The amount the Government has to borrow each week has jumped from $250 million a week to $300 million a week, to cover the blowout in the cash deficit to $15.6 billion.

But Finance Minister Bill English says that the operating deficit will halve next year and that the books were still on track to get back into surplus no later than 2015-16.

"We will certainly be looking for opportunities to get back to surplus sooner," he said.

Mr English put the blowout down to a lower tax revenue because of a "more subdued" recovery than expected and the one-off costs of the Canterbury earthquake and the leaky homes package.

Treasury's forecast for GDP growth in the current year has been downgraded from 3.2 per cent in the May Budget to 2.2 per cent.

Mr English said the Government would continue to limit new operating spending to $1.12 billion a year.

The figures reinforced the reality that there would be no spend-up in election year.

"There cannot be a lolly scramble in 2011. No amount of wishful thinking can make that possible."

Mr English steered away from suggestions the Government would embark on wholesale spending cuts, such as reversing the decision to continue with interest-free student loans.

Mr English's emphasis yesterday was on lifting the performance of public service and government entities such as Housing New Zealand Corporation and the Ministry of Education.

He detailed the Crown's $223 billion in assets including roads, schools, housing, national parks, airlines, railways, and its $128 billion of liabilities, such as ACC and the Government Super Fund.

The assets were expected to grow by $33 billion over the next five years. He said state-owned enterprises, valued collectively at $52 billion, were "a very small proportion of the family silver".

"And we need to be using the whole silver set much more effectively."

He cited the fact that the Ministry of Education had 244 closed schools, teacher houses or vacant sites worth $96 million. They could sold to be used for new schools or better housing or defence equipment.

"This is about a major shift in the public sector respecting public capital, treating it with respect, using it effectively particularly because when they waste it, we've got to go and borrow more from the same people who are lending to Spain and Portugal and they are going to be asking harder and harder questions."

State agencies would be expected to show they were using their capital base "fully and effectively before being granted additional capital".

Labour's associate finance spokesman David Parker said it was time for National to take responsibility for the deterioration in the books.

"They have blamed the former Labour Government, they've blamed the Canterbury earthquake, they've blamed a decline in tax take, which they say is unexpected - but they haven't blamed themselves."

Act's Sir Roger Douglas said Prime Minister John Key had failed to get spending under control and it showed he wanted the trappings of office but none of the hard decisions. "It is as if Sir Robert Muldoon has risen from the grave to become his adviser."

Current year:

Revising the forecasts
* GDP growth - 2.2 per cent (from 3.2 per cent in May).

* Tax revenue - $52.5 billion (from $53.9 billion in May).

* Operating deficit - $11.1 billion ($8.6 billion in May).

* Cash deficit - $15.6 billion ($13.3 billion in May).

* Unemployment rate - 6.2 per cent (6.4 per cent)