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Government measures to cut red tape are on track to cut compliance costs for businesses and consumers by around $200 million a year, Finance Minister Bill English and Regulatory Reform Minister Rodney Hide say.

The estimate is included in a new Ministry of Economic Development report, Regulatory Reform: Changes Affecting Compliance Costs for Business and Citizens. The report, which will be produced annually, measures progress towards the Government’s goals of better and less regulation.

The Government’s Review of Expenditure on Policy Advice identifies several significant issues with the cost, quality and management of policy advice and makes 36 recommendations to address them.

The review, announced last year, will help the Government’s wider programme to control growth in the costs of public sector back office functions and deliver better frontline public services, Finance Minister Bill English says.

However, it does not recommend specific cuts to policy advice spending.

The new Productivity Commission's first two inquiries will be into housing affordability and international freight services – two areas that affect New Zealand's international competitiveness, Finance Minister Bill English and Regulatory Reform Minister Rodney Hide say.

The Ministers also announced the appointments of Sally Davenport and Graham Scott as commissioners, working alongside New Zealand Productivity Commission chairman Murray Sherwin.

Ministers will initially refer two topics for inquiry to the Productivity Commission: