Key Points:

Trying to taunt Michael Cullen in Parliament this week, Bill English instead found himself on the receiving end of a brief, but pointed lesson in simple arithmetic.

"I have not delivered eight Budgets," replied the Minister of Finance when asked by his Opposition counterpart how many of his eight Budgets had contained tax cuts.

English was stopped dead in his tracks. Cullen has seven Budgets to his name. Next Thursday's will be his eighth. The question remains, however: will it contain tax cuts beyond the reductions in company rates already foreshadowed?

This Budget is shaping as one of Cullen's most crucial - not only in getting the tax cut monkey off his back, but also in demonstrating Labour still has the vision and vitality to govern, while simultaneously sticking it to National.

The political burden this Budget carries may explain why Cullen is being so inscrutable about its contents. He has refused to be interviewed in advance. Apart from a speech forewarning of his intention to axe plans to introduce export tax credits, he has done much less scene-setting than normal.

He has deliberately avoided raising expectations, preferring to under-promise and over-deliver. However, there is no talk of this year's effort being boring - a description he has attached to previous Budgets ahead of delivery.

Add to this mix suggestions that Budget secrecy is being enforced even more strictly than usual and next Thursday's document begins to look like being more stunning and more substantial than the version Cullen is currently under-selling.

In a sense, this Budget brings Cullen full circle. It brings together his greatest achievement - ensuring that funding for the retirement of the baby-boom generation does not cripple everyone else financially - with his greatest failure - his inability to persuade people that years of mountainous surpluses did not justify slashing personal tax rates.

Cullen has long argued that he has had more pressing priorities, principally improving social services and addressing the country's infrastructural deficit.

However, an overheating economy, a healthy cash surplus and the increasing proximity of next year's election mean Cullen can no longer stick uncompromisingly to his ideological preference for more and more Government spending.

To bolster his argument that tax cuts were unaffordable and irresponsible, Cullen warned last year that the cash surplus would shortly move into deficit. That has not happened. It is now hitting the $2 billion mark.

Further boosts to Government spending would only stoke inflation and force the Reserve Bank to lift interest rates even higher with the consequent potential for further pushing up the value of the New Zealand dollar and causing exporters even more grief.

The economics aside, it is politically unsustainable for Labour to go into the next election without returning some tax revenue to taxpayers at some point, especially to those who missed out on targeted tax relief under the Working for Families programme.

The expectation is that Thursday will see the covers lifted off the mechanism which will do that. It is guesswork as to exactly what that might be - and how developed it might be - such are the variety of ways this could be done. But this much does not seem to be in doubt. What might best be called "tax transfers" will be channelled into personal savings accounts, possibly by expanding the KiwiSaver scheme. There will be rules on when this money can be withdrawn.

We are not necessarily talking tax cuts per se. As with Working for Families, tax rates and thresholds could remain where they are and taxpayers claim a special rebate which would then have to be deposited in a KiwiSaver account.

Cullen could alternatively cut income tax rates or lift income thresholds at which higher rates kick in and then require the boost in take-home pay be diverted into KiwiSaver accounts.

Another option would be to dramatically slash company tax rates, but require employers to contribute a set percentage of an employee's income to his or her account.

The one essential is that the money goes into savings - not consumer spending, which further stimulates an already over-stimulated economy. This approach does not prevent Labour from flagging real tax cuts which actually put cash into people's pockets and which could be implemented in stages after the next election.

That may well be necessary to neutralise National's likely programme of tax cuts. The scheme Cullen unveils on Thursday will not be tax cuts as most people understand them. Many will bristle they will not get money in the hand immediately, even though they will get a retirement nest egg later.

For that reason, the Government will not sell the savings initiative as a tax cut. It would be political suicide to do so. That is why Cullen has knocked back suggestions the Budget will contain tax cuts.

Instead the saving initiative will be promoted as an integral part of the Budget's heavy economic flavouring. It will be used to counter National's claims that Labour's "economic transformation" agenda has stalled and long-term structural weaknesses in the economy are thwarting the kind of growth required to close the gap between Australia and New Zealand in terms of household incomes.

It will also be used as evidence the Government is doing things to address short-term imbalances in the economy, such as high interest rates and a high dollar.

The economy remains extraordinarily buoyant. However, variable mortgage interest rates are now close to 10 per cent - the highest they have been since Labour returned to power in 1999.

Economic management is starting to become a political issue again. The Budget's task is to stifle that debate, not ignite it.

The savings initiative is also important in demonstrating Labour is still capable of fresh thinking. Similarly, the Budget must work as an antidote to the notion that the minority Labour-led Government is increasingly hamstrung by the difficulty in building parliamentary majorities.

In that regard, the policy "trophies" extracted by Labour's support partners will provide a brutally accurate measure of the degree to which Labour is hostage to them.

The big plus is that NZ First and United Future are both advocates of the kind of savings strategy contained in the Budget. But Labour will not want to see Winston Peters and Peter Dunne getting all the credit for it.

To that end, the minor party leaders will be making Budget-related spending announcements before Thursday. While this gives them space from Labour to display their trophies, it is also being done to stop them crowding Labour on Cullen's big day.