The Crown accounts for the eight months ended February slipped back into deficit after encouraging signs in the period ended January.
After a small surplus of $77million in the seven months to January, the operating balance excluding gains and losses (obegal) returned to a deficit in February of $269 million.
It appears the Finance Minister has given up on his promise of returning the Crown books to surplus by the end of the June financial year.
''We're continuing to manage the books carefully, but lower inflation, while good for consumers, is making it less likely that the final accounts in October will show a surplus for a whole year.''
''Nevertheless, the fact that we're a bit over one month and a bit under the next shows just how far we have come since 2010-11 when we had an $18.4million deficit,'' Mr English said.
Next month's Budget would produce new forecasts Mr English expected would take into account further reductions in the inflation outlook.
As a list MP, Mr English could take the opportunity to leave Parliament sometime next year, giving a new finance minister the chance to make an impact before the 2017 election.
There will be plenty of opportunities for him on a world stage, particularly given his long tenure in the finance role both since 2008 and earlier when he was an understudy to former finance minister Sir William Birch.
But the failure to achieve a surplus after seven years of promises will come hard, despite his achievements of reducing government spending and dealing with the fallout from the global financial crisis.
The Crown accounts showed revenue from some tax sources had remained higher than forecast in February, but not as far ahead as they were in January.
Other individuals tax was $217 million ahead of forecast and corporate tax was $91 million higher, indicating a pleasing lift in profitability for some businesses.
However, the February accounts showed GST collected being $261 million lower than had been forecast.
About $150million of that GST total was attributed to earthquake-related refunds to insurers.
The rest of the GST shortfall was related to very low inflation leading to lower-than-expected spending on consumption, Mr English said.
At the same time last year, the obegal was a deficit of $1.4billion and the operating balance was a surplus of $3.7billion.
Labour finance spokesman Grant Robertson said the trust of voters in National would disappear with the deficit.
Prime Minister John Key had spent seven years and two election campaigns telling New Zealanders to trust him, be patient and he would deliver a surplus this year.
''But eight months into the financial year, the books are over $260million still in the red. That's not good enough. If the Government can't get the books back in the black after seven years there is something seriously wrong with their economic management.''
The reason for failing to reach a surplus was the Government had not been able to get the productive economy humming to generate revenue, Mr Robertson said.
National needed to rebalance the economy so businesses and exporters could create the jobs and decent wages New Zealanders deserved. After seven years, National still did not get it, he said.
Analysis of the Crown accounts threw up one or two surprises, the main one was the big turnaround in the operating balance, which includes gains and losses from Government investments and expenditures.
The operating balance was a deficit of $952million, a $1.89billion turnaround from the Treasury forecasts of a $941million surplus and a $4.7billion turnaround for the corresponding period last year.
In the account notes, the Treasury said in addition to the favourable obegal, the University of Canterbury settled its insurance claims arising from the Canterbury earthquakes, positively affecting the operating balance by $330million.
But more than offsetting those favourable results, net gains were tracking more than $2.6billion below forecast.
The variance in net gains was mainly due to actuarial losses on the ACC and Government Superannuation Fund liabilities of $2.5billion and $1.6billion respectively - partially offset by $1.7billion higher-than-forecasts net gains on investments, mainly due to favourable market, interest and foreign exchange movements.
The Crown's net work at balance date was $74.6billion, $1.9billion lower than forecast.
