Seldom has a Budget been as crucial to the economy as the one that Finance Minister Bill English will deliver this week. It is immediately crucial to the housing market, where activity has been practically frozen while prospective buyers and sellers wait to see what tax will do to property investment.
And it is crucial to the country's productivity that something is done to divert investment from housing and consumption to industry and exports.
The minister has made no secret of this objective. For many months he has been travelling and speaking with charts to illustrate his concern that New Zealand was in an export recession long before the domestic sector's housing bubble burst in 2007 and it was struck by the recession of 2008.
We are traditionally a nation of exporters. Our domestic market is miniscule compared to the big, wide world out there. If this week's budget makes a conscious focus on exports, that can only be a good thing long-term.
And the leader writer reminds us of the background to National taking office:
National came to office at the end of 2008 with the world in a financial crisis and New Zealand counting itself lucky to have lost nothing more than Budget surpluses and facing a decade of deficit spending. The 2009 Budget came a month or two before the Government could be confident of the economy's recovery.
It did not cut spending drastically but assured international credit rating agencies it would deal with the projected deficits more decisively this year.
That assurance needs to be met on Thursday. The Government will need to find more revenue and reduce its spending.
We'll certainly be looking for a signal from Bill English that New Zealnd will return to surplus faster than expected, and that the legacy left by Michael Cullen, a Decade of Deficts was a worst-case scenarion. There are signs of an improvement in the economy. Time will tell how sustainable that improvement is.
As for cutting spending; the far right say that the Government has not gone far enough whilst the left says that cuts announced to date, especially those in the public service are too severe. Conventional wisdom would suggest that means the Government has got the balance about right!
And the editorial closes with a reminder that this Budget is pivotal:
Mr English will not have much money to give away on Thursday, which is why the Government has been revealing its gifts in advance - $225 million extra for corporate and public research and development, $30 million for tourism. There can not be much more.
The country needs a decisive Budget. It might not be popular but effective economic measures rarely are. This week we will find out whether the Key Government is up to the task.
We hope that the Government is indeed up to the task, but there are some lingering concerns, not the least of which is the Emissions Trading Scheme. About the only positive thing we can say about the ETS is that it is far less punitive that the scheme which Labour rammed through under urgency before the 48th Parliament dissolved. We'll be keeping a watching brief on pre-Budget announcements this week, and blogging accordingly in the run-up to Bill's Big Day out.