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"This is not the time to think about putting our feet up," he told the Wellington Employers' Chamber of Commerce today.
This year was likely to see a political debate between a determined Government and complacent opposition parties who already thought today's good times were permanent.
The opposition thought New Zealand could afford an immediate taxpayer-funded spend-up.
"We paid the price of complacency in the years up to 2008," he said.
Complacency led to a rapid pick-up in Government spending, policy that undermined competitiveness, soaring house prices and an unprecedented increase in household debt.
"As the Prime Minister confirmed two weeks ago, the Government will stick to its $1 billion Budget allowance for the 2014 - 2015 financial year. This is the responsible thing to do.
"Imagine the effect on interest rates - and the rest of the economy - of a return to the $3 billion plus spending allowances we saw under the previous Labour Government from 2005 to 2008."
Every one percentage point movement in mortgage interest rates is worth around $40 a week - or $2000 a year - for a family with a $200,000 mortgage.
Mr English hinted there could be further moves in the Budget to address the supply of affordable housing.
He said planning processes and rules were important drivers of land and housing costs.
In Auckland for example, planning rules required apartments to be at least 40 sq metres and balconies were now required to be 8 square metres.
"These two rules alone add around $80 a week to the rent."
A range of other rules set minimum subdivision size, ceiling heights, bedroom size and even the width of the front door.
"All of these push up the cost of housing,"
Local body planners and councillors were not aware of the wider social and economic effects of their complex rules and processes.
Mr English said that over the past two years the average full-time wage had increased from $51,700 a year to $54,700, an increase of $3000 with economic momentum having picked up.
Treasury would forecast annual gdp growth of between 2 per cent and 4 per cent a year out to 2018.
Based on that, forecasts showed the average wage would rise to around $62,000 a year in four years. That would mean an increase of another $7500 by 2018.
The Budget forecasts would also show around 170,000 more people working by 2018.
With a falling unemployment rate, that would build on the 66,000 jobs created in the past year.
"Providing we stay the course, we will have a faster growing, more sustainable economy."NZH lb