The Government doesn't need to lose any sleep over this budget. The tax cuts were more than had been expected, loopholes used by wealthy people to limit their liabilities are being closed and rich property owners are being hit with significant increases.
Finance Minister Bill English has tried hard to meet his "fair go" commitment and although the Labour Party won't agree he seems to have delivered, according to the budget figures, on a promise that no one will be worse off.
For low income people the cuts deliver minuscule gains but they aren't going to change the lives of the high earners either -- and they are the ones who will feel the effects of the avoidance clampdown.
It will, inevitably, be branded by opposition parties as a budget that favours the rich but the Government has given itself a fighting chance of winning that political battle.
What should concern it are the problems that are going to start emerging because of Mr English's tight-fisted approach to new spending.
He has capped it at $1.1 billion, as he said he would, and in his budget speech he explained the need for that -- the Government is still borrowing $240 million a week to keep the show on the road and he has to get debt under control.
Health is getting $512 million new spending compared with $750 million last year and considerably more in the years before that.
The public health system is going to crash into demographics which show many more older people needing its services in the years ahead and the rapidly escalating cost of those services.
In some areas it is creaking now as district health boards cut spending, the care of elderly people is becoming an issue and it isn't likely to get any better.
Ministers are issuing orders to government departments to maintain services, even improve them, with no more money in their budgets.
If they don't succeed, people are going to start noticing. If services start to deteriorate, the Government will feel the backlash in the opinion polls.
The budget marks the beginning of an important road for the Government as it begins to rebalance the economy away from the old "borrow and spend" and towards saving and investment. It is changing the rules, but it is going to take longer to change habits that have formed over many years.
Prime Minister John Key and his Cabinet are serious about this, which is why they have started now in their second year in office. If they had wanted to buy votes with tax cuts, they would have waited until next year.
- Peter Wilson, of NZPA
