Better news is that the Government should soon be in a position to start reducing its debt and cuts to ACC levies are coming over the next two years, and income tax cuts for lower and middle income earners are on the cards for 2017.
Low income people are also winners in this Budget from the $790 million Child Hardship package, with its increases in benefits for families with children, and tweaks to Working for Families, which targets it more towards people at the bottom.
Federated Farmers welcomes a number of measures in the Budget, but we think the best thing to assist the rural economy is to control Government spending enough to create an enduring surplus to enable debt repayment and to keep pressure off inflation, monetary policy and the exchange rate.
Although inflation is currently low and monetary policy likely to ease in the short term, inflation is expected to rise again over the next few years.
Monetary policy is expected to tighten from 2016 and the exchange rate to remain elevated.
The Reserve Bank will continue to need fiscal policy and other levers of government to do its bit to help keep pressure off interest rates and the exchange rate.
Government spending needs to be held below 30 per cent of GDP.
There are relatively few 'big announcements' for agriculture, but those made are, in our view, mostly helpful.
There is more money for research, science and technology, with an extra $80 million over four years to R&D grants administered by Callaghan Innovation and $25 million over three years to support the establishment of new privately-led regional research institutions in areas outside the three main centres.
This takes the Government's total investment in science to more than $1.5 billion in 2015/16. But we will need to see more detail on how these initiatives will affect agricultural research and science.
The Government is increasing by 20 per cent the tuition funding for agriculture courses at tertiary institutions, which is a welcome move to encourage more of our young people into the primary sector.
A further $41 million over four years will go to supporting RMA reform and reform to the management of freshwater.
Meanwhile, Crown Irrigation Investment Ltd has been appropriated almost $100 million to advance irrigation projects.
This year's drought has highlighted once again the need for more water storage and irrigation.
The $360 million package for improved internet connectivity is also welcome, with $150 million of that devoted to improvements to rural broadband and filling mobile blackspots.
Biosecurity is a high priority for farmers and it is good to see $25 million extra funding over four years for MPI to improve quarantine standards, greater auditing of other countries' biosecurity systems, expanding detector dog capacity, and more x-ray machines.
The new Border Clearance Levy on all departing and arriving passengers has proven to be controversial, especially as the $100 million raised per annum will be used to replace existing taxpayer funding for biosecurity passenger clearance.
A passenger levy takes a user-pays approach and will ensure funding responds to growth in passenger numbers.
Animal welfare funding is also being boosted by an extra $10 million over four years to develop new regulations under the recently amended Animal Welfare Act, to improve compliance and enforcement capability and to manage the welfare of animals in civil defence emergencies.
More money is going to compliance and enforcement, with an extra $32 million to increase the number of labour inspectors and strengthen enforcement of employment law.
Farmers can therefore expect more visits to check on employment agreements and terms and conditions of employment.
Also less than cheery news is $210 million being injected into loss-making KiwiRail, with a further $190 million pre-committed against next year's Budget.
This level of ongoing support is unsustainable and could have been used to greater effect elsewhere.
John Key and Bill English prefer an incremental approach to reform, consistent with the concept of compassionate conservatism.
The large-scale, controversial reforms and slash and burn of the 1980s and 90s are a thing of the past, which is good politics and probably more likely to result in enduring outcomes in an MMP environment.
However, a risk with such an incremental approach in a rapidly changing world is that we're playing catch-up and reacting to problems. As with housing and child hardship, or in some cases deferring problems, such as the sustainability of New Zealand Superannuation and the question of whether the age of eligibility should be raised.
With the Budget continuing to edge closer to the elusive surplus much credibility will be riding on whether it makes it this coming year. It will also test whether the Government's incremental approach is indeed enough.
