Prime Minister Julia Gillard
Prime Minister Julia Gillard Inga Williams

Labor pushes ahead with Gonski despite $12 billion shortfall

PRIME Minister Julia Gillard is today expected to push on with expensive education and disability scheme reforms despite Labor uncovering a $12 billion shortfall in revenue.

The government had been promising to deliver a surplus in the May 14 budget but that has been blown out of the water given the gaping hole in revenue.

All the major news sites reported Ms Gillard will give a speech today explaining that by the end of this financial year, revenue will be down $12 billion since the October budget update.

Ms Gillard is expected to blame lower profits and tax revenue on the fact that "prices for what Australian companies sell overseas are lower, imports are cheaper, local competition is fierce".

But the ABC reports she will promise the Government will use the budget to push on with the Gonski school funding plan and the National Disability Insurance Scheme.

Earlier this month Treasurer Wayne Swan revealed the budget has taken a $7.5 billion hit since the end of October.

The Treasurer blamed the effects of the high Australian dollar for the revenue writedown, and said the Government was focused on protecting jobs.

The Opposition is expected to make much of the latest shortfalls, saying the government is simply spending too much.

On the weekend, The Australian newspaper was reporting on plans for the government to spend billions more on defence.

In last year's budget, the government cut defence spending to about 1.56 per cent of GDP -- its lowest level since 1938.

New acquisitions likely to be included in a defence white paper include a fourth Air Warfare Destroyer, up to another 24 Super Hornets, and a narrowing of the available design options for the navy's promised 12 submarines, the Australian reported today.