Stand by for Cullen's grey Budget

By VERNON SMALL deputy political editor

Unless you are a university don, prepare to be underwhelmed by a grey Budget.

Finance Minister Michael Cullen will unwrap his second financial package on Thursday, and all the signs point to a classic mid-term affair, short on big spending plans and major reform.

After last year's splurge implementing Labour's costly election promises - to cut tertiary education costs, restore superannuation levels and bring back income-related state rents - Dr Cullen has flagged a tight Budget in the Government's "year of consolidation."

His 2002 Budget may be more generous - it will be election year after all - when most of the $270 million increase in the Coalition's fiscal cap, announced a fortnight ago, will be spent.

But this year little more than $600 million is available for glossy new plans.

The emphasis will be less on social spending and more on fiscal prudence. Long-term transformation of the economy and better workforce skills will be the catchcries as the Coalition tries to establish itself as a sound financial manager.

The Finance Minister's own instincts have been to "demystify" the annual financial statements.

This year its main elements and forecasts have all been well-signalled.

Surpluses will remain on a rising trend. The long-term outlook for growth will be good, but the economy will be sluggish in the short term because the world economy is deteriorating.

Pre-Budget announcements have already scored headlines for an eco-package and youth crime initiatives.

The new superannuation fund will be a key element of a broader national savings strategy.

Other major strands are likely to focus on research, science, so-called economic transformation, and regional development initiatives, including seed venture capital.

They will dovetail with moves to improve education and training, promising changes to the shape and funding of tertiary education to establish "centres of excellence."

Tertiary reform is certain to draw accusations that a cabinet thick with former teachers and university lecturers is attacking prized academic freedoms.

If the Government follows officials' advice, competition between universities will be discouraged in favour of cooperation, and funding will be slanted towards qualifications the country needs.

Significant extra funding for the sector may be on hold, however, pending the structural reforms.

Overall social spending in the Budget will rise (it always does), although much less than last year. The health sector is facing belt-tightening as any extra cash will struggle to keep pace with inflation.

Paid parental leave will start on April 1 next year although details will not be in the Budget.

Hints of other initiatives have been made - extra help for adult literacy programmes and Alliance leader Jim Anderton's longed-for youth suicide package, for instance.

This year's surprise on the day could be the extent of change planned in the tertiary education sector.