sense we're not worse than those countries. I just expressed the view that we should be doing much better. REGION : Okay. Let's turn to central banking. I spoke with a few of our economists before I traveled to New Zealand. I mentioned I was going to meet Don Brash. One fellow in particular said, "Oh, this is such an interesting story because here's a governor who's personally on the line in the fight against inflation." Can you explain how that works? BRASH: This again was part of the public sector reform more generally, where the conviction of the reformers was that there was not enough accountability for policy outcomes on the part of officials and bureaucrats. In government departments, there was a move to a formal contractual relationship between the minister in charge of the department and the head of the department, setting out the outputs that the head of the department was supposed to deliver. Instead of being on a permanent employment basis, they were put on fixed-term contracts, which might or might not be renewed and could not be renewed typically more than once. The department heads were given more discretion, hiring their own staff, firing their own staff, setting the remuneration of their own staff and so on, in a way which had not been true previously.

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