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Last updated 22:05 12/05/2014

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New moves to lift the supply of affordable houses and a boost to paid parental leave are expected to be key features of Finance Minister Bill English's election year Budget on Thursday.

Health and education are set to take the biggest slices of what Prime Minister John Key yesterday said would be slightly less than $1 billion earmarked for new spending.

But he has stressed there will be no election year "lolly scramble", despite a return to surplus and he forecasted economic growth averaging about 3 per cent a year.

Last week the Government delayed debate on a Labour move supported by a majority of MPs that would lift paid parental leave from 14 to 26 weeks. That was widely seen as a blocking tactic until it unveiled its own plans in the Budget.

They are likely to see a smaller increase - to 18 weeks - and wider eligibility for the taxpayer-funded leave and the alternative parental tax credit.

But there will also be strong interest in whether English hints at any possible long-term tax cut.

So far ministers have indicated the priorities for surpluses are cutting debt, resuming payments to the "Cullen" superannuation fund and rebuilding EQC's exhausted disaster recovery funds.

With affordable housing set to be a key election issue, new initiatives in that area are also widely expected.

The shortage of housing, particularly in Auckland, Reserve Bank loan restrictions and rising prices are all putting pressure on homebuyers.

Labour has pledged to build 10,000 houses a year under its "build and on-sell" KiwiBuild plan as well as a range of other measures.

Meanwhile Commerce Minister Craig Foss has told the Commerce Commission to focus on ensuring the construction sector was competitive and productive "whether through advocacy or enforcement".

"This is in line with the Government's focus on housing affordability," he told the market watchdog in a February letter released under the Official Information Act.

In a scene-setting speech last month, English noted the biggest housing issue was the limited supply of new homes. He said planning rules were one factor in high land and housing costs.

He said the Budget would show growing surpluses over the next four years, starting with a small surplus in 2014/15.

Labour leader David Cunliffe yesterday said he would be looking carefully at areas like spending contingencies to see how the Government achieved its "paper thin" surplus.

He said the public should ask for assurances that insurance payments to cover education and hospital costs in Christchurch had not been held back to boost the surplus.

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They should also look at how interest on those insurance payouts were treated.

English has said he is taking a long-term view, because some of the factors driving the economy - such as high export prices, a shortage of houses and the Christchurch rebuild - would peak over the next few years and eventually slow.

Economic Development Minister Steven Joyce reinforced that message yesterday, saying the economy was heading "steadily in the right direction" with a Budget surplus - in contrast with tomorrow's Australian budget.

Meanwhile documents released in the run-up to the Budget show departments were reminded a surplus in 2014/15 was a "key priority for the Government".

Some were even told to specifically include any risk to their forecast performance under the "no surprises" policy that requires them to warn ministers of potential difficulties ahead.

- The Dominion Post

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