Predictive text

17 May is of course the 2007 Budget, and its probably the most important of the Clark Government. Why the most important?

Government's often change on the basis of a mood swing in the electorate - at some point people just 'change channel' and when that happens the gig is effectively over. Take 1999 for example, after 9 years of Tory rule, people said thats enough, we're having a change.

Now, I don't think we are quite there yet - but this Budget could be the final straw, so to speak, if it is like the 05 Budget - which lets be honest was a "bit of a let down".

So, what do I expect to be included in said budget to get the government back on the front foot?

Now I should point out - this is all based on my personal speculation, im of course not privy to any information.

Climate Change: Something small, that will be talked up as though its something substantive? Probably. There are indications that a "Cap and Trade system" for carbon emissions has cross party support - but what level is the cap set at? Hopefully Budget 2007 will tell us.

Business Tax: First up, Dunne is kidding himself if he thinks this will save his "party". Govt will cut Business tax from 33c to 30c, matching (but not bettering Australia). Hand outs for R and D will also feature according to most media.

Transport: Electrification of the Auckland Lines - finally (gauge still too thin). Regional Transport levy, local authorities will be given the authority to slap on a localised petrol tax in their area - Herald speculated this would be 10c/litre in Auckland. If this is as I suspect - left to local authorities to implement, it's a little smart arse. "We didn't increase it - your local council did".

Savings and Tax: I'm predicting this is the biggie, and Im thinking (hoping!) this will be twofold, Government will offer a 5 per cent tax cut which instead of being given back (that would be inflationary!! ARRGGH) will go into KiwiSaver. The Government will also offer tax free employee contributions. This is essentially salary sacrifice like in Australia - basically if you earn 50k pa, and you put 5k into KiwiSaver, you will only be taxed on 45k of your earning. This is very common in Australia and actually effectively increases your net earnings.

So there we have it. NZ Institute's David Skilling recently said that savings and infrastructure need to be the two main government priorities and I would agree. This would definitely help with savings, but infrastructure... hmmm. Still this would be a start and I think would be overall a popular budget.