As discussed in Chapter I, the key policy challenge confronting New Zealand is how to achieve faster labour productivity growth. Almost 20 years have passed since the country first embarked on a broad-ranging programme of structural and macroeconomic reforms. From a starting point of being one of the most regulated economies in the OECD, those reforms were among the most comprehensive and consistently market- oriented implemented in OECD countries. In spite of this, New Zealand continued to lose ground in income per capita terms relative to other countries into the 1990s, and only toward the end of that decade did it witness a sustained pick-up in trend labour productivity. The slide in relative living standards vis-à-vis the OECD average seems to have been arrested, but a further acceleration – necessary if New Zealand is to move back into the top half of the OECD ranking, as the government is intent on doing – is still not in sight...