KEY POINTS:
Finance Minister Michael Cullen knows there is a better-than-even chance that the Budget he delivers on Thursday will be his last. He made a dummy run at retiring from politics in the middle of this term and it seems highly unlikely he will have the stomach for warming the Opposition benches while he waits to take another watch at the helm.
Cullen also knows that the Budget's content will have a profound influence on Labour's fortunes in the election that is now less than six months away. It would not be cynical, but merely realistic, to expect him on Thursday to perform the fiscal equivalent of pulling a rabbit from a hat. The announcement that it would stop charging interest on student loans was crucial to Labour's success in holding off National's electoral charge in 2005.
Given Cullen's reluctant commitment to cuts in personal income tax this time, there is unlikely to be enough money for an act of such bravado this year, but it remains likely that on Budget Day we will see some generous gesture designed to depict a caring Government which, given another term, will be able to disburse the wealth its prudent fiscal management has allowed it to amass.
Equally predictable is that the Opposition will howl down as unaffordable or unsustainable or both anything the Finance Minister does. It is in the nature of politics. The problem is that the electorate has long ago tired of the way the Opposition (not just this one, but any one) reflexively denigrates any Government initiative. At the same time, voters have become smarter: they know when they are being bought - even if they are not above selling when asked; but they are also inclined to wonder, once having marvelled that a rabbit actually did come out of the hat, how much use a rabbit will be to them.
The difficulty for Cullen (and his detractors on the other side of the House, who will need to explain what they would do differently, and how) is that there is a disjunction between what voters urgently want and what the country, in the medium and longer term, is likely to need. Soaring prices, notably of fuel and basic grocery items, are creating genuine hardship in middle New Zealand households to an extent that we have not seen in the life of this administration. Meanwhile, independent research suggests that one in four children in this country lives in poverty - defined as households earning less than 60 per cent of the median household income. Middle New Zealand - and those not fortunate enough to be so classified - have waited a long time for tax relief, and the political rhetoric about tax cuts makes it unthinkable that they should be denied it now.
On the other hand, wherever this Finance Minister, or anyone who would wish to have his job, might care to look, Government is beset by the demand for public spending: on public transport in Auckland, on job creation in the provinces, on health and education everywhere.
The Australian Budget - the first in 13 years by a Labor Government there - makes an unfortunate backdrop against which Cullen must deliver his own. Treasurer Wayne Swan was hailed as a Robin Hood for robbing the rich and giving to the poor on Tuesday when he took tax breaks and other concessions from the affluent and massaged Government spending to ease the pain in mortgage-belt constituencies. More sober analysis suggests that he was robbing the rich of a good deal less than he claimed but there were real signs of a change in direction.
Such radical action is unlikely here. Australia's is a newly elected reform Government acting on a big public mandate for change; New Zealand's is a third-term administration at the lowest ebb of its popular support.
In an ideal world, Cullen's Budget would suggest the kind of grand vision for the country that Swan's did. But as Labour fights for its electoral survival, he cannot afford such an approach.
The best we can hope for is that he will do what we should all do on a household level: take a long hard look at spending, cut out the luxuries, stick to the necessary stuff, tighten the belt and try not to panic.
