The Government could again be sneaking back into surplus territory after the latest Crown accounts showed the much-watched obegal falling to a deficit of below $1 billion in the six months ended January.
Finance Minister Bill English has been fixated on the operating balance excluding gains and losses (obegal) since he took on the job after the 2008 election.
The much-awaited surplus has been widely called ''wafer thin'' and was part of the Government's election promises, despite the prospect of returning to surplus becoming bleaker in recent months.
Earlier this week, Mr English was criticised for saying even a $1 surplus would be meaningful.
However, the latest Treasury figures show a 1% increase in tax revenue of $323 million one of the main issues holding back a return to surplus.
Although GST was $132 million higher than forecasts, indicators for domestic consumption through the December quarter looked weaker than forecast.
The outlook for other tax types, such as source deductions, was more positive.
The obegal for the six months ended December was a deficit of $990 million, a $381 million improvement on the December half-year forecast of a $1.4 billion deficit and a nearly $800 million improvement on the $1.8 billion deficit at the same time in 2013.
The operating balance, which includes losses and gains from government investments from the Superannuation Fund and ACC, was $42 million higher than forecast at a $316 million deficit.
At the same time last year, the operating balance was a surplus of $3.2 billion, thanks mainly to strong sharemarket returns on the investments.
Mr English said the Government still considered the strong economy and responsible fiscal management could deliver a surplus when final accounts were published in October.
The smaller-than-expected obegal deficit reinforced that message.
Crown expenditure for 2014-15 was forecast to be $4.1 billion lower than forecasts made when the surplus target was first set in 2011.
''The challenge is coming from revenue which the Government has much less control over,'' he said.
Labour finance spokesman Grant Robertson said Mr English said a $1 surplus would represent job done for him in delivering on his promise of a ''meaningful'' budget surplus.
''That is farcical, particularly when the Government accounts indicate the country is in fact still heading for a deficit north of $300 million.''
