The announcement yesterday that we can now expect a deficit comes as no surprise.

This is an embarrassing back-flip for Mr Swan, who repeatedly assured the Australian people the government was on track and that its economic prowess would deliver the surplus he had made so much of repeatedly since Labor secured its second term.

Mr Swan, it would appear, believed his own spin on how well Australia was performing in a struggling world economy.

He either failed to take into account, or chose not to, the sluggish performance of the Australian economy.

Much of it has been in the doldrums for some time, and apart for some highs such as increasing new car sales and and an ongoing overseas appetite for our mining resources, the rest of the economy has been showing significant stress.

The high Australian dollar has hit the manufacturing and agricultural sectors hard.

With this backdrop it was obvious government revenue would fall short, meaning Mr Swan would have to axe spending to get the result he wanted. But even with some modest cuts it was apparent the revenue shortfall was going to eclipse the budget savings.

Mr Swan made a major tactical mistake by making so much of his surplus commitment.

Deficits, when they are needed are not bad, providing the numbers remain in reach. And a surplus does not necessarily equate to sound economic management in some environments.

Government policy should concentrate on waking the economy from its current slumber and delivering some real economic growth outside the mining sector.

In this environment revenues will increase and the government will be in a much better position to reduce our national debt and set money aside for the future.