KEY POINTS:
There's a story that Ronald Reagan used to relate when his Cabinet officials got a bit down in the dumps about balancing the US Federal Budget.
It goes something like this: Two boys - one an optimist, the other a pessimist - were unwrapping their Christmas presents. The
pessimist got a sackful of toys, but was upset because he thought there must have been a catch. The optimist got a sack of horse manure. He was over-the-moon and went outside to look figuring that there must be a pony somewhere waiting for him.
The Reagan story (the former US President was, of course, an incurable optimist) contains some parallels in the way in which National and Labour are approaching the forthcoming election.
The economy is down in the dumps as yesterday's Treasury forecasts confirmed (although anyone walking down the nation's High Streets would have needed no persuading New Zealand has been - and will continue to be - in recession for much of this year).
It's not difficult to pick into which category Labour's top duo (PM Helen Clark and Finance Minister Michael Cullen) and National's top duo (aspirant PM John Key and finance spokesman Bill English) belong.
Both sides share similar misgivings about the struggling New Zealand economy, riven as it is by high inflation and interest rates, high imported fuel and domestic food prices and growing unemployment as a number of shocks - such as the drought and the impact of the international credit crunch - work their way through the economy. Both Clark/Cullen and Key/English point to the long-term upside for New Zealand as a food-producer in a world where commodity prices are booming.
Both sides believe that in the short term the dropping kiwi dollar ought to correct imbalances in the economy by pushing up exporters' incomes, thus creating more incentives for New Zealand businesspeople to shift production away from the stagnant domestic economy.
Where they differ is on how to manage through the downturn and project the economy on to a new track.
Last week I alluded to Key as "Helen Clark in drag" - a description admittedly containing an element of what might euphemistically be described as a "piss-take" - due to the practice of adopting many of Labour's signature economic legacy projects.
But the 10-point election blueprint that Key unveiled at last weekend's National Party conference - and the accompanying philosophical messages - make clear the prime differences between the two major parties are in how they will manage through the downturn and project the economy on to a new growth track.
Cullen - who is Labour's marker guy when it comes to trying to puncture National's relative optimism - was yesterday warning that although the Labour-led Government's $10.6 billion tax cut plan would provide some relief for households and stimulate economic growth it would be done without "breaking the bank" and putting the recovery at risk.
Cullen's rhetoric is strongly backed by Clark. Between them they are seeking to contest the election on their economic management record: Budget surpluses and Government debt paid down - a "better the devil you know" line that they hope will persuade voters against "putting it all at risk" when they enter the voting booths.
This is a perfectly acceptable line for Clark and Cullen to take.
But will it do the business for traders, domestically exposed businesspeople, young people deciding where to build their future?
Key and English are taking a different stance: Pumping the economy further through the downturn by introducing another tranche of personal tax cuts next April.
The 10-point blueprint will create a bigger role for the private sector - a factor that will delight business and is long overdue. But Key/English are still vulnerable to Labour's assertions that they will need to borrow to finance tax cuts.
The problem they face is that until they release more details - expected after the Labour-led Government releases its pre-election economic and fiscal update - on just how National will "hermetically seal" its infrastructure-borrowing programme from the Government's operational budgets they will remain vulnerable to Labour charges they intend to "borrow for tax cuts".
The pair would have had far more credibility if they had announced just which of the Government's programmes they were prepared to pare back to help offset the second tranche of tax cuts.
So far, Key/English have also not got much purchase with their counter-charge that Clark/Cullen are doing just that with the 2008 Budget which increased Crown borrowing during the period when Labour's first tranche of tax cuts will be implemented.
Both competing duos are of course right and both are wrong.
Put aside Labour's "smoke and mirrors" on the debt score (it is also investigating a public private sector partnership for the Waterview roading project), it is clear both sides are promoting Keynesian methods to stoke the economy through the downturn - it's a question of degree.
The other major issue will be the level of debt. Key - as I challenged him to do in last week's column - came out and said National would increase Government debt by no more than another two percentage points of GDP. This would only take Government debt out to around 20-22 per cent of GDP (the current figure will become clear in the pre-election economic and fiscal update).
It is, as English reminded the National conference, a long way off the 61 per cent of GDP level that his party inherited at the 1990 election.
The current Government debt level is also one of the lowest in the world - but it has come at a cost. The debt payback under Labour has arguably been achieved through over-taxation. While Cullen has built his own piggybank - and paid down New Zealand's Government-level debt - Kiwis have arguably borrowed too much to make up their own deficits.
The major question now is whether New Zealand lets its waistband out a little more at Government level to assist a quicker turnaround. Or keeps it tightly tucked in.
The moral of the Reagan story is that if the manure pile gets too big - the pony ain't going to stay about.
If National is to persuade voters to get behind its growth programme it will also need to ensure that they believe the party will ensure the debt level does not blow out beyond what it is projecting.
