$7.4b in kitty for Budget splurge

By BERNARD ORSMAN

Less than three weeks from the Budget, Finance Minister Michael Cullen is sitting on a $7.4 billion surplus, the biggest mountain of spare cash a New Zealand Government has seen.

With Labour under pressure from traditional Maori supporters and trailing National in the polls, Dr Cullen has already indicated that this Budget will help some of the party's lower-paid constituency.

The Treasury said yesterday that the $7.4 billion surplus was a record both in dollars and as a proportion of gross domestic product. For every $100 spent in the economy, $5.60 is spare cash for the Government to do with what it likes.

Dr Cullen has made a boast of his tight-fistedness in previous Budgets, but when it comes to his fifth Budget on May 27, he is expected to deliver an old-fashioned spend-up.

A spokeswoman said he would not comment on the surplus or its implications ahead of the Budget.

For months now, Dr Cullen has been foreshadowing extra assistance in some form for low and middle-income working families.

New spending initiatives, such as the purchase of Kaikoura Island in the Hauraki Gulf for $10.5 million, will be drip-fed through to Budget day.

The Treasury said the record surplus arose because the accounts were running $1.5 billion ahead of forecasts in the first nine months of the financial year. Income from GST was up $225 million and investment income by Crown entities had swelled by $548 million.

On the other side of the ledger, lower spending on student loans was helping to bring down the education budget by $142 million and fewer benefits were a big reason the welfare budget had been trimmed by $122 million.

The positive figures have led to gross debt falling to $37 billion and net Crown debt to $15.2 billion, $1 billion lower than forecast in December.

In March last year, the surplus was running at $3.4 billion and net debt was $17.5 billion.

- additional reporting: NZPA