Finance Minister Bill English has painted a gloomy picture of the economy for the next few years but has promised to raise New Zealanders' incomes by improving productivity and economic growth.
In a point of difference with the Reserve Bank, Mr English told the Otago Daily Times that New Zealand was still in recession but he hoped it would pull out of that recession within 12 months.
"We understand that 2009 and beyond will be tough for many New Zealanders who will be anxious and concerned about their families, their businesses and the economy more generally.
"The coming year in particular will be very challenging for everyone."
The Government would pump in about $9 billion into the economy in the next two years through tax cuts and infrastructure spending.
Short-term infrastructure spending would include housing, education and some smaller roads.
Next year, infrastructure spending would be around roads and some ambitious projects, he said.
Everything from performing arts centres to water storage had been suggested.
Government debt is projected to soar but Mr English said the Government could not let that happen without introducing a plan to speed up economic growth.
Without growth, the debt could not be repaid.
New Zealand was still in a strong position compared with the United States, the United Kingdom and Australia.
Mr English also promised a budget of restraint next year with no new bids.
This morning he released the 2009 budget policy statement and the December economic and fiscal forecasts.
