Edited highlights from the Treasurer's speech

In six months the world enters a new millennium. This country will be the first in the world to see the sun ... Visitors are coming from all over the world ... because it is such a powerful symbol of hope and transformation...

The world has begun to enter a new age. When I was a boy, I talked to the kids on the other side of the street. My grandchildren talk on the Internet to kids on the other side of the planet - and international business has been totally transformed.

Our young people today stand in the anteroom of a challenging, and ultimately a very much richer, world...

The thrust and purpose of the 1999 Budget is to open a door for them into that richer world...

This Budget is about preparing the nation's children for success in the 21st century, improving the capability for that task of all New Zealand working families, and giving disadvantaged families and children a much fairer shot at a good life.

The 1990s have laid the foundation ... the country is growing, on data to date and current forecasts, three times faster in the decade to 2002 than it did in the previous decade.

Inflation is at the lowest level for 50 years. We have cut net Crown debt by half, and been able, at the same time, to drop the middle income tax rate by 25 per cent ...

We've given consumers an improved deal. Tariff reform has slashed the price of cars. Parallel importing is reducing the retail price of some imported goods ...

Competition has lowered prices and improved service, in telecommunications and the petrol industry, for example. Householders now have choice, for the first time, between competing retailers of electricity.

In tertiary institutions, enrolments are up more than 50 per cent. Maori enrolments are nearly 200 per cent. Women have risen from 49 per cent to 56 per cent of all tertiary enrolments. We have a way to go before all primary children leave school with good skill in reading and maths - but that's what this Government demands ...

The strength of the policies in this Budget arises from a new approach to policy formulation. Ministers now work in teams across portfolios ... In this speech, I can only sample that work ...

* All our young people must get an education of competitive world quality.

* Low and middle income mums and dads get further practical recognition of their needs, the effort they make, and their responsibilities.

* Severely disadvantaged people leading dysfunctional lives get the hand-up they need to give them, and in particular their children, a fair chance ...

* We have to work, all of us, to gear up business and the public sector for the new millennium; to reward innovation; to use the information revolution, and greatly reduce the separation between us and the rest of the world.

* Last but not least, Government must ensure a solid foundation for enterprise and innovation - openness, price stability, low debt, quality spending, and lower taxes.

Last year, drought and economic collapse in Asia threatened our standard of living. The shroud-wavers were out in force. But thanks to the sound policy framework established under this Government, the fall in world prices was more than offset by lower exchange rates. Interest rates fell to a 30-year low ... The economy turned round and is now forecast to grow by an average of more than 3 per cent in the next three years.

This Budget announces the Government's sixth consecutive fiscal surplus, and they are the only surpluses achieved in this country since 1978 ...

The 1998-99 balance shows an $800 million surplus, before counting a $1.4 billion gain on Contact Energy's book value, which takes our total surplus to $2.2 billion. Next year should be close to balance. Surpluses then rise to just over $1.5 billion dollars by 2001-02.

The Asian crisis underlined our vulnerability ... Sustainably lower debt has put the nation in a far better position to deal with any future adverse event ... Lower debt has reduced debt servicing costs ... a major saving which has helped fund increases in education and health expenditure ...

The successful public float of Auckland International Airport, Capital Properties and Contact Energy reveals a very strong popular desire by the public to become shareholders in such businesses.

More than 225,000 Kiwis, a lot of them ordinary mums and dads, aided no doubt by tax reductions, bought shares ... I welcome this wider involvement by ordinary New Zealanders in our equity markets.

This year, we intend to scope our ownership interests in MetService Limited, and enter a sale process for Vehicle Testing New Zealand...

Tax is a cost of doing business. Unnecessary tax reduces the ability of our businesses to export and to grow. High tax impacts adversely on working families, reduces take-home pay, limits choice, and does not promote prosperity...

We are ... in a position already to make further progress immediately with tax reductions worth more than $200 million a year to the taxpaying public.

The Public Broadcasting Fee imposes a tax of up to $110 a year on 1.1 million families who own TV sets. Only 45 per cent of the $97 million raised last year was spent on TV programmes. Collection took 11 per cent. The rest subsidises radio, music, Maori broadcasting and so on. No one can justify isolating TV owners as the right people to pay those bills ... Services funded from the fee will in future be funded from general taxation ...

Lifting the disposable incomes of low and middle income working families has been an ongoing goal of this Government. This Budget enhances the tax credit package already provided for them and gives that package a wholly new name, Family Plus.

Family Plus is for working families, on top of the $32-$60 a week per child paid as Family Support to all low and middle income families. Family Plus has three components ...

Conveyancing and lease duties, often known as stamp duties, usually collect about $77 million a year net. Large commercial businesses increasingly avoid them. An unfair and growing share of the burden falls on farmers and small businesses ... Both [taxes] will be abolished ... from midnight tonight. The saving on the sale of a $750,000 farm is about $14,000.

