The PREFU is up. The short version (based on the executive summary [PDF]): significantly lower economic growth (but picking up again in mid-2009), and therefore much lower tax revenue ($900 million a year) and higher government spending (about $500 million a year more in benefits due to higher unemployment). Together, these completely blow a hole in the government's allowance for future spending increases, which it had already spent. Throw in an extra $480 million due to higher than expected uptake of 20-hours free and Kiwisaver, and higher debt servicing costs ($500 million a year) due to the financial crisis, and the government is looking at a deficit next year of almost $6 billion, growing to $7.3 billion by 2012. And we'll be in the red for the next decade (rather than just skimming it for the next three years):
And this is based on their picture of the economy in late August. Given the changes since then, the situation is likely to be much worse than expected.
In short, this is not a time to be borrowing for tax cuts, as John Key is promising. if we have to run a deficit, we have to run a deficit, but we shouldn't go out of our way to make it any worse than it already is.
(And I wasn't even in the lockup...)