Police and entrepreneurs benefit from 'sound fiscal' budget

3.00 pm

Police and entrepreneurs emerged as major beneficiaries of today's budget, which Finance Minister Michael Cullen says makes a strong commitment to "sound fiscal management".

"The budget is vigilant on new spending," Dr Cullen said.

"Every initiative had to be justified, and several worthy proposals had to be deferred. This is the tightest of the three budgets the Labour-Alliance Government will present this term."

Net new spending has been limited to $692 million, compared with $1.26 billion in last year's budget.

The fiscal surplus for this year is $641 million -- lower than market expectations. Surpluses for the next four years are now lower than previously forecast because of the slowing world economy and increased spending provisions, Dr Cullen said.

In one of the few major new spending initiatives, the police will get an extra $165.5 million over the next four years.

The Government is also creating a new $100 million seed capital investment fund to finance business start-ups, in partnership with private sector capital.

"New businesses based on technology and on high-value products and services will be a key part of New Zealand's economic transformation," Research, Science and Technology Minister Peter Hodgson said in a statement.

"They will need seed capital, but that end of the venture capital market is presently under-developed."

Another string to the Government's bow in transforming the economy, away from over-reliance on commodity trade, is investment of $44 million over four years in research, science and technology.

And to help industry and regional development, the Government is directing $34 million a year in new spending over four years towards small businesses, high growth industries, local communities and regions.

In a contentious move, the Government will fund an extra $36.9 million in tertiary education institutions this year, if they freeze student fees again in 2002.

The country's eight universities have already indicated they will not accept that offer.

Associate Education Minister Steve Maharey said the government offer would add up to a total fee stabilisation offer next year of 5.1 percent above 2000 rates.

- NZPA