Budget 2012 continued National’s battle to control government spending by attrition rather than by ground-breaking reforms.

This battle will be lost eventually because mere attrition increasingly mobilises thwarted spending interests, while preserving both their privileged positions and the mechanisms they can use to increase spending when attrition fatigue has set in. The Yes, Minister TV series made the point best: entrenched interests and bureaucracies outlast politicians.

National’s biggest economic decision has been to sustain real government spending at the then record level it inherited from the Clark government in 2008. That decision forces the private sector to adjust to the new level.

Discount the emotive talk about public sector austerity. Even spending, excluding finance and unemployment costs, is projected to be higher in 2015-16 (inflation-adjusted) than in 2008-09, albeit marginally lower on a per capita basis and appreciably lower relative to incomes.

That major spending decision has forced National to rely on real revenue growth to close the deficits it inherited from the Clark government. The hope is that income growth will swell real revenue to new record highs.

However, this is a low growth strategy. On the budget forecasts, by 2016, GDP growth will be trending below 3% pa while labour productivity growth gravitates towards its assumed long-run trend of 1.4% pa.

Even those mediocre outcomes look optimistic. Between 2005-06 and 2010-11, average annual labour productivity growth was a mere 0.5% in the sectors of the economy where it can be most reliably measured. According to the OECD, annual labour productivity growth will not exceed 0.5% in 2012 and 13 - and will be lower than it was in 2004.

National does, however, deserve credit for its efforts to improve specific outcomes in major areas, such as welfare and education, and to improve the fiscal disciplines in the Public Finance Act.

Even so, it is discouraging to see a popular and determined government reduced to waging such a grim war of attrition with public spending for such lacklustre economic outcomes.

National is probably not getting more support for its budget from its sympathisers because of valid fears that its 2015 or 2016 spending targets will not be achieved. But there is a deeper problem in that the measures are limited and the projected outcomes are neither aspirational nor inspirational.