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Corin Dann: A Budget of nips and tucks

opinion Corin Dann

Published: 10:55AM Thursday May 24, 2012 Source: ONE News

TVNZ's Political Editor Corin Dann gives his immediate analysis of the Budget.

Today's Budget may not be the dreaded slash and burn Budget some had feared but it is certainly one that slices and dices and has plenty of nips and tucks.

True to his word Bill English has produced a Budget that shows the Government making it back to surplus by 2014/15 and he deserves some credit for doing so.

But to get there in face of a flat economy and an economic meltdown in Europe he has had to do some major re-jigging of spending priorities and make some big trade-offs.

Deferred for example is a $500 million plan to introduce soft compulsion to KiwiSaver in 2014/15. While new plans to boost spending on science and innovation this year could arguably be seen as coming at the cost of making students pay back their loans faster.

Underpinning English's drive back to a surplus is the assumption that the economy will keep growing strongly over the next few years and shrug off the threat of a meltdown in Europe and a slowdown in our major trading partners.

As it stands this Budget is forecasting growth of 2.6% next year, rising to around 3% for the next few years - with the Christchurch rebuild to be a strong factor in that.

Worryingly but prudent given the tendency for Treasury forecasts to be wayward, a downside forecast is also included in the books to take into account the possibility of new global recession.

This shows growth over the next few years struggling to top 2.5% and unemployment remaining stubbornly around 6%.

As far as ambitious measures to grow the economy, this Budget is a little light with perhaps only the new science and innovation spending ticking that box.

However National is likely to be holding back any big bold ideas (if any actually exist) until closer to the next election.

Today's Budget was always about being sensible and consistent.

However, should the economy not perform as expected, they may find themselves going again into an election campaign with few new spending promises up their sleeve.

It may have worked for them last election, but by 2014 Kiwis may well be starting to tire of the term 'zero budget'.