As Australia grapples with a slowing resources sector exacerbated by plummeting commodity prices, analysts say the Australian budget due Tuesday will be about propping up sub-par economic growth rather than the traditional fiscal discipline.
Iron ore pain
Falling commodity prices and slowing income growth are expected to strip off 21 billion ($16.6 billion) Australian dollars from revenues, according to a May 6 Goldman Sachs report.
Iron ore is such a central part of the Australian government's revenue that "the key revision to economic parameters is likely to be a downward revision to iron ore prices and the terms of trade," ANZ said in its May 4 budget preview report.
Treasurer Joe Hockey recently suggested the government's forecast for iron ore prices may be slashed to $35 a metric ton from $60 per metric ton, according to the ANZ note. Iron ore futures were quoted at $62.50 on Tuesday.
Fiscal repair shelved
Revenues may be falling but voters don't like spending cuts, and as a result, the government will be forced to shelve any plans to get any closer to balancing the budget.
"The focus will change, and fiscal reform will become a medium term goal – the priority will be helping the economy to grow," ANZ senior economist Jo Masters told CNBC by phone.
ANZ sees the budget deficit narrowing to 0.8 percent of gross domestic product (GDP) by 2017-2018.
"No political party could be realistically expected to stem the hemorrhaging in tax revenue that occurs in sharply falling terms of trade and the corresponding weak nominal growth environment," said Goldman in the note.