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Government spends kitty to ease youth jobless

Published: 7:59AM Monday August 03, 2009 Source: NZPA

Programmes to reduce youth unemployment have left the government with little spare cash to get through the rest of the year.

Prime Minister John Key ended the National Party conference over the weekend by announcing plans to spend $152 million on creating work, education and training opportunities for unemployed young people.

Key said out of the $152 million, the total new spending would be $120 million between 2009 and 2011 and none of it would come from borrowing.

Instead the money is to come from the "between budget contingency fund".

This money is usually set aside for emergencies that can not be met within other spending such as unexpected natural disasters.

When asked about how much room was left in the budget for emergencies, Key said there was very little.

He hoped that the hunt for savings and under spending in budgeted programmes would give the government some room to move over the coming months.

The decision to spend the contingency fund was largely unnoticed at the conference.

National's first conference since winning last year's election was a celebration for members, but ministers spent most of their time warning that there was no money and many people faced tough times.

Youth unemployment has risen by 300% from a year ago and Key unveiled a plan to blunt the worst effects of that.

The largest amount of money - $52.7 million - is to create 2000 new places for 16 and 17-year-olds not engaged in school to study at polytechs.

There will also be $20 million spent on a Job Ops programme to give 4000 low-skilled people a wage subsidy of $5000 over six months to get them into jobs.

Another $40.3 million scheme to be known as Community Max will get 3000 people places in community programmes paying the minimum wage for 30 hours a week and a $1250 training payment paid to the community group.

In all, Key outlined nine programmes to be targeted at youth unemployment, some of which were expansions of current programmes.

The spending programme is targeted at reducing unemployment levels over the coming year as the recession makes employers reluctant to take on new staff.

At the conference, Key urged his party members to hire staff and warned that leaving a generation of young people out of work would create far greater problems in the years to come.