Budget 2011: Set against tough economic times

Finance Minister Bill English will present a budget this afternoon which the Government says will deliver sound, sensible economic management -- and Labour says will be a timid, tinkering attempt to shelve problems until after the November election.
It will be a bleak budget set against tough times, with no new money in it, and Prime Minister John Key says there's no choice but to get the books back in order.
``The alternative is that the country doesn't get back into surplus, we keep borrowing and the Reserve Bank puts up interest rates,'' he said yesterday.
``We get a scenario where the country has a future generation that has to pick up the tab for that.''
Mr Key hinted that one of the surprises in the budget would be the speed at which the books would be back in surplus.
The Treasury's last economic update said that would happen in 2015/16, but that was before the February earthquake in Christchurch which is going to cost billions to repair.
Given that Mr English is facing a record deficit of more than $16 billion, anything better than 2015/16 would be a significant achievement.
Labour leader Phil Goff said the Government wasn't facing the urgent need for economic restructuring.
``We need big changes in our system. It's under-delivering, we shouldn't be borrowing $380 million a week,'' he said.
The party's finance spokesman, David Cunliffe, said the budget would do nothing to improve productivity, export performance or living standards.
``A good budget would rebuild and reorient our economy towards exports and sustainable, high-value production and employment,'' he said.
``Now is the time for boldness, not tinkering. It is time to fix the structural problems.''
There will be more money in the budget for health, education, justice and infrastructure but it will come from savings scraped out of other departments.
Expensive programmes such as KiwiSaver and Working for Families, which the Government says aren't sustainable, will be trimmed.
Other programmes, considered to be poor-quality spending, are likely to be axed.
The Government will continue on its cost-cutting path, aiming to save more money in the years ahead.
The public service will be set an overall savings figure, with chief executives left to work out how to meet their targets.
The Public Service Association (PSA) was scathing about that last night, saying the Government needed to produce a plan for economic growth, create jobs and build skills.
``Public sector bashing doesn't address any of these issues,'' PSA national secretary Brenda Pilott said.
``This needs robust economic management and a strategy that encourages diversification beyond agriculture and primary exports.''
Mr Key has said there will be some good news in the budget -- Treasury projections showing strong growth in jobs and employment over the next two years.