The John Key National Party government has taken the path of least resistance by in effect targeting passive income or savings as a source of taxation. The problem with this is that:
1. It does not resolve the problem of excess national consumption
2. It undermines long term savings
3. It does not resolve the parasitism in NZ elevated by a decade of socialist government, but I suspect that it does enough to rein in recurrent budget items, by targeting student loans, and a commitment to find savings in the bureaucracy over 3 years of $1billion.
The implication is that the private sector is unlikely to snub the National Party, so I think Key has done enough to prevent John Brash's ACT Party from winning a significant share of the vote in the next election. This would have been unthinkable a few months ago. We will in all probability be looking at a National Party-ACT Party coalition, with possibility ACT having 5-10 seats. Based on this budget, I do not see any National Party MPs defecting to the ACT Party - as John Brash has already done. If its going to happen there will need to be strong support for the party from business, and this budget does entail restraint. This can only mean ACT becoming smarter, and I just don't think any of the salesmen in parliament have the intellectual vigour to achieve that. Another problem for ACT is that business is surprisingly paternalistic in NZ; and not in a good way. i.e. Christian dogmatic, duplicitous, non-contextual charity more than objective, conditional, contextual empathy. I am always surprised by the level of business support for Helen Clark. This financial crisis is her legacy...at a time of high commodity prices.