The crown financial accounts, released yesterday, showed a sea of red ink because of rising costs associated with the Canterbury earthquakes.
The operating loss excluding gains and losses of $18.4 billion for the year ended June included $9.1 billion of net costs associated with the earthquakes.
The deficit is the largest for at least 10 years, probably more.
Gains on investments made by ACC, the New Zealand Superannuation Fund and EQC totalled $5 billion for the year, well up from the $1.8 billion last year.
Interest will now turn to the Government's pre-election financial update, to be released on October 25.
Mr English said the deficit was unusually large but it included the significant costs of the Canterbury Earthquake Recovery Fund and the updated assessment of the Earthquake Commission's costs.
Total net debt at balance date soared to more than $40 billion, compared to $26.7 billion at the same period last year and came in at 20% of gross domestic product (GDP).
Total crown expenses also rose sharply to $100 billion from $81 billion last year. The most significant increase in costs came from crown entities and state-owned enterprises.
EQC insurance expenses were $11.7 billion higher than last year due to the earthquakes and core crown spending increased by $1.9 billion due to earthquake-related spending.
Mr English announced that EQC levies would rise next year for all homeowners with insurance from 5c per $100 to 15c per $100. The maximum homeowners with insurance will pay rises from $69 a year to $207.
The increases will take effect from February 1.
The increases would enable EQC to rebuild the natural disaster fund to its pre-earthquake level of $6 billion in about 30 years and increase the annual levy revenue from about $86 million to about $260 million.
Westpac chief economist Dominick Stephens said earthquake-related costs would be largely concentrated in the previous and current financial years but the cost of servicing the additional borrowing would add to expenses for years to come.
The Government had confirmed its target of returning to surplus by 2015.
"If a return to surplus in the next four years remains the goal, we would need to see either stronger economic growth projections, or even more belt-tightening than was set out in the May Budget.
"We don't see much upside potential for Treasury's growth forecasts, given the slowing global economy, so the latter seems the more likely route," he said.
Labour finance spokesman David Cunliffe was the only Opposition MP to comment on the crown accounts, criticising the Government for its "so-called fiscally neutral tax cuts" which added $1.1 billion to the country's debt in the past year.
"It might seem small beer when total net debt has now broken through the $40 billion barrier, but this is $1.1 billion New Zealand did not need to borrow, and could not afford to borrow."
The tax cuts for the rich actually cost an extra $2.7 billion but was partially offset by $1.6 billion raised through the 20% hike in GST, he said.
"In other words, low-income Kiwis are paying for the tax cuts for rich New Zealanders while they are the ones who are struggling most to cope with the GST increase."
When National came into office, net debt stood at $2.2 billion. It had now blown out to more than $40 billion. That did not have to happen, Mr Cunliffe said. It happened because National blamed everything and everyone else except itself.
