Faced with large deficits and growing debt, the Government has reined in spending, scrapped tax cuts and stopped contributions to the Superannuation Fund in an effort to bring debt under control.
Prime Minister John Key said the primary objective of the budget was to stop credit rating agencies downgrading New Zealand and pushing up interest rates.
That was achieved when Standard and Poor's took New Zealand off a negative outlook and classed it as stable shortly after the budget's release.
Mr English had broader objectives, saying the budget was balanced and put the country on the road to recovery.
His recipe was to give the big spending portfolios some breathing space with increases in the short term, and warn the entire government sector that the days of having cash to burn had ended.
Besides reducing future spending allowances, Mr English cancelled two big ticket items to bring future debt levels down.
Contributions to the super fund were effectively cancelled with none foreshadowed until 2020, except a small top up of $250 million to be invested in New Zealand.
Tax cuts planned for 2010 and 2011 have been dropped for the foreseeable future.
The one warm spot in an otherwise cold and austere budget was the beefing up of home insulation subsidies at a cost of $323 million.
Its bleak projections include a decade of deficits against a background of shrinking growth, falling revenue and higher borrowing.
Unemployment is forecast to peak at 8 percent in late 2010 with 90,000 people on the dole and the public service has been warned it will have to adapt to even tougher times ahead.
Spending growth has been cut to $1.45 billion in the near term and $1.1 billion in future years, compared with an average $2.8b over the last five years.
Mr English has effectively given his ministers and departments a year's breathing space to find ways to meet cost growth without any big increases in funding.
With the deficit rising to $9.2 billion in 2011 and net debt reaching 21.8 percent of GDP at the same time, Mr English said the Government had to tighten its belt just like households.
"The world has moved very quickly from the best of times to the worst of times," he told Parliament.
"Ten years of economic growth and expansive appetites for debt and government spending have ended."
He said the budget marked a turning point as the Government put in place its plans to increase productivity, and despite increased borrowing its balance sheet was one of the strongest in the OECD.
Mr English gave categorical assurances that pensions would not be cut and welfare programmes would be maintained.
He has been able to increase funding for health, education, law order and corrections, helped by rigorous departmental spending reviews throughout the public service which have delivered savings of about $500 million a year.
Mr English said no one had predicted how savagely the international recession would bite, and imbalances in New Zealand's economy had been laid bare by it.
Labour leader Phil Goff said it was a "standard but poor" budget which was the death knell for superannuation for generations of New Zealanders.
"National has dug a $20 billion hole for our kids to dig themselves out of," he said.
"When it's time to pay the bill, John Key won't be the prime minister."
Mr Goff argued that now was the best time to be investing in superannuation, not deferring it.
