Finance Minister Bill English is embarking on a mission to rebalance the economy. It will take time, and if he succeeds he will have changed attitudes which have been set for decades.
The tax switch is the beginning, designed to improve incentives to earn more and save more. Taxing spenders, not earners, is part of the thinking behind it.
Save and invest is the message behind it -- and the aim is to move investment away from the property market and into areas where there are economic gains through increased productivity and exports.
To shift the balance, Mr English is going to make it less attractive to invest in property. A lot less attractive.
The tax breaks that have allowed people to run a string of rental houses and write of a big part of their liability are going to be significantly altered, with the added benefit of bursting the housing price bubbles before they happen.
"There is a compelling case to rebalance our tax system to support our goal of tilting the economy towards savings, investment and exports and away from borrowing, consumption and investment housing," is the way Mr English describes his objectives.
"We have an economy where we're spending more than we earn. Tax is one way to change people's choices and help turn that around."
As for what you get, it isn't going to change your life. Details aren't known, but enough has been signalled to indicate gains of around $20 a week in the $50,000 to $70,000 income bracket. When the increase in GST is taken into account, the net gain will be between $1.20 and $6 a week, according to estimates published by the New Zealand Herald.
Those earning less than $50,000 gain less from tax cuts, those earning more than $70,000 get more and at $100,000 there is an extra $50 a week with a net gain of $23.
Labour calls it tax cuts for the rich at the cost of nearly everyone else, to which Prime Minister John Key says the "vast bulk" of taxpayers will be better off. In the aftermath of the budget, Opposition parties will be searching for those who aren't.
In Mr English's big economic picture there is a driving need to stimulate growth that will help the Government handled the burden of borrowing $240 million a week, forced on it by the global recession.
He says he has to deal with the effect of poor policies run by the previous government, and the perception that the economy was growing strongly before the international crisis is wrong.
"In fact, New Zealand's economy is not much bigger now than it was in 2005 -- and it was already in trouble before the global recession," he says.
"Output from exporters and import-competing industries, often termed the tradeables part of the economy, is now about 12 percent smaller than in 2005. The growth we did see came from all the wrong places."
Against this background, government spending increased 50 percent in the five years to 2009.
The clamps are going on that. The public service will again be told not to expect any increases in individual budgets, with some exceptions in the justice area, and it will be a case of "do more with less".
New spending in the budget will be capped at $1.1 billion compared with $1.5 billion in Mr English's first budget.
Health and education will share most of it, and there is another $1.8b of "redirected" money over the next four years that is being saved from what the Government calls poor quality spending. Programmes are going to be axed, amid protest from the Labour MPs who set them up.
Revenue figures are expected to be significantly better than forecast a year ago, and Mr English is likely to say he will be able to return to budget surplus sooner than he had expected.
This budget is the beginning of a process designed to achieve the Government's economic aims rather than impress voters with tax cuts. If that was the intention, it would have waited until election year.
