Editorial: Budget's prospects for new economy

The Budget tomorrow promises to be predictable. This Government, like those that preceded it, believes nothing is to be gained by springing surprises on those who are trying to make economic decisions. But it could be - should be - a more interesting Budget than last year's, which was essentially fulfilling promises made previously. This one ought to be more forward-looking.

The country has been enjoying 18 months of good farm returns boosted by a low exchange rate. It is time that wealth began to produce investment in goods and services that can reduce our dependence on commodity trade.

Tourism is one such investment. The $4 million boost for the Tourism Board announced yesterday is not the $11 million sought by the board when it outlined its latest growth strategy last week. But it will help.

Forestry is another industry ripe for upgrading. The volume of wood ready for milling is about to multiply. There might never be a better opportunity to develop processing industries that could add value to radiata logs.

And in farm exports, the last of the statutory producer monopolies are disappearing at last. The Apple and Pear Board will no longer control pipfruit exports; if dairy farmers vote for the Global proposal shortly, the Dairy Board will disappear in a year. The way will be open for new investors and new ideas in milk products and fruit marketing.

This Government is not so very different from those that went before it. Like them, it is not in the business of direct investment. It has gone a little further than they did by offering seed money for a venture capital fund with the private sector, and export credit insurance. But the amounts are small and the schemes are designed to try to minimise their influence on decisions best made by those who must answer to private investors.

The Government's greatest contribution to the economy is always education. Tertiary education is going to figure prominently tomorrow. The Budget will not bolster the sector's funds; that much is known to universities already and they are protesting about it. But they are likely to receive an indication of the way they will be financed in future.

Some, perhaps all, universities may be financed as "centres of excellence" and they are likely to receive allocations that reflect their status as more than teaching institutions. World-class scholarship and research may be recognised in the distribution of taxpayers' funds. Precise decisions will probably await the final report of an advisory panel that has been working on the subject since last year. But the direction is already evident.

The money for more investment in universities is going to come at a cost to the thriving private sector in tertiary training. The Associate Education Minister, Steve Maharey, has made that clear. There will be less public investment in technical and occupational courses and more in the sciences, medicine and engineering, where all economies see their future these days.

The Budget may be memorable for ending a decade in which tertiary education was largely responsive to students' choices. This Government believes the needs of the economy come first. However, it is a false distinction. An economy is no more or less than the contributions of all the people in it. They make their most valuable contribution when they follow their interests and talents.

If the Government believes not enough of them are interested in science and engineering, the solution is not to restrict other tertiary courses. There is not much point providing extra places in science and engineering for students who would rather be doing something else. If we need more young people to be enthused about science and engineering, attention should be given to schools. Higher salaries for good science and mathematics teachers would be a start.

The Government has left itself little extra to spend this year. If this is a Budget for the knowledge economy, it will be with promises rather than provisions. There is much to be said for distinguishing the funding of different levels of tertiary education and providing a contestable purse of research money. But when tuition funds are allocated, let them continue to follow the decisions of fee-paying students and the institutions that house them. Those students are the economy of the future.