New Zealand's skills shortage was highlighted in the Budget yesterday with the Government allocating $256.5 million to promote tertiary education and apprenticeship programmes, particularly in science, engineering and agriculture.

Minister for Tertiary Education, Skills and Employment Steven Joyce said most of the funding would be used in the next four years to increase tuition subsidies in science subjects by 5 per cent, agriculture by 16 per cent, veterinary science by 9 per cent and undergraduate medicine by 6 per cent. He said more than 200,000 jobs had been created in the past three years with record numbers of highly skilled graduates and emerging high-tech and software services industries.

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"Now we need to continue that momentum," Joyce said. "We need more skilled people in disciplines like science, engineering, agriculture and the key trades if we are to continue to grow a high-value, diversified ... economy."

Also, $14.4 million had been set aside to fund 5500 more apprentices by 2020.