Editorial: Budget offers little substance, less stimulation

Patience, the Minister of Finance said in concluding his Budget speech, would need to be the country's byword. Patience, however, is not an inexhaustible commodity. If this Budget, as Dr Cullen suggests, was but one step in a longer journey, it leaves the lightest of footprints.

A country looking for bold and imaginative initiatives was confronted instead with an array of reviews, conferences and yet-to-be-announced policy details. A Budget of worthy fiscal soundness and devoid of unpleasant

This is a Government inclined to analyse issues to the point of stagnation. When it paints in bold strokes, it is apt to be in peripheral areas, such as the arts or biodiversity. In contrast, unconvincing doodlings characterise the Budget's approach to economic development, the area of most concern to a fretting business sector. A new $12 million grants programme is a welcome, and fair, means of resuscitating research and development. That apart, however, there is little to indicate how the knowledge economy will be embraced.

Dr Cullen acknowledges that we must be quick to seize upon new technologies or risk trailing the world. His solution: the snail-like gambit of an electronic commerce summit. Is there not a swag of overseas evidence and analysis pointing the way forward? Similarly, we know little more about the Government's plans to increase investment in industry assistance, even though concrete steps could have been taken at relatively little cost. Details of the regional development vehicle are to be announced soon. They should have been in this Budget.

Tax simplification, a subject of vital interest to small business, is also treated in generalities. Legislation is promised for October. Additionally, the Government will set up as wide-ranging tax review, the recommendations of which will be championed at the next election. Is the implication that a further increase in the top personal tax rate will be considered essential?

That might dovetail with Dr Cullen's dire warning about the consequences of the coalition partners failing to agree on the partial pre-funding of superannuation. The risk in delay on this most central of issues, he warns, is a choice between tax increases, big cuts in the level of superannuation or tough tests to limit eligibility. The strictures of the proposed fund, Dr Cullen further cautions, dictate spending increases and tax cuts will have to be forgone.

The Budget is not without its nuggets. There are welcome spending increases in education and health, notably the $74 million a year more for elective surgery. As the Government observes, this should not be the preserve of those who can afford it. Yet there is little on law and order, the credit-card pledge on which the Government has most palpably failed to deliver. And even its much-touted "closing the gaps" strategy for Maori and Pacific communities has a caveat. Much of the funding must wait a year.

Underpinning the Budget is strong economic data. Treasury, unlike private sector forecasters, has seen no reason to revise its predictions, adhering, for example, to 3.7 per cent growth in the March 2001 year. It is also optimistic that surging exports will prompt the current account deficit to drop from a worrisome 8.2 per cent of gross domestic product to about 5 per cent over the next two years. There is a proviso to this cheery scenario, however. Treasury concedes the slump in business confidence since its forecasts were finalised could translate into lower activity.

Every budget is a balancing act. Immediate needs must be weighed against the Government's ultimate intentions and the economy's long-term health. Dr Cullen has prudently met economic circumstance. But his Budget is short on substance and stimulation. And those who are unfulfilled are unlikely to feel patient.