Result: Medium-term Economic Strategy

What are we seeking to achieve?

The Government has signalled an ambitious and wide-ranging economic growth agenda. Medium-term economic strategy is focused on promoting economic growth and reducing vulnerabilities. However, other Treasury results also contribute to these aims, notably State sector performance, infrastructure, macroeconomic stability and fiscal policy.

The medium-term economic strategy result aims to lift economic growth by supporting a dynamic environment for firms in which they are given every opportunity to expand and shift their activities in line with market signals. We will support the capability of the State sector to progress and implement policy changes and help Government to act where the State sector can better support economic performance. We will also ensure that when other agencies provide Government with policy advice, the economic impact of that advice is adequately addressed. This will help us deliver:

• an economy that is integrated and connected to the world economy
• a competitive business environment and efficient financial system that rewards business investment, innovation and enterprise
• productive and sustainable use of our natural resources
• better use of a highly skilled workforce, and
• regulatory and tax systems that promote economic growth while balancing efficiency with fairness.

What will we do to achieve this?

The Treasury will provide expert advice on economic strategythat is well-integrated, analytically robust and persuasive. Our advice will support the Government's current economic agenda, focusing on both current and future priorities, and will be informed by leading thinking (from New Zealand and abroad) and empirical evidence. We will also inform public debate on economic issues through publications and speeches.

We will promote regulatory reform by providing policy advice on key regulatory sectors that matter for growth and advice on how to improve the regulatory management system, which may include the introduction of a Regulatory Responsibility Bill. We will support Ministers to improve the flow of regulation through our role in assessing major Regulatory Impact Assessments, and building agency capability. We will also support agencies in their assessments of the stock of regulation, and the establishment of the Productivity Commission.

Our work on education and skillsincludesadvising on benefit reform and thedesign and implementation of the Youth Guarantee to ensure the labour force has good incentives to work. Institutional settings will be important in our work over 2010/11: tertiary reforms that get the incentives right to focus students and providers on achieving qualifications valued by the market; and better governance, accountability and leadership in the school sector that improves teaching and learning, and builds on National Standards.

To get better results from the Government's role in innovation and business assistance, we will focus on: ensuring advice from government agencies is coherent, integrated and focused on economic outcomes; increasing levels of business research and development; and getting better value from our public investment in research and development and in enterprise-related activities. Our focus in 2010 will be on implementation of decisions on research, science and technology agency structures, and on initiatives aimed at increasing business research and development and technology transfer.

The implementation of the 2010 Budget tax package will be a key part of the Treasury's work programme to achieve a world-class tax system. Looking to future tax reforms, we will focus on the effects of tax on savings and investment. We want to ensure that our advice - and resulting decisions - are based on robust empirical information, and on high-quality analysis of relevant trade-offs.

To improveNew Zealand's international connections we will identify areas for further integration with Australia in a Single Economic Market and actively contribute to international fora that advance New Zealand's goal of regional integration, including ensuring progress is made on the Asia-Pacific Economic Cooperation's (APEC's) structural reform agenda. As with our work on tax, we want to ensure that our advice is based on robust understanding of the effects of policy on the economy. To this end, we will gain a better understanding of the role and determinants of cross-border investment, the role of economic geography and trade in services.

Our work on investment and financial systems includes advice on the broad set of policies that influence savings. We aim to understand better the importance of savings for New Zealand's economic growth and reducing vulnerabilities. We will provide advice on reviews of the Securities Act 1978, any key changes to financial sector regulation, international developments (such as G-20[1] outreach) and enhancing financial crisis response effectiveness.

Our work on natural resources incorporates advice on New Zealand's international climate change negotiating position, achieving emissions reductions at least economic cost and on economic policy relating to areas such as water and the Resource Management Act 1991. Two thematic elements of our work are the role of different policy instruments in allocating resources, and the role of Māori in natural resource management. Our work on the return to the economy from the use of natural resources also includes advice on the primary sector.

How will we demonstrate success in achieving this?