The financial statements of the Government for the four months ended October underlined the need for action to make the economy more productive and competitive.
"Our books are going to get worse before they get better," Mr English said.
The accounts showed the Government reporting an operating deficit of $3.5 billion, more than $4 billion lower than the forecast surplus of $689 million.
Mr English said in an interview in Dunedin the investment portfolios of the New Zealand Superannuation Fund, ACC and EQC had taken significant losses due to the international financial market turmoil.
"They also show Labour's legacy of deepening operating balance deficits, rising debt and a deteriorating economic and fiscal situation. New Zealand, like other countries, is feeling the impact of the global downturn," he said.
"However, our economy was slowing markedly before the latest global events unfolded because of Labour's complacency and refusal to address structural issues dragging down our growth potential."
The New Zealand Superannuation Fund had a negative 13.5% return, or $3.5 billion loss, for October. ACC had a loss of $600 million, and EQC had a loss of $200 million.
Treasury blamed the weak performance of global equity markets for the poor performance of the investments.
Mr English said the National-led Government was ready to face the economic challenges ahead.
Measures would be introduced to remove barriers that had prevented New Zealand becoming more competitive and achieving higher productivity growth. National was also cutting personal taxes at its first opportunity.
The Government was boosting infrastructure investment through a 20-year national infrastructure plan, reform of the Resource Management Act and adding $8.6 billion in new capital projects over the next six years.
In time, 40% of the New Zealand Superannuation Fund would be invested in New Zealand, keeping more of the country's capital for use at home, Mr English said.
"The National-led Government is bringing back responsibility to fiscal policy. We want to ensure that every taxpayer dollar delivers value for money, with a focus on delivering better front-line services rather than bigger back-room bureaucracies," he said.
The Crown accounts showed that core government services increased 27.5% from October last year to October, 2008, an increase of $228 million.
Heritage, culture and recreation expenditure increased 26.6% ($290 million more), economic and industrial services 22.1% ($864 million), education 10.7% ($3.2 billion), health 8.1% ($3.7 billion) and social security and welfare 5.8% ($5.9 billion).
Treasury deputy secretary Peter Bushnell said the core Crown cash deficit was $900 million lower than forecast at $3.7 billion, mainly due to delays in transferring $700 million to the NZ Fast Forward Fund and higher-than-expected petroleum mining royalties received due to high oil prices earlier in the year.
Gross Crown debt climbed by $3.1 billion to $33.6 billion, or nearly 19% of GDP.
