Key Points:

The cupboard is almost bare and that is the way Michael Cullen planned the 2008 Budget.

He has delivered a Budget that offers a little of something for almost everyone but his biggest gift is to National - an election-year headache.

There is so little cash left to play with, $1.75 billion, that National will have little headroom to make attractive tax promises without saying what funding commitments Labour has made it will scrap.

That is what Michael Cullen promised and that is what he has delivered. The $1.75 billion isn't real either because $750 million of it was earmarked for health long ago.

Phil Goff's revealing comments this week showed that Labour is into legacy politics and this is a legacy Budget - a legacy to National. It will make it harder for National to win and if it does win, it will make it harder to govern.

Cullen told journalists before delivering his speech: "I would not want to repeat the famous Robert Muldoon statement that the cupboard is bare - actually Sir Robert had sold the cupboard off and pawned the house at the same time - but I would say that we are in this Budget reducing the fiscal position to one which is quite tight and does not allow for any significant further loosening at all.'

Cullen will be vulnerable to two lines of attack however. Beneficiaries with no children and no part-time job, will not benefit at all. And National could turn the tables on him and suggest that the $3.5 billion cash deficit means Labour could be borrowing for tax cuts just as he has warned that that is what National would do.

The first round of a three-phase tax cut (adjustments to rates and thresholds) will take effect on October 1, shortly before the election.

They will range between $11.92 a week for the lowest paid (rising eventually to $21.73) and $28.08 for the highest.

Early increases to Working for Families and pensions bill are additional and the figures by 2011 look attractive. But is it enough to stop the stampede?

As Cullen points out that tax cuts will reduce the rate of improvement to social services, the least that they should do for him is stop the rate of stampede away from Labour.