Statistics released today show that a significant improvement in productivity is needed if New Zealand is to achieve the required levels of economic growth to catch up with Australia.

"The figures show that labour productivity fell 1.5% in the year to March 2009," said Chamber CEO Charles Finny.

"This is too low and there is no evidence things are improving. It is particularly disappointing that the contraction occurred while the economy is in recession.

The achievement of higher productivity is essential if we are going to grow the economy to its maximum potential. Productivity growth is important for both businesses and employees. Productivity growth allows businesses to grow at the same time as allowing wages to grow.

"We are pleased to note that capital investment increased over the year. Increased investment is the key to increasing productivity, particularly in the areas of infrastructure and technology. But further investment is required.

"Business will be in a position to provide new investment but it needs government to provide a sound policy platform to allow this to happen. Further tax cuts are essential in this regard.

"We look forward to the details of the proposed Productivity Commission, which the government announced last week, which will have productivity increases across the economy as its focus," Mr Finny concluded.