MERRY CHRISTMAS

As we head into the summer break, it feels like it's been a long year - and a hard one for many families and businesses. Looking around the corner, there is more work to be done to get our economy really growing again, but I'm pleased some of the gloom is lifting and New Zealanders can go into the New Year more confident about their jobs and incomes. With those slightly better tidings I'd like to wish all the readers of this newsletter a Merry Christmas and a Happy New Year.

ECONOMIC OUTLOOK

This week Treasury opened their books for the Half Year Economic and Fiscal Update, which shows how the Government and country are doing economically.

The updated forecasts showed a better economic outlook than Budget 2009. The recession was not as deep as originally feared and growth is expected to be slightly stronger over the next four years.

Supporting jobs has been the Government's focus for most of the year and from my perspective the most heartening news in the update was that 64,000 fewer jobs are now forecast to be lost from the economy than predicted in the Budget. You can read my press statement here.

However reduced business profits and a lower tax take mean the improved outlook does not immediately flow into the Government's accounts. Our fiscal position remains challenging. We face another six years of deficits and the amount we need to borrow in the next four years has only slightly reduced from $250 million a week to $240 million a week.

The best way to improve that position is to lift our economic performance and growth rate. That will be the Government's main focus in 2010.

CAPITAL MARKETS DEVELOPMENT TASKFORCE

The Government is keen to develop New Zealand's capital markets so investors have a better range of options and businesses get the investment they need to help our economy grow. My colleague, Commerce Minister Simon Power, this week released the final report of the Capital Markets Development Taskforce. It includes a range of recommendations including:

• Expanding the range of products available to investors and improving the quality of advice they receive.
• Increasing access to capital for businesses.
• Improvements to securities law.
• Changes to the structure and operations of finance sector regulatory agencies.
• Addressing tax incentives that cause distortions in the local capital market.

The Government will respond to the report next year. The Minister's press release can be read here.

THINGS TO LOOK OUT FOR IN THE NEW YEAR

As well as responding to the Capital Markets Development Taskforce the Government will receive the Tax Working Group report and the first National Infrastructure Plan in the New Year. Both should make interesting reading.

The Tax Working Group report, which we are expecting to receive in January, will look at fiscally neutral ways to improve New Zealand's tax system. The Government will consider the report seriously and signal any changes - if there is a sufficiently compelling case - in Budget 2010.

The Infrastructure Plan will be a stock take of New Zealand's existing infrastructure and planning. Evidence shows that good roads, a reliable electricity grid and faster broadband can improve productivity. The aim of the plan is to identify strategic gaps and start a dialogue with the sector and public about the best way to fill them. It too will be released early in the New Year.