The government's books are in the black, thanks to a stronger tax take.
Bill English has not ruled out using future surpluses to fund tax cuts. Photo: RNZ / Cole Eastham-Farrelly
Excluding investment gains and losses, the operating surplus stood at $222 million for the three months to September 30, compared with the $503m loss that had been forecast in May's budget.
That comes after the government recorded a $1.8 billion surplus in the June 2016 year - four times more than forecast.
The growing economy has again boosted tax revenue for the most recent quarter, which came in above expectations at $17.3bn.
Treasury said the improvement was being driven by a higher corporate tax haul and stronger GST returns from building work and tourists.
Expenses remained close to expectations, at $18.9m.
If investment gains and losses were included, the operating surplus was a larger than expected $2.3bn.
Net debt totalled $63.1bn, or 25 percent of the value of the economy.
Economists are picking the faster growing economy will translate into bigger surpluses in coming years.
Finance Minister Bill English has not ruled out using future surpluses to cut taxes, though unions and community groups want him to loosen the purse strings and fix the country's growing social ills.
Mr English may reveal more about next year's tax and spending plans in December, when he updates the economic and fiscal forecasts.