The Gillard government will not achieve its much-hyped budget surplus this financial year, according to a withering analysis to be published on Monday by Canberra's respected Deloitte Access Economics.
The report says the budget was back in deficit ''before the ink was dry'' on the midyear budget update delivered last month.
Finance Minister Penny Wong declared ''difficult choices'' faced the government on cuts to be made in May.
Ruling out rumours of an early election, she said savings would have to be found to pay for the national disability insurance scheme and the Gonski education plan.
''We will have more to say about those policies before the budget and I think what you will see is, as the Prime Minister said at the Press Club, more of the same, more difficult choices,'' she said. ''There will have to be difficult choices made to ensure that these very important policies, which are both economically as well as socially important, are delivered.''
Following the delivery of the midyear budget update, the government softened its language on achieving the surplus from its earlier unequivocal promise.
Asked to guarantee the surplus would be achieved, Senator Wong said the budget update showed the government was ''on track'' to return to surplus.
Opposition finance spokesman Andrew Robb said Senator Wong was ''clearly rattled'' in ''failing to guarantee'' the budget would return to surplus this year despite previous iron-clad promises.
In the update, known as the Midyear Economic and Fiscal Outlook, Treasurer Wayne Swan was forced to find a further $16.4 billion in savings over the forward estimates to return a slightly smaller than expected $1.1 billion surplus this financial year. The government cut the baby bonus from $5000 to $3000 for second and subsequent children from next year, and placed further restrictions on the private health insurance rebate.
Business was angered by the proposal to change company tax payments to monthly from quarterly, a change that will raise more than $8 billion over the four-year forward estimates.
The major obstacles to returning the budget to surplus are falling commodity prices and economic contraction in Asia.
''We think 'profit taxes' will disappoint and we see the mining tax providing the worst news,'' the Deloitte Access Economics analysis says.
''When China sneezes, the [mining tax] was always going to get pneumonia.''
The analysis says its forecast for revenue from mining and company taxes is $4.7 billion less in this financial year than in the MYEFO.
''Accordingly, and absent further policy changes, we see 2012-13's hoped-for surplus turning into a cash underlying deficit of $4.2 billion,'' it says.
''That is $5.3 billion worse than Treasury forecasts.
''We project 2013-14 to also see deficits - a cash underlying deficit of $5.1 billion.''
Former prime minister Kevin Rudd criticised the Greens on Sunday for seeking a renegotiation of the mining tax when they disagreed on how to price carbon emissions when he was in office.
It was a ''bit opportunistic'' of the Greens, he said.
''We would have had an earlier, more effective solution to critical challenges such as climate change had the Greens … backed an emissions trading scheme back when I was prime minister.
''We would have had avoided two years of rancorous debate and we could have got on with the rest of the agenda.''