Liam Dann: English sticks close to straight old line

Finance Minister Bill English with a copy of his 2011 Budget at Printlink. Photo / Mark Mitchell

The email from Standard & Poors arrived at precisely 2.13pm - the Budget had passed the first test. There would be no ratings downgrade.

Either those guys are very fast readers or they knew what was coming. To be fair, we all knew what was coming. Well, mostly.

The tinkering with KiwiSaver was more aggressive than expected with news that tax exemptions on employer contributions are to be removed. The Government has balanced that with plans to push the minimum savings rate to 3 per cent by 2013. But it's not much of a reward for those employers and savers who have been doing the right thing and who already contribute at 4 per cent.

Otherwise, though, Bill English billed this as a no-surprise Budget and he pretty much stuck to that.

Federated Farmers described it as "boring in a positive way". One suspects the Government will like that description.

Split Enz used to sing: "Don't look to the left don't look to the right, just follow that straight old line." English would have us believe that, like a tightrope walker, he is singing that song.

Step to the left, leaving debt levels untamed, and risk the wrath of ratings agencies. Step to the right, cut further and harder, and watch the timid economic recovery go crashing to the ground.

It is true that economic events - and in particular the earthquakes - have put more constraints than ever on the Government. But having decided how far they needed to cut and how quickly they needed to bring the national accounts in to line, there were still choices to be made. And the choices made in yesterday's Budget were definitely political.

The big ones - KiwiSaver, Working for Families, student loans and state sector budgets - will free up some $5.2 billion over four years. Partial privatisation of state assets is also likely to unlock $5 billion to $7 billion over that time period. Although having made that an election issue, no details were included in the Budget.

These are the kind of material gains the Government needs to make right now. English has done well to hit such big numbers without making the kind of decisions that will have people marching in the streets - as they did in 1991.

But as much as he and John Key will say they were pushed to make these calls by big macro-economic forces, it is clear they have never taken their eyes off the prize of re-election. Fair enough, they believe they have a steady-as-she-goes, long-term strategy for turning the economy around. They believe in their vision.

Yet still the nagging doubt remains that in meddling with the nation's retirement savings our leaders have once again, as they always have done, put politics ahead of the real prize- a secure and stable savings culture for New Zealanders.