Labor MPs 'hung out to dry' by backflip on surplus

LABOR MPs feel they were "hung out to dry" by the Treasurer's announcement the government may not deliver a budget surplus.

LABOR MPs -- including some ministers -- feel they were "hung out to dry" by the Treasurer's announcement the government may not deliver a budget surplus.

Backbenchers were embarrassingly caught out by Wayne Swan's announcement on Friday and said that as early as the day before they'd been given "talking points" to use when defending the drive for a surplus to the media.

Chief government whip Joel Fitzgibbon broke ranks weeks ago, declaring on SkyNews that the Gillard government should abandon its push for a surplus.

Julia Gillard was quick to reject the suggestion and told ABC Radio any decision on the surplus target would be make in consultation with cabinet.

"Mr Fitzgibbon is entitled to his views but these decisions will be made by me, the Treasurer, the Finance Minister, and the cabinet," she said.

"We have released the most recent economic forecast. We don't jump at people's figments of imagination here. We deal with the facts. We deal with the forecasts and I refer you to what we said in that mid-year statement."

At that stage it seems the government had received the data containing the bad news on the economy -- but it was still being processed by the experts.

Even ministers appeared wrong-footed when Mr Swan made his announcement on Thursday -- just a week after Ms Gillard delivered her reassurances.

On the Sunday before it, leader of the house Anthony Albanese, on Sky's Australian Agenda, was sticking firmly to the party line that the government's target was a surplus.

Mr Albanese certainly appeared to have no inkling that the change was in the air and seemed to have been given no opportunity to soften his confident delivery.

Mr Swan explained later that he had no choice but to back away from the surplus guarantee.

He said that what changed was the revenue numbers that came through from the tax office.

It took some days for Treasury to work through them and give the government formal advice.

"And we have been working our way through that data and our conclusion is that we lost in four months the equivalent of what we'd written down at the mid-year update for the whole year. So that was a huge whack to revenue."

Mr Swan on Friday said he had discussed the issue with Ms Gillard before she went on leave. "I discussed it with a number of other colleagues and I made the announcement yesterday.

"But what we've had here is a huge revenue whack if you like, out of the blue, which has made it very hard to get to surplus in 2012-13," Mr Swan said.

"And if we were to get the surplus in 2012-13, we'd have to take cuts to the budget which would impact on jobs and growth and as a Labor government our first priority is always jobs and growth."