The Government's first tranche of tax cuts started on Wednesday at a cost of around $3.94 billion a year.
Mr Dunne, also United Future leader, said in an interview that $3.94 billion a year was sustainable given current economic circumstances.
With the Wall St meltdown and the uncertainty about the global economy, it would be unwise for Mr Key to over promise.
Mr Key is due to release his package probably on Wednesday of next week, two days after the opening of the Government's books on Monday.
Mr Key and finance spokesman Bill English had indicated the tax cuts - once Labour's were incorporated - would be worth around $50 a week for average wage earners.
The pre-election fiscal update was likely to show a sea of red ink, Mr Dunne said.
"Clearly tax cuts are long overdue. Future tax cuts have to be realistic and affordable."
United Future was proposing further tax reforms, including a streamlined personal tax scale of 10% up to $12,000, 20% from $12,000 to $38,000 and 30% above $38,000.
In addition, United Future would align the top personal, business and trust rates, abolish gift duty and abolish voluntary income splitting for parents with dependent children.
Mr Dunne was in Dunedin to address the Otago Chamber of Commerce's leaders series. The current world financial crisis placed a premium on political stability and commonsense politics.
While New Zealand was more resilient and better able to withstand international shocks, the economy would not escape unscathed from the turmoil.
This was a fraught and fragile time, he said.
"While we are at the end of the queue in many respects, the best thing any government can do right now to reduce the adverse effects on New Zealand and promote business and investment, is to ensure a stable political environment."
The financial scandals surrounding New Zealand First, Act New Zealand's insistence on Sir Roger Douglas returning as a minister of finance and the Maori Party's "cuddly bear approach" to the serious business of government all gave a Mickey Mouse air to current politics.
By contrast, United Future was a "past master" at ensuring stable government under both Labour-led and National-led administrations, as well as achieving significant pro-business policy wins.
United Future was committed to reducing New Zealand's infrastructure deficit through encouragement of a combination of public private partnerships and infrastructure development bons, especially in the transport sector, to boost economic growth.
