Venture capital one winner in Budget

By Phil Boeyen, ShareChat Business News Editor

Thursday 24th May 2001

The Government is taking a lead in the venture capital industry with the announcement that it is setting up a $100 million venture investment fund.

The fund has been announced as part of the Budget, with $50 million coming from the balance sheets of the Crown Research Institutes and an equal amount from state-owned enterprises.

Finance Minister, Michael Cullen, says the aim of the fund is to accelerate the development of the venture capital industry, develop a larger pool of people in New Zealand's venture capital market, and facilitate the commercialisation of research.

He says the fund will operate in a way that is designed to launch a robust private sector seed and start-up capital market that does not rely on continued injection of public money.

The Government is also planning to spend $20 million of new capital funding to Centres of Research Excellence within the tertiary education system.

Other spending highlights include a $34 million package for economic and regional development, an extra $467 million over four years for education and an extra $166 million for the police over the same time frame.

There is also an allocation of $1.4 billion over the next four years for new health spending, including $84.4 million a year for elective surgery.

The Government says spending is now at its lowest level as a proportion of gross domestic product since 1977 and that net debt is forecast to fall to 17.8% of GDP by the end of this electoral term, down from 21.7% when it took office.

An operating surplus of $641 million is projected for 2000/2001.

Mr Cullen appears to have played it relatively safe with today's Budget, playing the ever-popular health, education and law and order cards.

However the Auckland Regional Chamber of Commerce says the Government has still failed to address the issue of lowering company tax.

"With Ireland's company tax at 10c and Australia's now at 30c, we are staying disadvantaged against the countries we want to be competing with for new business and skills," says chief executive Michael Barnett.

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