The only way out for the [Kevin Rudd] government is to employ its "razor gangs" to cut spending, with Finance Minister Lindsay Tanner already stalking through government departments looking to save between $3 billion and $5 billion.

"People can't assume that the automatic revenue flows from what they have seen in the budget from the boom in recent years will flow through in this budget," he said. "These are challenging times for the international economy. We have the highest underlying inflation in 16 years domestically, and that certainly has an impact."

"A budget that hacks into government spending will show how keen he is for the new government's economic credentials to be taken seriously. By contrast, a budget that merely implements election commitments will reveal a preoccupation with short-term electoral considerations, notwithstanding the inevitable rhetoric about responsible economic management."