Cullen hopes his second Budget will soon be forgotten

3.10pm

Finance Minister Michael Cullen hopes people will soon forget this afternoon's Budget.

"If you look back at the budgets you remember they tend to be the ones you didn't like at all," Dr Cullen told NZPA as he promoted the budget he described "as friendly to everybody but not excessively so to anybody".

Unlike this week's Australian election year budget with sweeteners thrown to all and sundry, Dr Cullen's version was never going to be a lolly scramble.

Dr Cullen and his fellow ministers signalled that little money was available after a big spend up last year.

What little there was would most likely go to education and welfare.

Today, Dr Cullen announced an extra $467 million over four years for education, featuring boosts for adult literacy programmes, early childhood education and the professional development of school principals.

Other winners were economic development projects (34.35million) and research and development funding.

The Government reported an operating surplus of $641 million for 2000-2001.

Dr Cullen highlighted his "fiscal prudence" despite the Government already breaking its $5.9 billion self-imposed cap in new spending over this term.

The finance minister pointed to government expenditure as percentage of GDP continuing to shrink over the next four years as evidence of his fiscal predictions.

Dr Cullen said Treasury had picked a slightly lower economic growth forecast of around 2.9 per cent on average over the next four years.

Boosting that economic growth by "transforming the economy" was the minister's other focus, but he said there were no instant solutions.

Dr Cullen, like most, can see a solution based on diversifying the country's economy and doing things better and smarter.

"Skills, human capital, issues of savings, trade policy, science commercialisation and innovation. These aren't the sort of areas where you can turn on the tap and, boom, the solutions come out," he said.

Instead, he outlined plans to match funding and priorities within the education sector more closely with the wider economy.

However, the political focus on the education portions of the budget is likely to see the Government coming under continuing attack over its treatment of tertiary education.

As expected, the Budget offered universities an extra $36.9 million in funding in exchange for a freeze on student fees.

Yesterday, the Government was asked if universities would lose the 2.3 per cent increase given to them last year as well as the 2.6 per cent on offer if they said no.

However, ministers batted away questions saying people should wait until the budget.

The University Students' Association has called on universities to accept the offer amid growing unrest among tertiary education bosses about the take-it-or-leave-it deal.

Also, Dr Cullen announced a small boost to businesses with more money for research and development.

The Alliance also got a share of the portions, with leader Jim Anderton getting funding for his "jobs machine" through economic development spending.

Welfare agencies are received a boost to deal with at-risk children and also to assist people from the dole to work.

- NZPA