The Labour Party says not only is the Government not going to reach surplus this financial year, but it's looking doubtful for next year as well.
The latest financial statements show the books are $358 million in the red, compared with the $1.2 billion forecast in the Half year Economic and Fiscal Update.
The lower deficit, which excludes investment gains and losses, is due to a higher-than-expected tax take, and lower government spending.
Labour's Grant Robertson said the drop in spending should be carefully examined.
"Part of that is also the fact that lower inflation means lower expenditure on benefits for instance for the government.
"So there are swings and roundabouts here. But at the end of the day the government made a promise to New Zealanders, it's going to break that promise, and on all of the data we are seeing today, it's going to struggle to get there in 2016 as well," he said.