'Predictable' Budget gets low-key response in Parliament

4.30pm

Finance Minister Michael Cullen's second budget speech was 14 pages long - but included just over two pages on social spending.

There was no "Closing the Gaps", no detail on parental leave. Nor was there much on health, education or welfare. And it provoked a muffled, low-key response in Parliament, even from Government backbenchers.

His 40-minute address was loaded with structural revaluations, capital provisions, "sound financial management and credible financial allocation" and the showstopper: the OBERAC - the Operating Balance Excluding Revaluations and Accounting Changes.

For a finance minister proud to be "demystifying" the annual budget process by eliminating the old "collection of surprises" his introduction of OBERAC would have been a mystery to most voters.

This new fiscal indicator strips away valuation and accounting changes, he says, and gives the public a more accurate fix on a government's financial stewardship.

The budget speech confirmed what everyone knew: that the Labour-Alliance Government had spent up large on social policy last year and would have to scale things back in this mid-term package.

Even then, Dr Cullen has been unable to stay within his $5.9 billion fiscal cap or "counting limit", announcing that it had risen to $6.1 billion over the announced period.

"Social spending does not have the same prominence in policy terms in this year's budget as in last year's," he said. "But it nevertheless continues to take the lion's share of increased spending.

"Budget 2000 was unashamedly dedicated to redressing the balance, to restoring a sense of social purpose and cohesion to a nation which had become divided against itself, too mean and selfish.

"Budget 2001 reinforces that philosophy with carefully targeted increases in spending in key social areas. More than last year, however, it asserts the need for economic growth to be the essential companion to social justice," he said.

The speech was not one for heckling, laughter or fiery interruption. As Dr Cullen prided himself on contributing to a "more predictable, less attention grabbing" Budget the immediate response from the floor was: "It's boring".

When he finished, there was the obligatory standing ovation by ministers and the kiss for Helen Clark.

But next up, Opposition leader Jenny Shipley was quick to accuse the Green Party MPs of failing to rise and of Hauraki MP John Tamihere of failing to clap Dr Cullen's effort.

Mrs Shipley labelled the budget "grey, faceless, visionless" with too little in it to demand support from any part of Parliament.

"They have blown the fiscal gap and there's huge political trouble coming," she thundered. "I'm not surprised that John Tamihere is not on his feet. There's not one word on 'Closing the Gaps'. One year ago that was the flagship of this Government."

She slammed the attempt to "socialise" the tertiary sector by increasing government influence over universities and polytechs, and stripping $50million from the balance sheets of Crown Research Institutes to help fund the new $100m innovation fund.

National would expose the budget's failings, including the lack of extra money for police. "If you want a policeman, dial 'none, none, none' because there's no extra money for the police in this budget. None."

The Prime Minister, Helen Clark, strongly defended the budget speech, declaring Mrs Shipley's entire reaction as "ineffectual snarling" and adding a tit-for-tat dig by claiming National's deputy leader Bill English had not risen to applaud his leader.

The budget was National's nightmare as it reflected a growing economy, falling unemployment and a shrinking current account deficit. "The worst thing this Government stands accused of is keeping its word and delivering on its promises," Miss Clark said.

The Labour-Alliance coalition had "identified a new role for the State which is consistent with Third Way social democratic governments worldwide."

She scorned Mrs Shipley's concern at the tertiary sector being socialised - "It is publicly owned. It is publicly owned" - and appealed for universities not to protest an increase in funding when no such action was taken when National cut funding.

Alliance leader Jim Anderton said the budget showed "good, but not sufficient progress" and there was a long way to go. Voters in 1999 had given his party "a small bucket and we've got lots of horses to water."

ACT leader Richard Prebble followed, criticising Dr Cullen's use of multi-year periods of funding rather than giving figures for the coming financial year. "Last year it was over three years, this year it's over four years. Why not go the whole hog and make it over 100 years?" he asked.

What was unsaid in the budget was the single biggest area of spending, $563 million more on welfare.

www.nzherald.co.nz/budget

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