KEY POINTS:
On the surface it looks worrying to see the Government's operating surplus come in well below forecast this morning - particularly at a time when both major political parties talking openly about cutting personal taxes.
But there is no need to panic. Not at this point, at least.
One of the biggest reasons the Government's operating surplus for the six months to December 31 has come in at just $815 million - just a third of the forecast $2.511 billion - is because it is subject to the vagaries of offshore stock markets.
The so-called Cullen super fund invests heavily overseas and when the US economy and global stock markets took a hit in the past couple of months so did the fund's returns.
And those returns form part of the measure that is the operating surplus in the Government's books.
The fund is not the only factor at play in the dramatic undershoot of the Government's forecast surplus.
Other arms of the Crown also invest funds overseas - ACC and the Earthquake Commission too suffered at the hands of the global market downturn.
The important thing to remember at a time like this is that markets can be volatile and it is a mistake to read too much into just one month's returns.
Politically the lower-than-expected surplus actually has an ironic silver lining for Finance Minister Michael Cullen.
He has been arguing for years that media and the public shouldn't focus on the operating surplus when they look at how much money he has to spend.
Instead, they should look at the underlying amount of money he has, what used to be called the OBERAC, and is now called the OBEGAL - a measure which excludes the unrealised gains and losses of something like the Cullen fund.
Over the years Dr Cullen has been notorious for running large surpluses, but it is easy to forget that those surpluses were actually boosted by the good returns the super fund was raking in.
It was only a matter of time before the fund didn't fare as well because of a downturn on global markets.
Dr Cullen might feel a bit of an "I told you so" moment coming on as he notes that the OBEGAL figure released today is bang on forecast at $2.529 billion - meaning in his eyes he has just as much money to spend this election year as he did before the operating surplus fell short of forecast.
But while he eagerly draws attention to the `conundrum' facing commentators who focus on the operating surplus, he does face some political risk from this situation with the Government accounts.
Those who want personal tax cuts may well think Dr Cullen has sat on whopping surpluses for years and has left it so late to actually offer tax cuts that by the time he does, the surpluses are evaporating.
A missed opportunity - exactly what National has been trying put into voters' minds.
All of which highlights the challenge Dr Cullen faces in getting a pay-off from the electorate for the tax cuts he does offer later this year.
