Building a stronger economy and fairer society

My second budget reinforced the Government's reputation as a prudent fiscal and economic manager while boosting security and opportunities for New Zealanders.

The budget reflected our core values, with five distinct features that set it apart as a Labour - Alliance Government budget.

1. People first The government moved early in our term to attend to deep festering problems with New Zealand's social security system. We front-end loaded priority spending: boosting the pension, introducing income related rents, easing student debt and more funding for elective surgery and education.

2. Look to the future Budget 2001 takes a long term view, investing in young people, setting the stage for effective tertiary education and putting aside money through the New Zealand Superannuation Fund to meet costs that will emerge in twenty and thirty years time.

3. Hands on economic support Instead of leaving everything to the private sector, this government has an active programme of skills development, regional and economic expansion and support for technological support. Good social services and good jobs need a well performing economy.

4. Core values: opportunity , security The budget emphasises the importance of giving individuals and communities the opportunity for personal development and self reliance. For example: the equity funding provisions for early childhood education, the funding boost for Child, Youth and Family Services and the direct resourcing whanau, hapu and iwi initiatives.

5. Sustainability The budget highlights social, financial and environmental sustainablity. By taking a whole of government approach, the budget balances competing demands: short term versus long term, resource use versus conservation, demands for more spending versus the ability to pay for things.

		Tight 1st term budget trio

		The budget is vigilant on new spending. 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. This compares with around $1.26 billion in Budget 2000 and with the $815 million we are setting aside now for next year's budget. The Government was concerned that the spending allocation for Budget 2002 should be realistic. I am satisfied that $815 million is credible although it will demand continuing firm discipline from Ministers. The risks the world slow down poses to New Zealand are acknowledged in the budget documents. But I share the Treasury's view that the economy is well-placed to absorb the shock and to continue to grow. Although the Treasury has revised down its growth track since the December Economic and Fiscal Update [DEFU], it is still projecting growth of 2.9 per cent on average over the next four years. Overall the general outlook is good - unemployment remaining low at around 5 per cent, inflation under control and the current account deficit dropping steadily to 3.3 per cent of gross domestic product by the end of March, 2005. For more information on Budget 2001, check out our website: www.beehive.govt.nz

		Driving economic transformation and growth

• $34.35 million package of initiatives for economic and regional development.

• $100 million seed capital investment fund in partnership with the private sector to assist the development of innovative high-tech businesses and increase of $11.6 million in direct research funding.

• Increase of $1.2 million a year, from $0.6 million to $1.8 million, for the business Incubator Support Programme.

• Additional $56 million over the next four years to create more than 17,000 extra industry training places.

• Tertiary Education Commission to be set up to drive improvements in the tertiary sector.

• Increased funding to the tertiary institutions to continue the fees freeze through into the 2002 academic year and $40.6 million over four years for a new Centres of Research Excellence Fund.

• $4.4 million over four years to allow the Industrial Supplies Office to actively seek out tendering opportunities for large public sector projects both here and in Australia.

• Extra funding for the new embassy in Brazil and for Trade NZ.

		Investing in people

Education

• $30 million over four years for an early childhood education equity funding initiatives and $18 million to improve adult literacy.

• $27.4 million over four years to develop school principals' leadership and skills. A variety of other initiatives to improve teacher quality and school administration.

• Increase in school operation funding.

Health

• $330 million increase in Vote: Health.
  $84 million a year built into permanent baselines to maintain gains in reducing waiting times for elective services and an additional $7.4 million above the $50 million increase in last year's budget for mental health.

• $3.9 million to improve the cervical screening programme.

Social Services

• $184.4 million over the next four years for the Department of Child, Youth and Family Services to implement Mick Brown's report: Care and Protection is about Adult Behaviour.

• A $44.7 million package to assist beneficiaries make the transition from welfare to work.

• $31.1 million to support "for community, by community" programmes.

Housing

• Funding to build 125 new community houses and to extend rent relief to cash-strapped community housing tenants.

• Commitment to build an additional 300 new state houses this year and to upgrade further 9000.

  
  

• More money into the rural home loans scheme.

Maori Affairs

• Overview from Maori Affairs Minister Parekura Horomia on policies to strengthen Maori communities and advance Maori economically.

• $10 million a year for Maori television.

• $15 million over three years to directly resource local Maori initiatives.

Pacific Peoples

• $500,000 increase to the Pacific Business Trust.

• $2.8 million for Pacific health providers [contained in the health statements.]

Sports and Culture

• $100 million over the next five years to implement the recommendations of the Sport, Fitness and Leisure review.

• Funding package to support regional museums and galleries

Immigration

• Near doubling of the budget for refugee resettlement services.

Mediation

• Additional money to support the new Mediation Service.

Electoral Issues

• Improvements to electoral services, and to speed up vote counting on election night.

		Protection and security

Justice and Corrections

• $22 million over four years to begin implementation of the new sentencing and parole regime.
• $7 million over four years on treating alcohol and substance abuse and on programmes aimed at repeat disqualified drivers.
• $500,000 a year for victim support.
• Funding to build two new prisons in South Auckland.

Police

• $165.5 million over four years.

Eco 2001 package, announced 9 May

• $16 million over three years to improve visitor facilities on Department of Conservation land.
• $10 million over four years to make the one-off conservation awareness initiative a permanent feature of DOC's work programme.
• A new national park on Stewart Island.
• Funding to control bovine TB, prevent foot and mouth disease from entering New Zealand, control the spread of Asian kelp and fund a South Island survey of freshwater pest fish.
• An additional $6 million this year and $2 million next to the Ministry for the Environment.
• Funds to develop Environment Performance Indicators and to improve the collection of agriculture and horticulture statistics.
• Organic farming initiatives.

Defence, announced 8 May

• Increase in net operating funding of over $300 million in the next five years and around $700 million in the next ten years for Vote:Defence Force. Additional significant cash injection over the same period.
• Re-equipment programme for the Army, multi-role vessel with long distance and Southern Ocean capabilities to replace HMNZS Canterbury on retirement, upgrade of Air Force's Orion, C-130 Hercules and Iroquois fleet.