(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.
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
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.