But the Government will borrow heavily to fina' />

National's first Budget has accomplished its mission of avoiding a costly credit-rating downgrade.

But the Government will borrow heavily to finance Budget deficits expected to continue until 2018.

The Budget also cancelled the next two rounds of personal tax cuts, eventually saving $900 million a year.

Finance Minister Bill English said the cuts would not be restored "until economic conditions permit".

Parliament is sitting under urgency to revoke last December's tax-cut legislation, aiming to minimise the time it is subjected to political attacks over a broken promise.

Contributions to the long-term Superannuation Fund will be frozen, as was expected, but that won't affect payments today.

Prime Minister John Key has said he would resign if the age of eligibility or the entitlement were to change.

The four-year $323 million housing insulation scheme has been universally welcomed, but $100 million of its money comes from health funding.

Low GDP growth for the next four years of 1.7 per cent, 1.8 per cent, 2.9 per cent and 4 per cent will affect jobs and Government revenue.

Unemployment over the next four years is forecast to peak at 8 per cent in September next year.

Mr English said $7.5 billion of capital expenditure over the next five years would create hundred if not thousands of jobs.

He said he had the dubious distinction of being "the only finance minister in the last 60 years to be delivering a Budget when the world economy is shrinking".

He dubbed his first Budget "the road to recovery". But it promises to be a long and costly journey.

The Treasury's debt management office is expecting to issue up to $8.5 billion in bonds in the 2009-10 financial year and to offer $150 million to $200 million of bonds a week.

In four years, the Government's gross debt is forecast to reach $78.46 billion, an increase of $34.25 billion.

That is 38.7 per cent of GDP, a level Standard & Poor's rating agency considers to be well enough under control to warrant an upgrade.

The agency yesterday affirmed New Zealand's AA+ rating and returned it to stable, rather than the negative watch it put it on in January.

The agency made mention of the fact that gross debt was estimated to be 38.7 per cent of GDP by 2013.

Labour leader Phil Goff attacked the Budget as one "designed to placate and grovel to Standard & Poor's".

Mr English said some people would be tempted to call the Budget a "slash and burn" exercise. But spending overall was up by about $3 billion.

The operating balance - excluding gains and losses such as in the Super Fund's investments - for 2009-10 is a $7.7 billion deficit, followed by $9.2 billion deficit in 2010-11, a $9.5 billion deficit in 2011-12 and a $8.4 billion deficit in 2013.

The Government has made a $250 million contribution to the Superannuation Fund - small by comparison with the usual $2 billion when surpluses abounded - which is earmarked for investments in New Zealand.

And under current projections, contributions will be frozen for 10 years.

Budget documents show that would leave the fund $19.5 billion short of its targeted total by 2020, which would need to be made up over the following decade before the fund is used to cover superannuation payments.

Mr English said the deterioration in the world economy had been rapid.

Only in October, the International Monetary Fund had predicted world growth to be 3 per cent a year; six months later, its forecast was for a 1.3 per cent shrinkage.

He said he was confident he had struck the right balance between supporting the economy in the short term and doing that by borrowing, and getting on top of debt.