KEY POINTS:
With one more sleep to Finance Minister Michael Cullen's ninth budget the wish list being thrown at the would-be Santa Claus is growing longer and longer.
Dr Cullen said today he had no chance of meeting the expectations of everyone.
"Tomorrow is always a difficult day because ...
expectations are always very high. Those in social service areas want big increases in spending, some people want big cuts in tax and the National Party always wants both," Dr Cullen said.
Asked if he would meet those expectations, Dr Cullen said: "Of course you can't. No."
Today the Government announced the budget would include a boost of $171.6 million over four years to school operation funding.
The immediate response from education unions was that this was not enough and there should also be an increase in funding for more staff in schools.
Other calls came for more money for medicines from the pharmaceutical sector, while New Zealand First wanted a cut to GST and an income tax free tax band.
ACT repeated its cry for $50 a week in tax cuts for everyone, while National called for tax cuts of a non-specific nature.
Prime Minister Helen Clark said it was a good budget, but like all policy decisions would not please everyone.
Dr Cullen said the budget was about the future.
"It's a fair budget, it's a forward-looking budget, it's about a strong economy, it's about a fair future for New Zealand," Dr Cullen said.
"I've never seen people happy across the board about a budget. They look at themselves and look at other people and make up their own minds, but expectations always run ahead of what can be delivered."
Dr Cullen has hinted there could be an across the board lift in the thresholds at which people pay more tax.
Speculation around Parliament is that Dr Cullen will also cut the tax rate at the lower end of the scale as the centrepiece of the tax cuts.
This would meet his self-set test of fairness and equity, as it would deliver something to everyone - even if it is very expensive.
Revenue would fall by around $1 billion for every $10 a week put into taxpayers pockets.
Dr Cullen has already ruled out the creation of a tax free income bracket and cuts to GST.
Yesterday he indicated there would be less money to deliver cuts but they were less likely to be inflationary given tougher economic times.
He also ruled out a lump sum dividend payment saying there was "no basis" for speculation about one.
Dr Cullen said again today that the budget would result in reduced expenditure in the future and any wider tax cuts will lead to cuts to services.
Dr Cullen is also faced with a gloomy economic outlook.
Government forecasts of 2.1 per cent economic growth in the year to March 2009 are expected to be cut back to around 1.0 per cent in the budget.
Westpac Bank chief economist Brendan O'Donovan predicted that Treasury would forecast growth bouncing back in 2009/2010 to 3 or 3.5 per cent.
- NZPA
