(The Budget Speech is released on a rolling embargo this is part 2.)
The knowledge economy
This Government is committed to assisting the transformation of the economy from our current over-reliance on commodity
production to the knowledge intensive industries of the future. The knowledge economy encompasses e-commerce but is
bigger than that. It is about adding intelligence, creativity and technological sophistication to our production and
export base.
To make this new economy a reality, we need to invest much more in research, science and technology. I am proud to
announce today new funding of $30 million for research and development. Together with initiatives already underway, the
total research and development vote will increase by over $43 million. It is a significant increase. This commitment is
central to our economic strategy.
A record $21 million will go toward encouraging more active research and development by the private sector. This is the
largest ever increase in Government support for private sector research and development. The support comprises a $9
million increase in funding for Technology New Zealand and a new $12 million grants programme.
The Government decided that grants were a better, safer and fairer option than tax breaks. I expect to see an expansion
of the new grants programme in future budgets.
The rest of the package includes an $3 million increase to the New Economy Research Fund and a $2 million increase to
the Marsden Fund. Both finance long-term, cutting edge research projects. A further $1.5 million will go toward health
research.
To enhance our trade, cultural and other linkages with the important Latin American market, this Budget allocates
additional funding for the opening of a new embassy in Brasilia.
E-commerce
The Internet has the capacity to substantially improve New Zealand's economic performance. But if we are neither quick
enough nor smart enough to take these new technologies and make them our own, we risk falling behind the rest of the
world.
We will host an electronic commerce summit later this year to get community and industry input into developing an
e-commerce strategy that is world-best.
In the public sector, our aim is that all government information and services should be available on the Internet and
other technologies as they emerge. Operational funding of around $16 million over four years and capital of over $1
million has been set aside for this purpose.
The Budget also provides Trade New Zealand with an additional $9.5 million over two years to expand their already
impressive trade development networks using e-business solutions.
2 Fostering Education and Skills
Education
Spending on education increases by almost $300 million next year from pre-election levels, including $200 million in new
initiatives. But our initiatives are not limited to money. We have also ended bulk funding. The redistribution of the
associated funds makes a small contribution to the ideal that opportunity in early life should not be determined by who
or how well off the child's parents are.
We have committed an additional $15 million per school year for school operational grants. There will be a capital
injection next year of $160 million. This is the largest ever school property works programme. It will be used to meet
roll growth and to upgrade existing schools.
The Government's goal is to ensure that all New Zealanders have the best possible chance to develop their potential, and
to equip themselves to meet the demands of a fast changing world.
A good start is crucial to later success. We are increasing funding to early childhood education by over $10 million a
year.
We need also to reduce the number of pupils who leave school without basic literacy and numeracy skills. We will put
another $23 million into this area over the next four years.
Successful students need good study habits. We are providing up to $2 million a year for primary schools in poorer
socio-economic areas to develop homework centres so that all children have an appropriate environment in which to study.
The low educational attainment rates of Maori and Pacific children must be addressed. Additional funding will be
provided to attract more Maori and Pacific peoples into teaching and to provide more resources for the development of
Maori and Pacific peoples' language and culture.
To put further impetus behind the need to raise Maori achievement, a Hui Taumata of experts and elders will be held in
October to develop a path forward.
Modern Apprenticeships is a major new initiative to regain momentum in developing technological skills. Over $5.5
million will go to rebuilding apprenticeship programmes in the next financial year: $42 million over the four year
period. An additional $23 million over four years will go to the Industry Training Fund to subsidise trainees' costs.
The Government has already moved to honour its commitment to lower the cost to students of tertiary education. We will
write off the interest on student loans while students are studying and have reversed the previous Government's decision
to increase the student loan repayment rate. This will significantly increase the subsidy to students through the loans
scheme, at a cost of $420 million over four years.
We will move to further reduce the study costs to students by increasing the tertiary tuition subsidy by $110 million
over the next four years. And we will provide $12 million over the same period to improve the participation of Maori and
other groups currently under-represented at our universities and polytechnics.
CONTINUES