Estate duty, though not payable since 1992, has remained on the statute book ... A bill will be introduced today to remove it from our laws entirely ...

Tax can rarely be reduced in large chunks - but it is very practicable, by consistent action, to make reductions over time that leave taxpayers much better off ... The hard work of New Zealand families deserves that reward.

The Government is confident that, with good fiscal management ... we will be able to commit further income tax reductions within the next term of Parliament.

Our growth prospects depend on better savings and more productive investment. In the past, household savings have been low and heavily focused on housing. The response to our recent public floats suggests the start of a welcome diversification ... We will continue to work to improve tax neutrality for savers across savings products.

For a small, open economy like ours, the success of our [Asia Pacific] region is vital ... New Zealand has a vital role to play to further these ideals in international forums like the World Trade Organisation and Apec.

The part we play in the WTO, and Prime Minister Jenny Shipley's challenging task chairing Apec this year, will be key and influential contributions ... Simultaneously, in this Budget, we fund a new business migrant liaison unit, and more support for the Asia 2000 Foundation and trade access development.

Growth is not an end in itself ... Growth is what enabled us in the 1991-99 period to increase Government spending per head of population by 23 per cent on education, and by 51 per cent on health.

In this year's Budget initiatives, the central focus is on children and the family ... The best way to empower people and strengthen their security is to give them a chance to fulfil their potential ...

Through Tomorrow's Schools, we have been making education more responsive to student needs and more accountable to the community.

The Fully-Funded Option is giving school boards the opportunity to manage a school's resources more flexibly ... Operational funding will be boosted by a further 1.6 per cent from January 1, 2000.

To move New Zealand forward faster in the 21st century, the Government is determined to help make New Zealanders skilled and passionate about becoming better equipped to participate in a highly successful knowledge-based society. Information and communications technology (ICT) play a growing role in education, the workplace and wealth creation.

Primary schools average only one computer per 14 students and secondary schools one per eight students. Half their computers are more than three years old ...

A new $25 million funding pool will encourage every school to have an ICT plan and an Internet connection by 2000, with money over for other ICT needs.

A typical primary school will get more than $6000, and typical secondary schools more than $20,000.

A further boost of $10 million per fiscal year in operational funding ... will let schools achieve adequate long-term ICT maintenance and support ...

This year, we are committing school accommodation works worth $537 million. Some 200 new primary and 80 new secondary classrooms will be set in place ... Work begins on five new secondary schools ...

People with skill are increasingly valued worldwide. People without skills face growing problems which can often impact adversely on their children. The Government makes a major commitment in this Budget to strengthen families ...

The Government is determined to see that all children can read, write and do maths by nine years of age ...

A pilot trial using 12 social workers in primary schools will be extended by putting up to 70 more social workers into schools. They will in due course cover 35,000 students at a cost of $4.5 million per annum. They will identify at-risk children, and develop and manage culturally appropriate intervention plans ...

Research suggests that up to 2000 14- to15-year-olds, many with serious behaviour problems, spend significant time alienated from schooling every year. An enhanced programme will now provide $11,100 per [alienated] student ...

New Zealand has one of the highest rates of youth suicide in the world. There has been a gap in provision for young people with severe mental health needs.

Since 1996-97, we have provided extra mental health funding to implement the Mason report. The extra funding will top $100 million next year ...

* About 10 per cent of the 7000 children in the care of or contact with the Department of Child, Youth and Whanau Services (to be established on October 1) have severe mental health needs ... A new scheme gives the Health Funding Authority an extra $2.8 million next year for additional mental health services for those children ...

One in seven working-age New Zealanders today depends on welfare ... The Government's welfare strategy encourages them to work to their full capacity. The number registered as unemployed for more than two years was reduced by 52 per cent from mid-1994 to mid-1998. The number of domestic purposes beneficiaries earning part-time income rose by 56 per cent between August 1994 and November 1998.

The number on the DPB fell by 2.5 per cent in the year to March 1999 ... Sickness beneficiaries decreased by 6.4 per cent in the year to March 1999 ... A method is being trialed to test the work capacity of sickness and invalid beneficiaries.

Maori health, education and employment are a national priority ... The Budget builds on many of the proposals developed by the Maori Commission ...

Next year, the Health Funding Authority will spend about $47 million on health services for Maori by Maori ...

Justice must ensure that criminals are caught and punished. The Government is very serious about getting tough on crime. But we also want to turn young people from a life of crime ...

The Budget puts $17.7 million over three years into a new specialist regional youth prison unit in Hawkes Bay and three more new youth units in existing prisons, with new measures to prevent youth suicide in custody, to improve rehabilitation, education, psychological and work skills programmes and to reduce re-offending ...

