Staring at large deficits and growing debt, the Government's budget 2009 has reined in spending, scrapped tax cuts and stopped contributions to the Superannuation Fund in an effort to bring debt under control.
Contributions to the super fund were effectively cancelled with none foreshadowed until 2020, except a small top up of $250 million to be invested in New Zealand. That was described as a short-term action that could bring long-term pain, according to consulting and investments firm Mercer.
Unemployment is forecast to peak at 8 percent in late 2010 with 90,000 people on the dole and the public service has been warned it will have to adapt to even tougher times ahead.
Unions say the budget does nothing for workers facing escalating unemployment.
The Council of Trade Unions said the budget did not do enough to stimulate the jobs market and invest in skills.
And it "continues the government's rolling maul of restructuring and job cuts in the public sector", said the Public Service Association.
National secretary Brenda Pilott said the Government wanted more public sector productivity and then imposed a regime of budget reviews and restructuring on public sector workers whose workload was rising because of job cuts.
"The only people who will benefit from this are high paid private sector consultants."
One warm spot in the budget was the beefing up of home insulation subsidies at a cost of $323m over four years to insulate houses built before 2000.
The move was generally praised. Warmer homes with cleaner heating would mean healthier people and cleaner air, which would be good for everybody, said Kensington Swan's Grant Hewison, a senior associate and expert in local government, who had been working with councils to make the scheme available to ratepayers.
Registered Master Builders Federation chief executive Warwick Quinn said the scheme overall would be good for manufacturers, retailers and installers.
But "students are out in the cold", said protest organiser Ella Hardy as Otago University's students plan to march in Dunedin today in protest against National's budget.
S tudents, universities and other training institutions predicted a lack of spending on tertiary education will lead to less opportunity for study, academics leaving for better money overseas and leave the country less able to respond in an economic recovery.
And one of the nation's highest-profile scientists, Paul Callaghan, of Victoria University, says today's budget was "extremely disappointing" for science and technology. The heads of New Zealand's business community were split on whether the budget was a winner, with Business New Zealand chief executive Phil O'Reilly saying it didn't have a hint of panic about it but the Business Roundtable said plans to curb government spending were inadequate.
Mr O'Reilly said business was disappointed there was no "plan B" replacement for the previously removed regime of tax credits for research and development.
The budget was noteworthy for reining in growth in government spending and also for its emphasis on productivity, he said.
Roundtable executive director Roger Kerr said it was not a tough budget but the first step on a long road.
Primary industries saw positives in the Government's new $190m funding over the next four years in primary sector innovation.
Horticulture NZ, which aims to double the value of its business to $10 billion by 2020, said it plans to have a project ready by the end of the year to tap into the new funding.
Federated Farmers said the budget emphasised agriculture as the nation's biggest and most important industry: "It's welcome realism".
