Investment losses unveiled in today's crown accounts are higher than expected but the overall plunge into the red is in line with predictions, National's finance spokesman Bill English says.
The government's financial statements show the crown operating balance was $757m in deficit at September 30, against a forecast surplus of $943m, in the wake of the global financial meltdown.
Treasury deputy secretary Peter Bushnell said the main reason for the worse than expected result was unrealised losses on government investments as a result of severe turbulence on global sharemarkets.
Those losses were $1.8b greater than expected.
There was also a $400m loss as a result of a drop in the discount rate used for valuing ACC's outstanding claims liability.
Mr English said while the unrealised losses were higher than expected he was more worried about the downstream effects of the global economic gloom such as higher unemployment.
He said it was vital to lift New Zealand's economy out of its recessionary spiral and used the accounts to make a pitch for National's policies.
"National has released a fully costed set of policies which promote economic growth and start the job of lifting New Zealand out of deficits earlier."
But Finance Minister Michael Cullen said the unrealised losses in entities like ACC and the New Zealand Super Fund did not affect the government's cash position, which was strong due to the Government's conservative fiscal policies.
Although gross debt was $1b higher than forecast at $31.9b - 17.8 per cent of GDP - net debt was $1.4b lower at $2.6b.
Once assets were taken into account the Crown's net financial position was positive, standing at about 5.7 per cent of GDP.
"This strong balance sheet position vindicates the Government's decision not to blow the surplus in good times.
"As a result New Zealand is today in a better position to weather the current global economic situation than the great majority of developed countries."
Dr Cullen said once the latest losses were taken into account the annualised return of the super fund was about 8 per cent since it was established in 2003.
The unrealised losses were offset by $500m more in taxes than expected, but the overall tax picture was a mixed bag.
Dr Bushnell said corporate tax and GST were $200m and $100m respectively higher than forecast, but that was due to reversals in accruals relating to an earlier period.
Once they were taken out of the mix the GST take was static and corporate tax was about $200m lower than expected.
The operating balance excluding gains and losses (Obegal), which strips out unrealised investment changes, was $900m, $500m higher than expected.
The books show a cash deficit of $3.2b, about $1.1b better than expected.
That was put down to $300m in extra petrol taxes as a result of high prices and delays in transferring $700m set aside for the Government's Fast Forward research fund.