Power Play - The Government now looks set to achieve a surplus, so why is Bill English talking down the achievement?
Bill English. Photo: RNZ / Alexander Robertson
Just a month or so after the Government's promise of getting into surplus in 2014-15 appeared dashed it now seems likely it will manage it after all.
In the financial statements for the 11 months to the end of May it recorded a surplus of $1.176 billion, much higher than the Budget forecast of $193 million.
For the full year the Budget had forecast a deficit, but, based on the turnaround in 11 months, a surplus now looks a distinct possibility.
But the Finance Minister, Bill English, is not about to claim victory and with good reason.
Mr English said there were still accounting adjustments to be made for the year and that could yet tip the Government's books into deficit.
Even if the Government does achieve its long awaited surplus, it is almost certain to be shortlived as the economy faces tougher times than it did just six months ago.
Dairy prices have continued to slump and that will flow through to much lower incomes for dairy farmers and a drop in spending in the regions, particularly strong dairy regions such as Waikato, Canterbury and Southland.
In turn, dairy farmers and the businesses which depend on them will pay less tax.
Mr English said his political opponents and economic commentators were, however, placing too much emphasis on the drop in dairy prices.
He pointed out other sectors of the economy - meat and tourism to name two - were doing well.
The drop in the value of the New Zealand dollar and lower interest rates were also expected to make up for the slump in dairy prices.
Nonetheless, New Zealand faces more worrying times than it did last year when voters went to the polls. Those worries have been exacerbated by the crisis in Greece but more particularly by the slowdown in China.
Mr English worries more about China than he does about Greece. He knows if China's struggles continue, its spending on imports will fall.
This would also badly affect the Australian economy and the two countries are New Zealand's biggest export markets.
The Government's political opponents criticise it for having not done enough to diversify the economy or its markets.
And looming over all this are continued worries about the state of the housing market, particularly in Auckland.
Why should any of this, including whether the Government gets back into surplus, matter to households struggling to make a living?
If the economy slows, as economists are now picking, that will make life tougher. Unemployment could rise, or certainly not drop as quickly as it would otherwise, and incomes would remain stagnant.
The Government faces a difficult problem. As the economy slows, interest rates are likely to fall further. That will help to lower the value of the dollar even further, thus boosting the incomes of exporters.
But it will also push up prices for imported goods and lower interest rates could help continue to fuel the housing market in Auckland.
Some of it is beyond the Government's control, but Opposition parties will not give it any slack.
They say it was National's policies which encouraged more and more farmers to switch to dairying, often taking on massive loans to do so. Now that the bottom has fallen out of the dairy market, for the time being at least, those farmers are left with a lot of debt but not much else.
The Government, though, rejects doomsday predictions about the economy and it warns about talking the country into a downturn.
Yet the economic future looks more uncertain and even if, as expected, the Treasury reports the public finances are in surplus when the full accounts for 2014-15 are released in October there might be little reason for celebration.
Politically too, for the Government it will not be a good look if it is in surplus for 2014-15 but immediately slips back into deficit the following financial year.
National's claim to be a better fiscal manager than Labour might ring hollow if that is the case.
No wonder Bill English remains typically conservative and cautious about the prospects of a surplus.