"It's essential, as we come out of the recession, that the Government shows leadership in managing its finances and getting back to surplus as soon as possible," he said after the release today of the Crown accounts for the seven months to 31 January.
"Surpluses give us choices. With another six years of forecast Budget deficits and net Crown debt forecast to treble to $65 billion by 2014, we won't have those choices for some time.
"Most government agencies will receive no new money in the Budget on 20 May. So they will need to reprioritise existing spending to ensure they are delivering better services to the public and value for money for taxpayers.
"The Government will operate within the $1.1 billion allowance for new spending it set out in the Budget last year.
"This is not a one-off exercise, and it will need to continue for years to come if we are to get the Government's books back into good shape and bring borrowing under control."
The Crown accounts issued today show core Crown revenue was $102 million higher than forecast at $32.4 billion in the seven months to 31 January, while core Crown expenses were $678 million below forecast at $36.2 billion.
Net debt was close to forecast at $22.8 billion.
The operating deficit before gains and losses was $883 million better than forecasts at $3.4 billion.
Gains in the Crown's investment portfolios and an actuarial gain on the valuation of the ACC insurance liability left the operating deficit at $630 million - or $1.4 billion better than forecast.
"Some of these gains may well be reversed in coming months. And in the context of the much bigger fiscal challenges we face over the next few years, they are really just incremental improvements," Mr English says.
Council of Trade Unions secretary Peter Conway believed the figures showed the Government had exaggerated the extent of the financial problems.
"No-one would deny that we face fiscal challenges, but the Government now has to face up to the fact that it has talked up the fiscal problems to a greater extent than was warranted."
Mr Conway said New Zealand in 2009 had the third lowest gross debt in the OECD and the 5th lowest net debt.
Treasury has indicated that $240 million gross issuance per week converts to $130 million net, and $110 million in repayments when it is averaged over four years from July 2009 to June 2013.
"While this still amounts to a significant borrowing programme, the Government should be more transparent about the fact that nearly half of the $240 million figure Ministers regularly quote is actually repayment of debt," Mr Conway said.
