POWER PLAY

10:10 am on 16 May 2014

The National-led Government had to do two things in this week's Budget: deliver a surplus and reward struggling families.

After repeatedly promising to deliver a budget surplus in the coming financial year (which ends on June 30, 2015) the Government has - although it is still only a forecast. It will not be until next year that it becomes clear the surplus is indeed real.

Notwithstanding that consideration, the Government's books are clearly in a much healthier state than they were in the immediate aftermath of the global financial crisis and the Canterbury earthquakes.

The second thing the Government had to deliver was some reward to struggling New Zealand families who have faced tough times in the past six years.

Extending paid parental leave to 18 weeks over the next two years, increasing the parental tax credit and extending free doctors' visits and prescriptions to children aged under 13 will help rebut criticism the Government is not doing enough to deal with poverty.

Both achievements are important politically.

National would have been vulnerable to further criticism had it gone into the election campaign facing a deficit. That would have undermined its argument that it is a good manager of the public finances.

And not doing anything to help families would have left it a large target for continued attacks that the National Party favours the rich over the poor.

Those political attacks will still occur, but National is now in a better position to bat them off.

In this budget, Finance Minister Bill English had an extra $1 billion to spend. There was no big splurge on any particular pet project, although health and education took the lion's share of the money.

There was also a bit of money to encourage more business investment, to promote trade, to foster more research and development, for housing and for rebuilding Christchurch.

At the same time he announced a larger forecast surplus in 2014-15 of $372 million dollars, with bigger surpluses predicted for the years after.

The Government is so confident about its surpluses it has also announced it will lift its allocation for new spending to $1.5 billion from next year. It is the extra $500 million which then gives National room to consider tax cuts, although Mr English says any cuts would be modest.

Watch the election campaign, though, for National to outline a tax cut package for next year and beyond.

Labour Party leader David Cunliffe dismissed Mr English's effort as a "fudge-it budget". Other Opposition politicians also criticised the Budget for not doing enough to help families.

Labour argues that most vulnerable families, for instance, will not be eligible for the extension of the parental tax credit. They and other parties also support a longer extension to paid parental leave, and believe National's plan to increase it to 18 weeks over the next two years is paltry.

But they do not oppose these initiatives, unlike proposals put forward in Mr English's previous budgets.

Mr English, within the limits of the fiscal discipline he has imposed, has done as much as possible to talk up the family package. While it has been touted as a $500 million package, that spending is spread over four years. In reality, it is worth on average only $120 million a year.

Nor did the Budget include any significant initiatives to make housing more affordable, particularly for first home buyers. It will remove duties on building materials, which it estimates will cut the cost of building a new home by $3500.

But, with houses in Auckland costing hundreds of thousands of dollars, that is small change. In that sense Mr English has not been able to neutralise that as a political issue.

The Budget also has more worrying news for home buyers. It forecasts a rise in net migration which, if the early 2000s are a guide, will put further pressure on house prices.

It also fails to outline an ambitious agenda for economic change. Much of the Government's economic strategy is based on exploiting growing Asian demand for protein - dairy and meat products.

While there is some increase in spending on research and development it does not represent the step change some believe is necessary if New Zealand is to become a high skilled, innovative, high wage economy.

Both Labour and the Green Party, for instance, argue the Government is not doing enough to develop an economic strategy aimed at lifting New Zealand's performance.

But that is a more complicated political debate and one that does not necessarily resonate with the struggles people face in their daily lives.

For the moment parents, at least, might be more focussed on Mr English's promise of free doctors' visits and prescriptions for their children.

Follow Brent Edwards on Twitter @rnzgallerybrent