Finance Minister Bill English says lower than expected tax revenue is a relatively small fluctuation and the Government will not overreact.

But he acknowledged that Treasury had identified "some clear downside risks to the tax take for the remainder of the year, including slightly weaker labour market conditions".

"That reinforces the need for the Government to be disciplined and stick to its plan to get back to surplus in 2014/15, so we can start repaying debt," English said.

Financial statements for the seven months to the end of January, released today, show tax revenue of $31.4 billion was 2.9 per cent below forecast.

Source deductions such as PAYE were $383 million (3.0 per cent) below forecast in the pre-election economic and fiscal update from Treasury, reflecting a weaker than forecast labour market.

GST was down $345m (4 per cent) and corporate tax was down $245m (5.1 per cent). The lower than expected corporate tax was a pattern now expected to persist to the end of the financial year.

New Zealand Institute of Economic Research principal economist Shamubeel Eaqub said the numbers indicated the economic outlook was probably weaker than the Treasury forecast.

Less growth in tax revenue meant current policies were probably not enough to achieve the Government's timetable for returning to surplus.

In its Quarterly Predictions, published last week, NZIER said it expected the budget later this year would reprioritise spending.

NZIER would like see a cut in low value spending, such as interest free student loans, working for families and KiwiSaver subsidies.

Those savings should be used to reduce the deficit, and to increase investments in the economy, in infrastructure, education and training in particular.

English said the figures indicated the economy was not picking up as quickly as it had been expected to.

The two reasons for that were a delay in the rebuilding of Christchurch because of earthquakes before Christmas, and the ongoing impact on confidence of problems in the European economies.

"It would be better if the tax take was higher, but we're not going to overreact. These are relatively small fluctuations," English said.

The Government continued to expect a moderate pick up in growth through the year. It had no reason to change that view.

In the February Budget Policy Statement (BPS), Treasury forecast the operating balance before gains and losses (OBEGAL) for the full year would be a deficit of just over $12b, $1.3b worse than in the pre-election data, primarily reflecting a weakening in economic activity.

"January tax data was in line with the BPS assessment although weaker labour market conditions now apparent suggest some downside risk to the full year source deductions forecast," Treasury said today.

In the seven months, core Crown expenses of $39.4b were 3.1 per cent lower than expected. Most of this variance was either offset by similar revenue impacts or reflects the timing of spending, which is expected to reverse by year end.

Treasury continues to expect that expenditure at year-end will be similar to that forecast before the election.

Officials said the OBEGAL was in deficit by $4.3b, $473m more than forecast, driven in part by EQC expenses related to the December 23, 2011 earthquake ($290m).

Including gains and losses, the operating balance deficit at $8.9b was $2.5b higher than forecast. The main contributors continued to be higher-than-forecast actuarial losses on the Government Superannuation Fund liability ($1.0b) and ACC's outstanding claims liability ($721m), as well as higher-than-assumed losses on investment portfolios across the Crown ($205m).

Net debt was at $48.1b (23.7 per cent of GDP). Gross debt at $74.2b (36.5 per cent of GDP), was 1.1 per cent lower than expected due to lower than forecast government stock issuances