THE ECONOMY MOVES ON TO FIRMER FOOTING

This week I've been encouraged by signs the economy is stabilising. Official statistics show New Zealand outperformed expectations in the June quarter and inched back into growth by the barest of margins, following five quarters of contraction. Data also showed the current account deficit – our trade and investment gap with the rest of the world - shrank further than expected to 5.9 per cent of GDP.

These indicators are better than expected, but it will probably be some time before individuals and families feel better off again. That is because unemployment is forecast to continue rising well into next year as growth remains relatively weak. This means there is still a lot of work to do if we are to create a strong recovery that provides sustainable jobs and growth.

A key part of this is avoiding a recovery based on housing inflation and consumer and Government spending, which wouldn't be sustainable in the long-term. That is why we have set out a comprehensive programme to increase productivity, business investment and exports in a bid to rebalance the economy. Click here on or the image to watch a brief video about this.

IMPROVING PUBLIC SECTOR PRODUCTIVITY

This week I gave a speech outlining some of the ways I think the Government and the public service can deliver better, smarter public services.

The public increasingly want better, more responsive services. Our challenge is to deliver that in an environment where there is little new money. To do that we need good ideas and innovation. In the speech I outline some of the ideas I think can make a practical difference.

The public sector makes up about a third of the economy, so improving productivity is a vital part of sharpening New Zealand's overall economic performance. A quick summary of the speech is available in this press release.

A WORKABLE EMISSIONS TRADING SCHEME THAT PROTECTS JOBS

The Government has unveiled proposals for an amended ETS that is fairer to businesses and householders and will not see an exodus of large companies and jobs to other countries.

Environmentalists have criticised the changes, but the reality is they strike a balance between protecting New Zealand jobs, halving the costs for families and households and doing our fair share on climate change. 

Having an ETS that sends emitting industries out of business – only to be replaced by less efficient producers in countries with looser rules - would result in more emissions, not less, as well as put thousands of New Zealanders out of a job.

GETTING OUT AND ABOUT

This month I was lucky enough to get a taste of Hawke's Bay sunshine - visiting local businesses and speaking to the local Chamber of Commerce. The recession has hit most regions and Hawke's Bay is no exception. However most people I met were showing the resilience needed to survive the current tough environment. That is very encouraging, especially when I think back to the last major recession – in the early 1990s – when many people appeared paralysed and were slow to make the changes needed to cope in the new environment.

A highlight of my trip was a visit to Hastings Boys High School, where the students performed a spirited haka that shook the foundations of their assembly hall. It was also interesting to hear the views and ideas of the school's students during a questions forum.