PRIME Minister Julia Gillard says the May budget will be more about the economic challenges facing the nation, rather than the upcoming federal election.
Ms Gillard on Monday laid out the government's broad economic strategy in a speech to a Per Capita forum in Canberra, ahead of the budget to be handed down on May 14.
The key challenge was to respond to huge reductions in revenue growth over the next four years, with the amount of tax revenue collected for 2012/13 now expected to decline by $12 billion.
"Tuesday 14 May will be no old-fashioned pre-election budget night," the prime minister said.
"What the treasurer will deliver will not be a political pamphlet - he will outline an economic program.
"The budget will outline the fiscal path for the coming four years, one designed both to take account of the nation's current circumstances and to shape the nation's future."
Ms Gillard said the main goals were to maximise jobs and economic growth, properly fund services over the long-term, invest in ways to strengthen the economy, keep inflation in check and give the Reserve Bank of Australia maximum opportunity to keep interest rates low.
Treasurer Wayne Swan attended the speech, telling reporters on his way into the venue: "We'll do what's right for the country".
The budget could deliver a deficit of about $10 billion for 2012/13.
But Ms Gillard said Labor was committed to its medium-term strategy to deliver budget surpluses on average over the course of the economy cycle.
She said domestic economy was stable and resilient.
"Our economic fundamentals are sound," Ms Gillard said.
"We have contained inflation, low interest rates, low public debt."
Australia's prospects looked bright, given the global economic shift toward Asia.
"However - and this is key - while Australia is stable, resilient and close to centres of growth, the wider world economy is quite a different story," she said.
"There is serious, persistent weakness in global growth - and continued volatility in the global economy."
But while the strong Australia dollar showed the nation was a great investment, it came at a price.
"The persistent high dollar, as well as squeezing exporting jobs, also squeezes the profits of exporting firms - with lower profits for these companies comes lower company tax going to government," Ms Gillard said.
"We can't assume this will change soon."
Australia was creating more jobs, exporting more goods and services and buying and selling more from each other, but prices were growing at a slower rate and affecting gross domestic product growth in nominal terms.
"We expect nominal GDP growth for future years to be revised down," Ms Gillard said.
"For the budget bottom line, it's a very meaningful fact - because, naturally enough, companies don't pay tax on volume, they pay tax on value, which is driven by price."
Ms Gillard warned against "economic simpletons" who argue revenue in 2013/14 would be more than this financial year.
This did not take into account a larger population and rising health and aged pension costs which will be far higher than the growth in tax money.
"It's clear that the extraordinary revenue peaks of the mid-2000s won't be repeated," she added.
In the future, new spending in the budget must be matched with savings.
"I trust that all would acknowledge the government has some serious decisions to make and announce in the coming two weeks," Ms Gillard said.
She said Labor's education reforms and disability care programs must not be jeopardised.
"But - because we now are confronted with new facts and far more significant reductions in tax money than was expected - we are going through the process now of making decisions to spend less in some areas than we had hoped, to raise more in revenue in some areas than we had planned," she said.
Ms Gillard warned every "reasonable" option was on the table, "even options previously taken off the table".
"The nation and the government must have maximum flexibility to deal with these complex - and rapidly changing - events," she said.
But Labor would not cut the budget to the bone, and the burden of its decision would be shared across the community.
Questioned about whether the so-called "burden sharing" would apply to those already struggling financially, Ms Gillard said the government would take a "Labor approach which understands that people come with different capacities to the task".
"But also a Labor approach that understands that if we look right across our society and ask everyone to make some contribution then it lightens the load for everyone," she said.
Asked if the government was considering any changes to the goods and services tax (GST) to help fill the revenue hole, Ms Gillard said no.
"No change in the GST is being contemplated. We will not change the GST," she said.
"The GST is a revenue flow which goes to state governments.
"What I've outlined here ... is changes in the amount of tax money that was expected to go to the federal government and the federal government budget problem that therefore poses. GST, absolutely no change."
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