KEY POINTS:
Finance Minister Michael Cullen's ninth (and probably last) budget will not bring home the electoral bacon for Labour.
That is, unless his colleagues and some frightening political poll results have persuaded him to throw in a last-minute major lolly scramble - fear of losing seats might do that.
But digging into taxpayers' pockets to fund another bribe - such as major expansion of Working for Families - would simply risk a backlash from other sections of New Zealand society.
Most New Zealanders will at least get a bit extra in their pockets from rolling tax cuts and other payouts, meaning they can buy a few extra rashers at the supermarket.
The problem is that unless they fall into Cullen's favoured lower- to middle-income brackets they may find themselves waiting a long time for the tax cuts, which are expected to be no more than $25 a week.
Cullen is pitching his budget as a prudent affair.
"It will show once again that it is Labour in government that can be trusted to manage our economy in difficult times, and it will show that we are serious about delivering even greater prosperity for New Zealanders," he says.
The reality is there is "no silver bullet" that will offset the punishment household budgets are taking. Kiwis are feeling the pinch as rising food and fuel prices, and higher interest rates, slam those in the mortgage belt.
But Cullen's ability to do much is constrained by the impact of the credit crunch on global growth and finance costs, and the fact that the economic cycle is at a low point.
The Government's own tax revenues are dropping as a result of the contracting economy.
Figures released in the run-up to the Budget show the tax-take dipped $700 million below forecast in the eight months to February. The operating surplus for the June 30, 2008 year was $1.43 billion - 70 per cent below forecast.
Unless that surplus has been turned into a complete mirage since February, Cullen could still push about $1 billion out to a mixture of taxpayers, superannuitants and beneficiaries as a one-off "social dividend".
Crucially the $1b would come from the 2007/08 year's accounts and result in a downgrading of the budget surplus just for that year.
Such a step would help people on lower incomes who are particularly financially exposed right now.
But the level of tax cuts any responsible Finance Minister can dish out depends on the Government's ability to post future surpluses once budget forecasts are adjusted to take account of the lost tax revenue.
Tax cuts amounting to $40 a week for most income earners might have been possible three years ago when the economy was riding high.
But anything much more than $25 a week would seem unlikely right now, unless Cullen was prepared to change tack - borrow to fund tax cuts and run a fiscal deficit or cut spending.
Treasury financial forecasts released with the Budget will show the economy has tightened. There's no simple way out of the downside of the "sandwich economy".
Cullen and Prime Minister Helen Clark will be hoping a prudent budget on top of statistics showing a big increase in unemployment and falling consumer spending will persuade Reserve Bank governor Alan Bollard to bring forward interest rate cuts.
The problem is that the booming international commodity prices that are bringing a smile to dairy farmers' faces are not falling and imported fuel costs remain high, adding to inflationary pressures and making it less than certain that Bollard will move in June.
If he moves too quickly he risks an element of creditor flight, which would result in a major drop in the value of the Kiwi dollar and higher costs for imported goods. We are in a vicious circle here.
Cullen won't be posting large budget surpluses into the future, as he did in previous years.
But he is expected to continue his infrastructure spend-up - he favours the word "investment" - by backing broadband development.
In particular, he plans to increase New Zealand's international connectivity by investing in a bigger undersea cable.
Communications Minister David Cunliffe may even have succeeded in getting Cullen's backing to make a major investment in expanding broadband capacity within the country to trump National's policy.
There will be programmes to help Kiwis switch to environment-friendly remedies, such as home insulation, and more money to back research into mechanisms to reduce greenhouse gas emissions from exposed sectors such as agriculture.
New Zealand Superannuation will be pitched at 66 per cent of the average weekly wage.
The health package for this year will be about $750 million and there will be a boost to education and social services.
Beyond that it is a case of how desperate Cullen's colleagues are to hold on to their seats.
