Higher tax take and lower spending improve Crown accounts: Deficit 22% smaller than expected

NZ Herald

11 Feb, 2026 10:35 PM2 mins to read

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Finance Minister Nicola Willis may finally get some “upside surprises” in future Treasury forecasts. Photo / Mark Mitchell

The deficit, measured by Treasury’s traditional metric, was 22% smaller than expected in the first six months of the fiscal year, according to Crown accounts released today.

The Operating Balance Before Gains and Losses (Obegal) stood at $5.5 billion for the six months to December 2025, $1.5b smaller than Treasury’s
half-year forecasts published in December.

The slightly improved position was mainly comprised of lower core Crown expenses, which at $71.4b were $1b lower than forecast.

A commentary released with the accounts suggest that most of this improvement related to the timing of spending, meaning expenses could catch up with forecast later in the year.

Forecast payments for community and residential-based support services led to a $200 million underspend in health, but Treasury said much of that variance is expected to be timing. Housing and community development was out by the same amount, but this was also put down to timing, with Treasury saying this was due to “timing delays in recognising costs for underwritten property developments and the vesting of infrastructure assets”.