ACT Party finance spokesman Roger Douglas says New Zealand will slide further into recession if the Government does not develop a good plan to tackle key economic issues.
Sir Roger says New Zealand's lack of productivity is extremely costly and describes labour productivity as "particularly appalling in the last eight or nine years".
He told Summer Report the Government needs to reduce inefficient spending, cut taxes, and remove regulatory blockages that cause large projects to take so long to get off the ground.
But he said he did not see many of those suggestions being considered by the Government at the moment.
New Zealand has been in recession for nine months. Sir Roger was Labour's Minister of Finance from 1984-1988.
Prime Minister John Key will discuss the economic outlook with core ministers on Thursday.
Finance Minister Bill English told Summer Report the international forecast has deteriorated further since the last economic and fiscal update was published.