The Government says it's on track to return to surplus in 2014-2015, despite a bigger deficit and lower tax revenue.
The Crown accounts released this morning show a deficit for the six months to the end of December nearly $380 million bigger than expected, and lower-than-expected tax revenues.
The operating deficit before gains and losses was $1.8 billion for the six months - $379 million higher than forecast.
Core Crown revenue at $32.1b in the six months to December 31 was about $580m below forecasts in the half-year update and about $80m lower than Budget forecasts last May.
Treasury said it was difficult to work out how much of the lower-than-forecast tax revenue was temporary and how much was permanent, though that should be clearer in the next few months.
But including the gains in asset values, the Government's accounts look much brighter.
Continued strength in world sharemarkets generated gains on Crown financial instruments of $3.1b in the six months, which was $1.8b ahead of forecast. This left the total operating surplus for the six months $1.6b larger than forecast at $3.2b.
Finance Minister Bill English said government spending remained "under control and revenue remains somewhat below forecast in the six months to 31 December, possibly due to timing issues".
"Given the large size of both the revenue and spending bases, overall we are still tracking reasonably close to forecast for the first six months of the financial year," English said.
"And we remain on track to surplus in 2014-15.
"As we've said many times, this will require ongoing discipline and responsible fiscal and economic management.
"New Zealand certainly doesn't need irresponsible and expensive spending promises, which we're already seeing from other political parties, more than a year before we've even posted a surplus."
- Fairfax Media