Sweet budget, but not a sugar rush

03:30, May 15 2014

Bill English has opened his wallet for an election year budget pitched squarely at middle New Zealand with a focus on children.

With the finance minister eyeing a first surplus in seven years, this budget promises a little bit of jam today, some more tomorrow, though not enough to give us a sugar rush.

Paid parental leave is extended and the Government has made sure no one misses out by also increasing the family tax credit paid to those who return to work.

Free GP visits and prescriptions are extended to children under 13, up from age six, a measure that is guaranteed to be popular.

But the elephant in the room is migration figures showing that pressure on house prices will continue to build as demand surges.

The budget offers only token relief to first home buyers hit by the double whammy of lending restrictions and soaring prices, a lifting of tariffs to save $3500 on the construction costs of an average house.

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That barely scratches the itch revealed by the latest Stuff.co.nz/Ipsos poll, which rated housing affordability as one of the big measures voters want the Government to address.

But today's budget is clearly a holding pattern, with National leaving itself plenty of room to spread the projected growth dividend around more generously once it hits the campaign trail. And with surpluses predicted to grow to $3.5 billion by 2018, the tax cut debate will quickly turn to tax cuts. 

On that score English's language has changed markedly from yesterday, when tax cuts were pie in the sky, to today's language, when he was already starting to talk about "modest" tax cuts.

What a difference a day and a small surplus make.

Stuff