The Key government prides itself on two economic hallmarks above all others - being careful with the books and good for business.

But the facts of its latest budget shows it's delivering neither. Once again it's dangling the prospect of sizeable tax cuts next year, even though its fiscal forecasts shows little scope for them. Despite all the government's efforts, GDP, productivity and exports are all stuck in low growth mode.

The fiscal picture is discouraging. Despite moderate economic growth over the past six years, all the government can forecast is a minuscule surplus of $700 million for the fiscal years ending this June and next.

Tax cuts are pie in the sky, says Rod Oram.

It is forecasting a bit more headroom in the three years after the 2017 election. But that would evaporate if there were the slightest disruption to the domestic on global economy. Treasury's economic forecasts highlight those risks.

READ MORE:

* Budget 2016: As it happened

* Tracy Watkins: A smart Budget from Bill English, but no big fixes

* David Farrar: Bill's bland Budget

* Budget 2016 by the numbers

If surpluses were impaired, cutting spending is the only way the government could cut taxes, maintain surpluses and deliver on its goal of whittling net Crown debt down to 20 per cent of GDP from 25 per cent now. The debt ratio was essentially zero when National came to power in 2008.

Yet, the economy needs more investment by the government not less. GDP growth for the current year is forecast at 2.8 per cent. But fully 1.5 percentage points is the result of our fastest population growth in more than 40 years.

Minus that bonus, real GDP per capita growth will average only 1.3 per cent a year in coming years, compared with 1.8 per cent between 1995 and 2015.

Productivity growth is also disappointing, despite investment by business rising from $31b in 2010 to $40b in 2015 and a forecast $50b in 2020. Multi-factor productivity, which takes into account gains from labour, capital and technology, will average only 0.5 per cent a year to 2020. Similarly, labour productivity growth is running behind the historic rate.

Likewise, Treasury forecasts exports will grow by an average of only 2.7 per cent a year in the five years to 2020. That's half the rate it was in 2015. Even adding a good dollop of inflation, it would take 14 years to achieve the government's big goal of doubling exports.

In contrast, Treasury offers some hope to homebuyers. It forecasts net migration, one of the big drivers of housing demand, will peak in the year ending this June at 70,700, thanks to a reviving Australian economy and labour market. Migration will fall back to the long run average of 12,000 by 2019.

As a result, residential investment here will peak in 2018 and house price inflation will fall back to around 2 per cent in following years.

However, Australian economists are forecasting only a weak recovery. Following the huge boost from its mineral exports to China, the economy has still a long way to go to adjust to the subsequent bust.

Booms in consumer spending and housing construction have taken up a little of the slack but they are now faltering. Tourists and students from China are two bright spots. But those are low value activities compared with the likes of high technology sectors, which are still struggling to develop.

If Australia and some other countries limp along with low growth we can expect migration to New Zealand to keep running strong. Our government is coping badly. To meet the health, education and other needs of a fast growing population, it had to divert most of the spending it had earmarked for new initiatives in this budget, and some from next year's, to those demands. Even so, it is being widely criticised for skimping.

It is also storing up plenty of trouble for later. For example, it has largely avoided dealing with the challenges raised in its own National Infrastructure Plan published last August. Likewise, it ignores the fast-rising health and superannuation costs of a rapidly ageing population laid bare in analysis from the IMF and others.

The facts make a mockery of Finance Minister Bill English's claim in his budget speech that "we are shaping policy around a 20-30 year view of how we can improve the lives of New Zealanders."