Last week Finance Minister Bill English had the unenviable task of delivering a Budget for extraordinarily tough times.
The two Canterbury earthquakes, the support package for AMI policyholders, the leaky home disaster, extreme weather events, the collapse of major finance companies and the economic recession have all put enormous pressure on
the Government's books.
In fact, by the end of this financial year the deficit is expected to be a record $16.7 billion - meaning we have to borrow about $380 million a week from foreign lenders.
Budget 2011 aims to cut that back to $100 million a week in 2011/12 and return the Government's to surplus by 2014/15 - a year sooner than forecast.
We're committed to ensuring that future generations of New Zealanders are not saddled with enormous amounts of debt, as well as staving off a credit ratings downgrade which would result in all of us paying higher interest rates because foreign lenders would see New Zealand as a greater risk.
To get the books back into the black, the Government is better targeting major policies like Working for Families, Student Loans, and KiwiSaver to ensure they remain sustainable.
These changes, along with our decision to extend the mixed ownership model for four state-owned enterprises, will not affect people before the election.
Budget 2011 also sets up a $5.5 billion Canterbury Earthquake Recovery Fund to help rebuild Christchurch, and continues the drive for better public services by freeing up $3.6 billion of Government spending over four years for frontline public services, primarily in health and education.
The Budget also delivered reasons to be optimistic.
The economy is starting to pick up, and forecasts show New Zealand averaging about 3 per cent growth over the next four years, delivering 170,000 new jobs.
Our first Budget was all about surviving the international economic crisis. In 2010 it was about tilting the economy towards savings, investments, and exports. In 2011 it has built on that and sets a credible path for faster growth, increased national savings, and more jobs.
