New Zealand government Budget to target education,innovation: PM

New Zealand Prime Minister John Key outlined government spending plans for schools and innovation Tuesday in a speech ahead of next month's Budget.

Speaking to a business gathering in Auckland a day after conceding the government will not meet its self-imposed target for an operating surplus this financial year, Key said the government would "remain relentlessly focused on improving the competitiveness of our economy."

That would include controling spending and taking pressure off interest rates and inflation, "maintaining competitive tax rates," investing "many billions of dollars" in public infrastructure like roads and broadband, and expanding access to overseas markets.

"Two of the most important ways we can achieve sustainable, long-term growth are through innovation and investing in the education of our young people," Key said in the published speech.

Smart, innovative exporters were the key to a prosperous future for New Zealand.

Government investment in research and development would total 1. 5 billion NZ dollars (1.12 billion U.S. dollars) this year and next month's Budget would see another 80 million NZ dollars (59.79 million U.S. dollars) invested over four years in more private sector research and development.

Recent recipients of research grants included Rocket Lab, an Auckland-based aerospace company that had developed technology for building rockets to carry satellites into space, he said.

The government was also investing heavily in building new schools and modernizing classrooms to meet school roll growth and to provide modern learning environments.

"Today I can confirm that the Budget next month will provide another 244 million NZ dollars (18.25 million U.S. dollars) over the next four years to meet growing school rolls and to improve the quality of learning environments," said Key.

This included building three new state primary schools and one new high school.

The New Zealand economy was strong and growing, with low interest rates and inflation, and wages on average rising faster than the cost of living, he said.

Key's political opponents accused him of dressing up core government spending to hide the government's failure to reach a surplus after seven years of cuts.

"What this Budget must deliver is real gains for areas of real need," said Andrew Little, leader of the main opposition Labor Party, in a statement.

"We have a housing crisis spinning out of control, the regions are being neglected and Kiwis are still waiting for the wage rises (Finance Minister) Bill English promised them," he said.

The opposition Green Party said Key's speech lacked a vision for a better New Zealand.

"All he announced today is a lower-than-inflation adjustment for research and development spending and a standard school- building program to keep up with population growth," Green Party co-leader Russel Norman said in a statement.

The government's failure to achieve a surplus for the seventh time in a row equalled the record set from 1966 to 1972, said Norman. Endi