The good news is mainly shown on the bottom line of the statement of financial performance, where the actual operating deficit of $1.27 billion is less than the forecast deficit of $1.32 billion.
ACC and the New Zealand Superannuation Fund investment returns were up, helping offset plunging tax revenue.
However, that was where the good news started and ended.
As expected, core Crown tax revenue at $15.4 billion was $1.6 billion, or 9.4%, lower than forecasts and cash receipts of $15.9 billion were $240 million, or 1.5%, below forecast.
Deputy secretary to the Treasury, Colin Lynch, said a large portion of the revenue variance was caused by lower net terminal tax related to lower 2009 tax year business profitability.
"Indications suggest that lower 2009 profitability will flow through to lower-than-expected 2010 tax revenue than was forecast at Budget 2009."
Excluding a large payment made into tax pools that boosted corporate tax receipts in July, underlying tax receipts were also tracking below forecast, he said.
An analysis of the Treasury figures showed that corporate tax revenue was $1 billion, or 39.7%, lower than forecast.
The majority of the variance related to lower net terminal tax and suggests that businesses had overstated their provisional tax liability during the 2008-09 tax year at a time when profitability was falling sharply.
Recent financial year results for publicly listed companies indicate that weakness in corporate profitability has happened across a broad range of sectors and is consistent with the sharp economic contraction that occurred over that period.
Other individual's tax revenue was $346 million, or 33.8%, lower than forecast.
The lower figure was mainly caused by higher-than-expected refunds.
Mr Lynch said the refunds had increased in three main areas - the overpayment of provisional tax, a noticeable rise in the number of requests for personal tax summaries by individuals and the increasing value of donation and child care tax credits.
Finance Minister Bill English could take some heart from the year-on-year comparison, which showed that the October 2009 operating deficit of $1.27 billion was about $2.2 billion better than the deficit of $3.5 billion reported at the same time last year.
That was nearly a 64% improvement.
But the operating balance excluding gains and losses (obegal), which appears to be the measure favoured by finance ministers past and present, continued to disappoint.
The obegal for the four months ended October was a deficit of $3.3 billion compared with a surplus of $898,000 at the corresponding time last year, a nearly $4.2 billion turnaround.
Mr English said it was clear that the impact of the recession would be felt by many businesses and, in turn, on the Government's books for some time.
"This will influence our decisions around both revenue and spending.
"It means there will be little or no new money for Government departments and ministries for the foreseeable future - and certainly not at the unsustainable rate of increase provided by the previous government."
The challenging environment reinforced the value of the significant economic programme the Government already had in place, he said.
Without the balanced programme, there was no doubt that New Zealand would have emerged from the recession in much worse shape than it had, at the costs of thousands more jobs and even more debt.
The Budget Policy Statement and half-year economic and fiscal update on December 15 would set out the Government's economic framework and update forecasts for 2010 and beyond, Mr English said.
