An early British Labour politician once cynically observed that every government on taking office should burn its old speeches. As we move into election mode, many of Helen Clark's ministers must be wishing they'd done just that. Before the 1999 election they avoided making many specific spending promises, but the general thrust of pre-election rhetoric was that Labour would find the funds to soothe whatever itched. Right now Michael Cullen is facing hands outstretched for money. Late last year teachers and nurses, as they always do before wage rounds, began drip-feeding gullible journalists with stories about shortages and the financial opportunities open to them overseas. Nurses and doctors waved the shroud, telling us people would die unless healers got more money. Specialists are demanding new equipment with ongoing running costs that each year are 25-30% of the original capital outlay. GPs want more for primary health care, social engineers a top-up for the poor. Local authorities seek to pass all public transport costs to central government etc etc. Journalists breathlessly write it up as gospel. We haven't seen such wish lists since Norman Kirk's time in the early 1970s.

Michael Cullen's greatest test is coming up. Two years ago his forward planning left little financial leeway in election year. Commentators knew he'd have trouble. Higher than expected taxation revenue and the new petrol impost are lessening his discomfort. However, such are the unreal expectations that old-style Labour governments engender, that media spin on a grand scale will be needed to avoid major disillusionment. Cartoonists used to draw Walter Nash as Santa Claus before a budget, Scrooge next day. Cullen could experience the same.

What I find remarkable is the disjunction between reality and the public's hopes. I can only put it down to some failing within the education system. We talked a lot in the sixties and seventies about introducing "Civics" to school curricula - courses in general workaday knowledge about the real world. It seems never to have happened. Maybe it was left to teachers? They seem as blissful at the end of their educations as when they began.

In Kirk's day, New Zealand still looked like "God's Own Country". While our relative standards of living had dropped since the 1950s, most believed things would soon come right, and that big spending would assist. Ministers viewed budgets like lolly scrambles. They scampered around Cabinet committees with their barrows, always larger in election years. Between 1972 and 1984, however, the EEC, slumping commodity prices, two oil shocks and excessive government spending herded wishful punters over a cliff. From about tenth highest world living standard in 1970 we plummeted to 21st by 1985. There we have rested precariously ever since, perilously close to Third World status.

What is odd is that our nurses, teachers, doctors, local government officials, plus the journalists who succour them, are so ignorant of reality. They aspire to First World rewards from a lower-level economy and growth at 2%, and falling. Why this blindness to reality? Don't they care about the world their children will inherit? More likely, they haven't ever stopped to think about where the money could come from. If they were saying to the government "get on with economic reform, our opportunity lies in doubling the growth rate", then I'd have more sympathy. Even better if they would debate the rising welfare bill that steals so much currently available money from education and health. But no special interest group seems capable of hard thought. The best the teachers could come up with was that if an outside agency awarded MPs a 5% pay rise, then they'd settle for double!

In politics, as in so many areas of life, those who won't see are condemned to a life of darkness. What pulled this country down were pressure groups like them over-demanding funds that didn't exist. When Robert Muldoon borrowed excessively and stuffed dollar notes down their throats, inflation rose and growth slowed further. Next year and the year after, there was less to go around. The vicious cycle towards poverty wound down hill.

The challenge is to take a slice of cake appropriate to New Zealand's current growth, get on with reforms, and grow the economy so we can have more for tomorrow. First World living standards on a Third World income isn't a goer. Is this really beyond the educational and healing professions to grasp? Or do we have to start from scratch, re-educating the educators and the healers, taking our voluble fourth estate with us?

If we can't face up to this then we can kiss goodbye to Helen Clark's goal of getting ourselves back into the higher league of the OECD. The message for political parties is simple: never raise expectations beyond what you can realistically deliver.