Finance Minister Bill English reading his 2012 Budget. Photo / Mark Mitchell
English's tight Budget responds to bigger picture.
If the Finance Minister only had to worry about where we are in the economic cycle, it would be a different story.
A zero Budget would be the last thing the economy needed.
But the here-and-now isn't the only factor Bill English had to weigh up.
The Budget is contractionary, a headwind to the economy. Fiscal policy will subtract from demand and from growth for the next four years.
That is despite another downward revision in the Treasury forecasts for economic growth next year and the year after. And it is despite the fact that the recovery so far has been weak, unemployment is stubbornly high, the world economy is going through a soft patch and export prices - one of the things we have had going for us - have been falling for a year.
The Government is shutting down the fiscal irrigation in the hope that enough rain will fall to keep the paddocks green and the economy growing.
That is risky, but it clearly thinks the bigger risk is to continue to pile up debt at the rate it has been.
So it is all about a fiscal tightening, from a deficit of 4 per cent of GDP this year to a surplus in 2014-15.
At a scant $200 million, that surplus is way, way inside the margin of error. Even the $2.1 billion surplus forecast for the following year flirts with the margin of error.
The point is, though, that it is a serious improvement on this year's deficit of 4 per cent of GDP, to say nothing of last year's earthquake-bloated 9 per cent.
And that is what out international creditors need to see.
Standard & Poor's was quick to reaffirm the Government's credit rating, even though the country's net external debt - run up largely by the private sector - is forecast to climb from an already conspicuous $147 billion or 72 per cent of GDP to 81 per cent in four years time.
That counts as being up to our nostrils in debt to the rest of the world, and in these debt-averse times it limits the Government's options.
Big time.
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The New Zealand Defence force has a budget shortfall of $130 million.