Are we there yet? Nearly. Bill English's six-year search for a surplus reached crunch point in yesterday's Budget. National long ago set a target of the 2014-15 year for a return to surplus. Yesterday was D-Day - Deficit-Free Day.

We'll have to wait a year or so for the Government's accounts to tell us whether yesterday's forecast of a $372 million surplus turns out to be on the button or not. The eventual outcome is somewhat academic, however, in part because the intervening general election will be long won or lost by then.

The debate over the surplus has to happen now. It is not a large figure. Its survival hangs on projections of a bigger tax take. National's opponents have picked holes in it, but have yet to find any major example of fiscal jiggery pokery to render the forecast null and void.

The figure is credible. Bill English has done his job. He has delivered. Even if the forecast is not realised because someone sneezes on Wall Street, he has proved to be close enough to a surplus, give or take a few hundred million dollars, to be credited with doing so.


A surplus is much more than a figure, however. It is a symbol of fiscal discipline. It is something to which everyone can relate even if they don't understand the detail. It imbues the Finance Minister with an aura of competence - regardless of whether he or she come from left or right.

Reaching surplus in six years after the country was bracing itself for a Decade of Deficits is going to be a devastating weapon in the hands of English or John Key on the campaign trail come September. It will make it harder for National's opponents to gain traction on the crucial question of who is best trusted with running the economy. It will divert those opponents to attack National where it is relatively weak - income inequality.

Despite the pressures to cut spending to achieve a surplus, English has found enough cash to pay for a $500 million package for extending paid parental leave, and free doctors visits and prescriptions for under-13s, as well as boosting the parental tax credit.

English has done so in in large part by postponing start-up dates for these programmes until next year.

Apart from answering critics who claim National doesn't care about child poverty, these schemes, which come straight out of the centre-left's textbook, are National's way of paying a dividend to middle New Zealand for sticking by Key and his colleagues. It is another raid by Key into Labour territory to squeeze Labour out of the picture. Or at least to neutralise National's old enemy.

Next stop in that vein will be tax cuts, even though English's speech devoted less than half a sentence to the possibility of "modest" reductions at some point out in the future.

Debate on this article is now closed.