Australian Treasurer Wayne Swan has released the mid-year economic and fiscal outlook which is an update on the May budget figures.
From what we know it's not good news.
Mr Swan has to find an extra $4 billion this financial year to ensure that he delivers his promised $1.5 billion budget surplus.
Correspondent: Samantha Hawley
Speakers: Chris Richardson, Director, Deloitte Access Economics; Joe Hockey, Australia's shadow treasurer.
SAMANTHA HAWLEY: What a difference five months can make. Since the May budget there's been a $4 billion shortfall in revenue. It's understood to soar to $21 billion over the four year forward estimates.
CHRIS RICHARDSON: It is no fun balancing a budget into a headwind and a headwind which is strengthening.
SAMANTHA HAWLEY: Chris Richardson is a director at Deloitte Access Economics.
He says China's slowdown and a drop in coal and iron ore sales has seen the Government's promised $1.5 billion surplus slip away.
CHRIS RICHARDSON: The pace at which they have fallen away, that's been the, I guess, the real standout thing that's happened since the budget was delivered.
SAMANTHA HAWLEY: The Treasurer Wayne Swan will this morning outline significant budget cuts, but he says middle and low income earners will be protected.
JOE HOCKEY: What that means is that everyone else is going to be hit.
SAMANTHA HAWLEY: The shadow treasurer is Joe Hockey.
JOE HOCKEY: They'll always target someone.
SAMANTHA HAWLEY: The mid-year economic outlook is usually delivered between November and late December. The earlier release gives the Government more time to get the budget back into the black. But Joe Hockey says it's more about hiding the real figures.
JOE HOCKEY: To avoid having the real numbers on the mining tax revealed to the Australian people.
SAMANTHA HAWLEY: The first instalment of the mining tax is due today so the figures won't show up in the midyear review.
The Government had hoped to collect $5 billion. The real figure will be much less.
JOE HOCKEY: I suspect this is all about Kevin Rudd. Kevin Rudd is the one who would be nailing this Government for failing to negotiate a proper deal with the mining companies.
SAMANTHA HAWLEY: It wouldn't
JOE HOCKEY: Sorry.
SAMANTHA HAWLEY: It wouldn't matter though, would it, if it was Kevin Rudd's mining tax or Julia Gillard's mining tax - the revenue fall would be the same because of what's happening in China?
JOE HOCKEY: Oh well Kevin Rudd's mining tax was vastly different.
SAMANTHA HAWLEY: Well it was vastly different but the revenue would still be down because it was still a tax on profits.
JOE HOCKEY: Well the revenue was substantially higher under Kevin Rudd's mining tax.
SAMANTHA HAWLEY: The China slowdown, there wouldn't be any treasurer that could have predicted the pace of that, could there?
JOE HOCKEY: Well it seems as though over the last few years Treasury and the Treasurer have constantly over-estimated the performance of the economy which means they keep making promises on false assumptions.
SAMANTHA HAWLEY: So what, you don't think Treasury is giving the Government very good advice?
JOE HOCKEY: Well I think today's figures will be a reflection not just of the Treasurer but of the Government in total.
SAMANTHA HAWLEY: But you also seem to be saying it's a reflection on Treasury as a whole, a Treasury that presumably a Coalition government would need to rely on as well.
JOE HOCKEY: It reflects on everyone. When the numbers are so wrong, when the politics is being played, the incompetence of a government reflects on the entire public service.