Little spare change for Budget surprise

When Finance Minister Michael Cullen steps up to deliver his Budget today, he has only modest room for surprises in his own spending.

The big surprises may come from ways in which the private sector can invest in public projects.

A big chunk of the Government's new spending is already committed to fulfilling costly pre-election promises made by Labour as well as the minor parties now supporting it in Government.

Dr Cullen may have around $400 million to $500 million left for Budget day surprises after Working for Families, interest-free student loans and a hefty swag of pre-Budget announcements are taken out of his purse.

For that reason, it is possible that the biggest surprises today will be ones that relate to the signalling of changes in the future rather than any initiatives being undertaken now.

In that sense, Auckland roading and the energy sector will be in the spotlight.

Prime Minister Helen Clark has already dubbed it the "Investment Budget".

Transport Minister Annette King will host a special pre-Budget briefing at which key transport figures are expected to hear how the Government plans to fund the $685 million shortfall Transit identified in its highway programme earlier this year and how private sector investment may help to fund Auckland's infrastructure needs.

Dr Cullen also said late last week that energy would be mentioned in his speech as "an issue of considerable significance in which work is proceeding".

The health sector is to get an additional $750 million in spending and the police force just over $200 million for the first group of 1000 new officers.

While a large operating surplus will be revealed in the Government's books, Dr Cullen has said that much of that is already spent - and warned that it will be the last big surplus for some time.

"It's spent on schools and hospitals and the New Zealand superannuation fund," Dr Cullen said late last week.

He has deflected calls for tax cuts by noting that cash deficits are forecast for the Government's accounts in coming years.

National Party finance spokesman John Key said yesterday that he expects Dr Cullen to "claim poverty" in today's Budget speech.

"But as we saw in the last election, that only lasts as long as there's not an election around the corner," Mr Key said.

He said Dr Cullen was likely to have around $400 million in unallocated spending which could be used on Budget surprises today.

"We don't think he'll blow that $400 million either because he's in the period of wanting to conserve as much as he can for the next inevitable election spendup," Mr Key said.