In this issue of Focus on Finance I talk about some early signs that our economy is rebalancing, spending on policy advice, ways to better manage the Government's assets - and more. Your comments are welcome.

EARLY SIGNS OF ECONOMIC REBALANCING

Click here to watch this video briefing on YouTube

Over the last 18 months we've done a lot of work to rebalance our economy towards exports, savings and investment in a bid to lift sustainable economic growth. Today I want to highlight two more indicators that show there are some early signs of progress. In brief, the tradeables sector - that's exports and import competing industries - has outperformed the non-tradeables sector - imports, housing and government spending - by the largest margin in years in the nine months to March 2010.

Secondly New Zealanders are being more careful with their spending and in the past year household debt has eased for the first time in more than a decade. This rebalancing towards the parts of our economy that earn us a living with the rest of the world is vital if we are to get on top of the $170 billion New Zealand owes abroad. That is critical to building the kind of sustainable economic growth that creates jobs and helps families get ahead. You can hear more about this in the video presentation above or read about it in the presentation slides.

REVIEW OF SPENDING ON POLICY ADVICE

A crucial part of our economic rebalancing is ensuring Government spending doesn't run out of control, swamp us with debt and squeeze out growth in the more productive parts of the economy. That's why this week we announced a review of spending on policy advice. Between 2003 and 2009 total Government spending on policy advice across all ministries, departments and agencies jumped by more than 70 per cent to $880 million a year. This is over half of what the Government spends on policing or about the same amount we spend on state housing.

This kind of growth is not sustainable. We need to make sure the level and breadth of spending on policy advice is actually aligned with the Government's priorities. The review is just one part of a wide-ranging programme ensuring available resources are focused on frontline services and the public sector is delivering better value to taxpayers.

BETTER MANAGING THE GOVERNMENT'S ASSETS

I've made it pretty clear that one of the Government's priorities is better managing the $220 billion of assets we hold. Even small improvements in this area could yield substantial sums of money to reinvest into vital infrastructure such as roads, schools, broadband and prisons.

Initial investigations show that building and maintaining some new school property through a public-private partnership will offer a small saving for taxpayers and will free up boards and principals to focus on their core activity - teaching. That is why Education Minister Anne Tolley and I have announced we are taking the next step towards a PPP for some new school property. We believe introducing new methods of procurement will increase contestability and expose the public sector to different ideas and techniques that will help them raise their game when it comes to managing assets. 

HEADING ACROSS THE DITCH

Over the next two weeks I'll make two trips to Australia to speak to business audiences and hold discussions with financial and industry leaders. Australia is our largest trading partner and its economy has performed very well through the global recession. Our close economic relationship is helping us build on our recovery. It's important we maintain and build on these strong links. This week I'll speak to business audiences in Sydney and Melbourne before returning to Melbourne next week to speak to the Australia New Zealand School of Government.

THINGS TO LOOK OUT FOR

• 5 August: Statistics New Zealand will release the Household Labour Force Survey for the June quarter.
• 11 August: Speech to the New Zealand Council for Infrastructure Development in Auckland.
• 12 August: Speech to the Australia New Zealand School of Government in Melbourne.

Regards,
Bill English, Finance Minister

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