PRIME Minister Julia Gillard could be asking the nation to bear some tough decisions in this year's budget, if forecasts Labor is heading for a $20 billion deficit are correct.
Ms Gillard declined to comment on the analysis by the Australian arm of British bank Barclays suggesting the 2012/13 deficit will be double the size most economists expect.
But she told parliament: "In line with our fiscal strategy, we are asking the nation to take some tough decisions and to make some tough choices."
Ms Gillard also used question time to attack the opposition for voting against past "reasonable and legitimate" government savings measures, even though it railed about the need to get back to surplus.
"How anywhere can that possibly add up," she said.
Treasurer Wayne Swan was also asked by shadow treasurer Joe Hockey to guarantee the government won't exceed the $300 billion national debt ceiling in the May 14 budget.
Mr Hockey said Labor had changed the debt limit on numerous occasions.
"Wayne Swan and Labor are addicted to spending and addicted to debt," he said.
Mr Swan said the government's estimates would be updated in the budget.
"We will be within the cap," he added.
Barclays Australia chief economist Kieran Davies believes the government has been successful in containing spending and that its main problem is weak revenue.
While personal income tax and other forms of revenue had grown solidly - by eight and 14 per cent respectively - during 2012/13, company tax had likely declined 22 per cent.
This was due to lower mining sector revenues, following a sharp decline in commodity export prices and subdued growth in finance sector income.
Mr Davies said the government's dumped $1.1 billion budget surplus forecast for 2012/13 had always been too ambitious.
If it happened, it would be the largest turnaround in the budget bottom line in a single year since what he described as the "horror" budget of 1951/52.
In that year, spending cuts and tax increases were used to combat an inflation surge caused by a massive commodities boom.
"The forecast return to surplus this year always seemed to us driven by political rather than economic considerations," Mr Davies said.
Two major and costly government policies, the Gonski education reforms and the National Disability Insurance Scheme, are expected to be incorporated into the 2013/14 budget.
There's speculation the government may publish a longer run of forecasts than the usual five years forward estimates and including figures for the remainder of this current financial year.
If so, this would reflect the full impact of those two policies, and indicate how the government intended to pay for them.
The budget deficit for 2011/12 was $43.7 billion.
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