Prime Minister Julia Gillard insists the Government is "determined" to deliver a budget surplus this year despite an independent economic forecaster predicting a $4.2 billion deficit.
In its mid-year budget assessment, Deloitte Access Economics believes the slowdown in China and falling commodity prices will undermine the Government's commitment of a $1.1 billion surplus this financial year.
But speaking to reporters on the sidelines of the Asia Europe Summit in Laos, Ms Gillard reaffirmed the Government's belief that there will be a surplus in 2012-13.
"We've just delivered MYEFO (Mid-year Economic and Fiscal Outlook) including big savings which just once again shows our determination to reach surplus," Ms Gillard said.
"As you see from the Mid-year Economic and Fiscal Outlook, we are determined to deliver a budget surplus, we stand by the forecasts and we're on track to deliver it." Instead of delivering $2 billion to the budget bottom line, the economic outlook predicts the mining tax will contribute just $520 million in 2012-13.
"The MRRT (Minerals Resource Rent Tax) will have a dog of a year - when China sneezes, the MRRT was always going to get pneumonia," the Deloitte Access Economics report states.
It emerged after the Government delivered its mid-year budget update, that the mining tax had raised no revenue in its first three months of operation.
Chris Richardson from Deloitte Access Economics says changing Chinese demand will affect growth projections for Australian national income.
"The slowdown in China and its impact on coal and iron ore prices is more important for the average Australian than I think they realise," Mr Richardson told ABC News Breakfast.
"Despite the decisions the other day, which included some genuinely good and tough decisions around the baby bonus and private health insurance, you'd still need to do more to get a surplus." The Government announced billions of dollars worth of savings and increased charges to get the budget back into surplus, but Mr Richardson has described some of the measures as "fig leaf territory".
Some of the measures included bringing forward the payment dates for company tax and the early collection of unclaimed superannuation and bank accounts.
Speaking from Mexico, Treasurer Wayne Swan rejected suggestions that the Deloitte Access Economics report painted a more realistic picture of the budget situation than Treasury's predictions.
"Access Economics doesn't always get it right," Mr Swan told AM.
According to Deloitte Access Economics, the budget is not expected to return to surplus until 2015-16 - well after the next election.
'We would do better' Opposition Leader Tony Abbott has used the latest economic predictions to attack the Government's handling of the nation's finances.
"This Government is never ever going to deliver even a dishonest surplus, let alone the honest surplus that the Australian public deserve," Mr Abbott told reporters in Canberra.
Asked whether he stood by his promise to deliver a surplus in each of the first three years of a Coalition government, Mr Abbott replied: "Yes, we will do better - significantly better - than the Government".
He says the Coalition would achieve that through spending cuts and productivity growth.
But the Opposition has been forced onto the back foot over Treasury analysis which reportedly shows three of the Coalition's tax policies would cost businesses $4.57 billion in their first full year of operation.
According to reports in Fairfax newspapers, Treasury has considered the Coalition's paid parental leave policy which is funded by a 1.5 per cent levy on big businesses, its decision to axe the instant asset write off for small businesses that was part of the carbon tax package, and its commitment to get rid of the loss "carry back" provisions that were introduced as part of the mining tax.
The Treasury analysis reportedly shows that businesses would lose $17.2 billion over the forward estimates once the changes were introduced.
But Mr Abbott has accused the Government of "misusing" the Treasury work.
doesn't take into account the fact that the carbon tax is gone, the mining tax is gone, and there'll be a modest company tax cut," he said.
"I'm saying that taxes on business will be less under the Coalition than under Labor." 'Serious questions' Liberal MP Jamie Briggs has described the Treasury costings as "dodgy" and says it is an "absolute disgrace" that they have been used in such a way.
"This is an agency which should be absolutely impartial in Australian politics, yet information which we haven't seen (and) we haven't requested is being splashed all over the front page of national newspapers," Mr Briggs told ABC News Online.
"I think there is serious questions for the Treasury to answer on why they are running around preparing so-called costings on policies which have not had requests for costings to be done.
"How would they know how the policies are meant to operate if they haven't asked?" Shadow treasurer Joe Hockey says he is "alarmed" the information has been leaked, and plans to write to the head of Treasury, Martin Parkinson, to express his concerns.
Ms Gillard has rejected suggestions the Treasury has become politicised and says the Coalition should apologise for slurring the work of public servants.
"Treasury, full of professional people, is doing its job for this Government the same way that Treasury used to do the job for the Howard government," Ms Gillard said.
"To suggest anything else is an insult to those hard-working professionals, and I trust in due course it will be apologised for." Dr Emerson said it was quite normal for Treasury officials to cost policies of all opposition parties once they have been announced.
"The reason Mr Abbott doesn't like Treasury costing these policies...
is that the last time he tried to do this at five seconds to midnight on a Wednesday night before the last election, it was revealed subsequently through Treasury costings that they had a $10.7 billion black hole," he told reporters in Canberra.
Asked whether the Government would now begin releasing Treasury costings of the Greens' policies, Dr Emerson said: "Well, I haven't had an opportunity to have a conversation about that".
Treasury has previously rejected the Coalition's request under freedom of information laws for access to costings of Greens' policies.