In eight regions where crimes like burglary, car theft or violent offending significantly exceed the national average, the Budget will now fund new hot-spot teams ... to hit those activities ...

Security breaches in courts, from verbal abuse to murder, averaged 134 a year in 1996-98, up from 63 a year in 1993- 95. The Budget funds uniformed security officers for the 10 courts shown by incident statistics to be most at risk ...

The Government is making major investments to upgrade health care and health care facilities across the country ... In the 1998 Budget the Government forecast a $1 billion investment in hospitals over the next three years. Decisions in the 1999 Budget include the $250 million go-ahead already given for a new Central Auckland hospital.

The health care improvements funded by this Budget were announced in November ... [Funding] will rise again next year to almost $6.7 billion. These increases, targeted to priority areas, include an extra $75 million over three years for mental health, and an extra $25 million in 1999-2000 for elective surgery.

Some 180,000 acute and elective operations are being carried out in 1998-99, up 14 per cent from 158,000 in 1995-96. Funding increases will see mental health services delivered by June 2002 to 50 per cent more adults than in 1998-99, and more than twice as many children.

Another new move will provide financial assistance towards the cost of eye examinations, lenses and frames for children under six who have High-Use Health Cards or whose families hold Community Service Cards ...

International competitiveness is the key to New Zealand's success as a trading nation. The ministerial team responsible for enterprise and innovation, led by Max Bradford, has developed a five-point strategy to: lift our skills and knowledge base; focus the direction of Government R&D; improve access to risk and investment capital; ensure regulations and laws support innovation; and build a culture of innovation by actively promoting success.

The Government is promoting seminars in centres across the country ...

To help keep New Zealand agriculture and industry ahead of international competitors, the Government already invests $610 million a year in research and development. This Budget boosts science and technology funding by a further $28.1 million in the next three years ...

The Budget provides $2.2 million for the Y2K Readiness Commission's communications programme.

Legislation ending the state monopoly of workplace accident compensation and rehabilitation insurance has been enacted ...

Until now, the future cost of past motor vehicle accidents has been transferred to future owners and users. From July 1, to facilitate wider and more competitive options ... the total funds gathered in each year will cover the future cost of that year's accidents.

To make that transition, the future cost of past accidents, estimated at $1.4 billion, must also be covered ... Motor vehicle registration fees will be increased. For a car, this will [be] $47.50 ...

The Commerce Act is being reviewed to deal better with the worst cases of anti-competitive behaviour. Decisions can be expected about mid-June ...

The Government is reviewing the costs and benefits of occupational regulations which limit competition in, for example, conveyancing, legal and real estate industries. Reducing real estate commissions from 4 per cent to 3 per cent would bring New Zealand's commissions in line with Australia's, and save buyers about $1700 on the purchase of an average $170 000 home.

The pressures of population on New Zealand's environment have been growing steadily...

The Government is developing a strategy for the next 20 years to halt the decline in biodiversity...

In addition, this Budget includes funding to address the legacy of contamination and hazardous waste. Regulations are being developed for the management of used oil. Further funding is provided for national standards for organochlorine contamination and the cleaning up of New Zealand's worst contaminated site.

Primary industries and primary product processing ... have been under triple pressure from declining commodity prices, a very severe drought, and the Asian crisis. Improved world growth and low interest rates will be welcomed by rural communities. The pressure on them has encouraged the Government to abolish stamp duties this year, rather than later ...

The Budget provides $1.1 million for joint research into regional water supplies, water management, and feasibility studies for water enhancement schemes. It also provides for ongoing funding of $44.1 million over the next three years to control tuberculosis-carrying animal pests, and develop new strategies, in particular against possums.

The change of greatest potential long-term value to the rural community is undoubtedly, in the view of the Government, producer board reform ...

In the past 15 years, New Zealand has made unprecedented progress in reshaping incentives, industries and institutions for increasing prosperity in a competitive global economy. But the challenge of the new millennium is large ... We are mid-stream in consultation on a wide range of fronts: [roads, local government rating powers, antiquated water systems].

These are all difficult issues. The Government deserves great credit for bringing them forward on to the public agenda for action...

In a very different category, this Budget provides $44.4 million for a five-year programme defining the continental shelf around New Zealand for a seabed claim by 2006 under the United Nations Convention of the Law of the Sea....

Since 1990, this Government has laid a very solid foundation for this country. Across the decade to 2002, we will, on current data, average 3 per cent growth a year...

Because we were getting the growth, we have been able, for four years in a row, to make significant improvements year after year in the take-home pay of low and middle-income working families...

That's what New Zealanders want. That's what this Government has proved it can deliver. And everyone in the country knows the policy mix required to do that...