In this issue I talk about my new interactive feature in which I answer a question from a viewer by video, the gradual improvement in the economy, measures to increase fairness in the tax system, and more.

ASK ME A QUESTION


Watch my latest video on YouTube - click here.

Recently I've been inviting readers of my newsletter and website to ask me a question. Many have done so and in this newsletter I answer a reader's question about the rate of the New Zealand dollar. Last week I answered a question on GST. Please continue to send me your questions and watch the website for my answers.

ECONOMY CONTINUES GRADUAL IMPROVEMENT

Economic growth is continuing to pick up pace, but there is more work to do to ensure we get the kind of sustainable recovery that creates jobs and lifts the incomes of New Zealand families. GDP grew by 0.8 per cent in the final quarter of last year - it's third successive quarter of growth - driven primarily by a strong rebound in manufacturing.

This is good news, but the recovery remains weaker than what you would expect to see following a recession. This underlines the fragile nature of the global recovery and the imbalances that remain in our own economy. That is why the Government is focused on tilting the playing field towards savings and investment and away from borrowing, government spending and investment in housing. You can read my statement on the GDP figures here.

Another sign of improving economic conditions is banks being able to raise funds in the wholesale market without using the Government's wholesale funding guarantee. That is why, after consultation with banks, the Government has decided to end the wholesale funding guarantee on April 30. The retail guarantee will continue until the end of next year.

INCREASING FAIRNESS IN THE TAX SYSTEM

The Government's upcoming Budget tax package continues to be the subject of a lot of speculation. The package is yet to be finalised, but fairness will be a key consideration in those decisions. Under the current system many relatively well-off people can opt for a lower tax rate by restructuring their affairs - through self employment, company ownership or ownership of an investment property. In Parliament I set out an example of how a household earning $100,000 a year could restructure their affairs to reduce their effective tax rate to less than 10 per cent.

To illustrate the point - an IRD survey of New Zealand's rich list found only half were paying the top 38c in the dollar tax rate. This is unfair to wage earners who have no choice but to pay their marginal tax rate. One of our aims with our tax reforms is to lower the top rate so wage earners get to keep more of their pay and to close some of the gaps that currently make this kind of structuring possible.

INCREASING NEW ZEALAND'S PRODUCTIVITY

Raising productivity is one of the key challenges for our economy. To ensure we are on the right path to achieving this we are setting up a Productivity Commission. We expect to have the Commission, which is part of the National-ACT confidence and supply agreement, up and running by April next year.

Its roles and functions will be modelled closely on the Australian Productivity Commission which has been operating for over a decade. It will conduct inquiries into productivity-related matters, review existing regulations and the effectiveness of regulatory agencies and promote public understanding. Its funding will be drawn from the existing baselines of 29 government departments.

GETTING OUT AND ABOUT

Getting into the regions to talk to people, explain what the Government is doing and hear how policies are affecting people on the ground is vital for any Minister. In the past month I was lucky enough to get out to Hawke's Bay, Palmerston North, New Plymouth, Christchurch, Dunedin as well as my own electorate of Clutha-Southland. It's always encouraging to see the optimism and resilience of people and businesses around the country.

On a more personal note, my own resilience was tested when I competed in the annual Motatapu bike race near Lake Wanaka on March 13. The race is a great event in a spectacular part of New Zealand and once again I was impressed by the spirit and skill of many participants.

THINGS TO LOOK OUT FOR

• On April 13 I will be travelling to Christchurch to speak to Grey Power's AGM and to speak at the launch of Deloitte's second South Island Index.
• April 16 I'll open the World Ploughing Championships in Methven.
• April 20 Statistics New Zealand will release the latest CPI figures.
• April 22 I will speak to the Wellington Chamber of Commerce.
• April 29 the Reserve Bank Governor will announce the latest review of the OCR.

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