Cullen promises low-key Budget

By VERNON SMALL deputy political editor

Michael Cullen, the Finance Minister with the barbed tongue and the acid wit, is promising a boring, fiscally tight Budget with neither the controversy of Ruth Richardson's "Mother of All Budgets" nor the reformist zeal of Roger Douglas.

"I don't see Budget statements as being big-bang maxi-entertainment, everything thrown in, a la 1984 and 1991," he told reporters at a briefing yesterday.

The June 15 Budget would not be about "fireworks going off, stones being transformed into maidens, or for that matter maidens into stones."

A new policy direction, befitting a new Government, would be reflected in the document. But it would not be a blueprint for its whole programme.

That was the role of the Speech from the Throne, delivered by the Governor-General at the opening of the session.

"This is more a statement of the Government's fiscal priorities ... its expenditure priorities and its revenue policies," Dr Cullen said.

Government strategists have scheduled a welter of pre-Budget announcements to highlight initiatives which may not make headlines on Budget day.

The biggest ticket item is likely to be a $200 million, five-year biodiversity package, unveiled today, which will create "kiwi zones" and protect native species.

Other elements include extra cash for policing, a victims' rights package and reform of the Maori Land Court Dr Cullen said much of the Government's spending had already been announced, through increases in superannuation, cuts to student loan interest rates and the move to income-related rents for state houses.

As well as a heavy emphasis on "closing the gaps" between Maori, Pacific people and other New Zealanders, the Budget proper is likely to carry a heavily business-friendly message.

Plans for industry development will be fleshed out, while the conservative fiscal stance, including strong and rising operating surpluses, will build on the "charm offensive" aimed at a business community which has lost confidence recently.

Dr Cullen said confidence appeared to be recovering after the Government signalled it was listening to business.

Asked if the Budget would restore business confidence, he said: "I think a good deal of that has happened already. We have had messages to this office from various business leaders that they think things are going better."

Business was getting the message that the Employment Relations Bill would be changed to remove many concerns, and there would not be a whole new range of imposts.

Dr Cullen said the Budget would show total spending as a proportion of gross domestic product slightly lower than this year. The tax take would be a little higher as a proportion of GDP.

The operating surplus for the coming year would be slightly above the $400 million forecast in the Budget Policy Statement in March.

Forecasts for subsequent years would be significantly higher than forecast.

There would be only a little more detail of the pre-funded superannuation scheme.

The Alliance was in discussions with the Treasury now about the shape of the fund and more work would be done after the Budget.

He said the Government might have overstated its plans to "front load" the bulk of its planned $5.9 billion in extra spending.

For example, extra cash for the arts had been made in the current financial year, meaning spending in the upcoming Budget need not be as high as would otherwise have been necessary.

The business package would not include export guarantees in the first year and, as already announced, the package for research and development would see grants to companies rather than tax breaks.

Dr Cullen said officials' advice was that tax breaks could be a "black hole" without necessarily encouraging more research and development. New companies would benefit from grants, but they may not be able to use tax incentives if they were not already making a profit.