Plenty to disappoint observers on both ends of the political spectrum

Finance Minister Bill English. Photo / Mark Mitchell

From the left

They've given up even trying to grow the economy.

If you take out a 1.5 per cent bump from the earthquake recovery, and 0.3 per cent bump from the Rugby World Cup, then underlying growth is just over 2 per cent. And that's in the good years. It's just possible we won't have an earthquake and a world cup every year. What happens then?

These deficits are the direct result of tax cuts that couldn't be afforded - $44 million every week just to pay for last October's tax cuts for the top 10 per cent alone.

The Government is paying for those by telling everyone else to make sacrifices, like the hundreds of thousands who signed up for KiwiSaver only to have the rug pulled out from under them.

Too weak to take the public into his trust, John Key smirked before the election that his tax cuts wouldn't mean spending cuts and deficits.

They've booked the cash from selling down power stations before they've even decided how much of the assets they're going to sell, and savings in the public sector they haven't yet decided.

Foreigners will buy those, and the profits will flow out of the country. For National that will just be another excuse to argue for more cuts.

There's nothing for families, except cuts to KiwiSaver. There's not a single new investment in social development, like better schools, or police or in developing the economy.

What is the message they are sending? If you are working hard and responsibly putting away some of your income in KiwiSaver, the Government is punishing you. If you are a young New Zealander, you will pay more for education, and you can expect nothing to increase skills.

* John Pagani is a political commentator and former senior adviser to Labour leader Phil Goff and Progressives leader Jim Anderton.


From the right

An opportunity missed.

For months, the Minister of Finance has been warning New Zealanders that we can't go on borrowing in excess of $300 million a week, we must get our house in order, and we need to exercise tight restraint for as far ahead as the eye can see.

And what's he delivered? A commitment to a few timid reductions in programmes started by the last Labour Government - and roundly criticised by National in Opposition - then not starting till 2012.

Over the next financial year, the Government will still be borrowing over $13 billion, or $13,000 for every family in the country. And most of it will be borrowed from foreign lenders.

Adjusting for the cost of the earthquakes, the borrowing is as big next year as it's been this year, and Government spending remains a bigger part of the economy than in any year of the last Labour Government.

Cutting back spending programmes which recipients have come to enjoy requires political courage, and that's what the Government lacks. Some day soon people will realise the goodies which Government is still handing out are being charged back to our children.

And what of growth? The Prime Minister recently pointed out that real income per head is lower now than it was in 2004. No wonder life is tough for most New Zealanders!

Last year's Budget changed the tax system, and Treasury estimated that would increase our growth by a little over 0.1 per cent per annum. Big deal!

There's absolutely nothing in this Budget to radically transform our growth prospects, and certainly nothing which might enable us to catch Australia in 15 years - or indeed in 50 years. Our children will still be buying one-way tickets across the Tasman.

* Don Brash is the Act leader, a former National Party leader, and former Governor of the Reserve Bank.