TREASURY has hinted at the scale of the task facing the government at next week's budget update, saying since the budget in May the spot prices of Australia's three main exports have fallen 15 to 35 per cent.
The forecasts in the budget were built around a slide in Australia's terms of trade of 5.75 per cent.
Treasury chief economist David Gruen said iron ore, thermal coal and coking coal were the ''really big bulk commodities that have a material impact on Australia's terms of trade''.
Although Treasury's assessment of the real economy was ''broadly unchanged'', the falling terms of trade would hurt the ''nominal'' economy and harm revenue.
Resource investment would peak lower and sooner than had been expected, ''probably in the next financial year rather than this one''. But it would remain high for the rest of the decade.
''Beyond that will be a ramping up of export volumes. So, it's a more multifaceted story than simply saying there was a boom and the boom is over,'' Dr Gruen said. ''It is going through various phases, but there's plenty to go.''
August figures released as the Treasury economist spoke showed a seasonally adjusted slide in imports of 3 per cent, led by an 8 per cent drop in imports of capital goods. The Bureau of Statistics said the contraction was driven by an 11 per cent slide in machinery and industrial equipment imports.
Iron ore and coal producers BHP Billiton, Rio Tinto and Xstrata will tell the government on Monday how much minerals resource rent tax they expect to pay per quarter, although their estimates will not be made public until December.
The May budget projected that the tax would raise a net $3 billion in its first year.
A spokesman for BHP told BusinessDay the world had ''changed substantially'' since then. A spokesman for Xstrata said it would pay less than had been expected.
''It is a profits-based tax, so the significant challenges facing Australia's coal industry - including low prices, high input costs and the continued strength of the Australian dollar - will be reflected in the initial revenues,'' he said.
Asked to defend the government's determination to return the budget to surplus even if revenues declined, Dr Gruen said Australia was different from other economies that would be hurt by a return to surplus.
''The crucial difference is the Reserve Bank retains considerable room to cut interest rates if it deems it necessary, whereas the other advanced economies - the US, the eurozone, Britain or Japan - are all very close to the zero bound on interest rates.
''In the environment we are in it makes sense for monetary policy to be the first line of defence. If we have a worse outcome than we currently anticipate, at some point it would make sense to have fiscal stimulus. But that is not the world we are in at the moment. Growth in our region remains robust, although not as robust as we previously expected.''