Surprise. New Zealand has a $1.8 billion surplus all of a sudden. Well ahead of projections and 4 times better than last year. So what do we make of it?

Well I’ve heard a lot of babble on talkback about what we’re going to do with this extra money. It’s a lolly scramble.  It’s like we’ve had a good year let’s go out and buy a new car... and a a big TV and maybe a new phone... but not a Samsung.

It’s babble because if you look at the figures the government actually made a loss last year.  A 2.1 billion dollar loss

The surplus is an operating surplus. Money in. Money out. The fact is we have a cash deficit because of all the borrowing we’ve done lately.

So the figures tell us we have a net debt of nearly $62 billion. About 25 per cent of all our GDP. In fact our debt is up $1.8 billion on the year before. Last year the  government spent $4.3 billion paying off that debt or more than twice the so called surplus.

Meanwhile in releasing the figures Bill English said he's still sticking to his goal of getting debt down to 20 per cent of GDP by 2020. That's just four years away. By my quick calculations we'd need surpluses more than double if not triple last years to hit that that target.  Which by the way is a good target to aspire to.

My point is we're not rolling in it. But that doesn't stop the usual chorus of people with their hand out.

The Herald printed the figures at 1.47 yesterday afternoon. Less than 20 minutes later I had an email in my Inbox from Jordan Williams from the Taxpayers Union demanding tax cuts. I thought it was quite interesting to see the rich with their hand out before the poor. But of course the lobby for the poor chimed in eventually. Demands for affordable and emergency housing and for the fight against poverty.

So it was a day of rich and poor New Zealanders shouting at the government, “You've got a couple of billion, GIVE IT TO ME”. When in reality there’s no money and we’re still having to borrow to get by.

So what will National do? Well first realise these guys are great political players with a long game. They don't knee jerk. They'll fight the fires that have been burning them the longest. Just like they did with their token immigration moves this week.

Government spending is at it's lowest since 2006 so I reckon they'll give relief where they'll get public approval and gratitude from the recipients. With the big police number debate yesterday it’s obvious that National will step in soon and put that fire out. Nurses might get a New Year's present. National's gifts will go straight to middle class voters like cops, nurses and teachers who after all are voters too. And they’ll get some of it back in taxes and GST.

Labour is hoping that National will favour taxcuts over spending. No. National will head Labour off at that pass and steal the left’s thunder.

My pick is that tax cuts will be talked about next April. But only talked about. They'll be conditional on returning National to the government benches. And there will be an early election to capitalise on the good times just in case they turn. Whether there are tax cuts or not if there's a 4^th National Government is anyone's guess. But National will never be guilty of not offering hope. They've done it before and it's worked so far.

Not only is that good politics it’s also good economics.