KEY POINTS:
Today's Budget is expected to put Auckland on track for electric trains.
But that will be one of the few offerings in a document the Government will say is "responsible" and designed to avoid putting any more pressure on interest rates.
The investment in trains is likely to come from money generated by an Auckland regional fuel tax of up to 10c a litre for rail electrification and roading projects.
The Government may leave it to the region to determine the size of the tax, based on how much Auckland motorists can tolerate.
A figure of 10c a litre was under strong Government consideration until late last month, but varying levels of support among Auckland leaders looking at their chances of being re-elected in October may have influenced the equation.
The Budget - Finance Minister Michael Cullen's eighth - will have far less of the fanfare traditionally associated with Labour and its big social policy spending boosts.
Dr Cullen will deliver cuts to business taxes worth a combined total of about $1 billion, including a likely cut in company tax and tax credits to encourage research and development.
Another hefty operating surplus - tipped to be more than $7 billion - will be unveiled after the economy proved more resilient than was expected a year ago.
But although Dr Cullen will also almost certainly have a healthy cash surplus, personal tax cuts have been ruled out because of the fear they will add to inflationary pressure, sending interest rates higher.
Instead, as workers look for something in their pockets from the Budget, the most substantial overall handout appears likely to be an incentive to get people saving for their retirement.
The Government could decide to make part or all of an employee's contributions to the new KiwiSaver superannuation scheme tax free.
It remains to be seen how popular Labour's heavy focus on business and savings will be with voters.
It may be difficult for the party to sell the merits of a company tax cut to its own constituents, but Labour will be hoping that the Budget will boost its sagging poll ratings.
The Government in December indicated $1.9 billion would be available in the Budget for new spending. The $1 billion business tax package will be on top of that when it is introduced on April 1 next year.
The fuel tax could generate up to $140 million a year, not enough to cover the regional transport funding gap of $3.3 billion over 10 years, but sufficient to service substantial up-front loans.
Prime Minister Helen Clark hinted this week that more was in store when she opened the $44 million Esmonde Rd motorway interchange upgrade in Takapuna.
"And there's much more to come as we invest to make Auckland move the way a world-class international city should," she said.
Automobile Association spokesman Simon Lambourne said his organisation supported a "reasonable" apportionment of fuel tax money to public transport as part of a balanced strategy to get Auckland moving but would be concerned if regional leaders were given full control of the tax.
But the Green Party's Auckland transport spokesman, Keith Locke, said all the money should be spent on public transport to correct an imbalance towards roads over many years.
Transport Minister Annette King, who is expected in Auckland today to talk the region's leaders through the implications of the Budget for their constituents, said in March that electrifying rail was "firmly on the Government's agenda".
But she qualified that by saying that although the Government could provide the mechanism for raising a regional fuel tax, the "ownership" of it needed to be in Auckland.
In a business case to the Government in September for rail electrification, the Auckland Regional Transport Authority pointed to a "desperate" need for new trains to sustain a boom in patronage.
The authority says the value to road users from reduced congestion as road users switch to rail will amount to 44c in every dollar of benefit from electrifying the network.
