Gillard says budget will share burden

PRIME Minister Julia Gillard says the burden of the government's fiscal woes will be shared across the Australian community when the budget is handed down.

Ms Gillard says while no one group will be singled out, cuts will be framed around Labor values and protecting the government's main schools funding and disability care programs.

The key challenge is huge, projected 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.

"Therefore, I have expressly determined we need to have every reasonable option on the table to meet the needs of the times, even options previously taken off the table," she told a function in Canberra on Monday.

"The nation and the government must have maximum flexibility to deal with these complex - and rapidly changing - events."

Ms Gillard did not discuss specific measures, but did confirm the government had no intention of making changes to the GST.

The budget will be handed down by Treasurer Wayne Swan on May 14. Mr Swan attended Ms Gillard's speech to the Per Capita forum, 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 says Labor is committed to its medium-term strategy to deliver budget surpluses on average over the course of the economy cycle.

"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.

While this has helped push up the Australia dollar, the strong currency is exacting a toll by squeezing the profits of firms.

Even though Australia is creating more jobs and exporting more goods and services, prices are growing at a slower rate and affecting gross domestic product (GDP) 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."

In the future, new spending must be matched with savings and Ms Gillard says the government has some serious decisions to make and announce in the coming two weeks.

"I find these decisions both urgent and grave," she said.

But Labor will not cut the budget to the bone and the burden of its decision will be shared across the community.

Asked if this will affect people already financially disadvantaged, Mr Gillard says the government will take a "Labor approach" to burden-sharing.

"People come with different capacities to the task," she said.

"If we look right across our society and ask everyone to make some contribution, then it lightens the load for everyone."

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