Australia faces a decade of budget deficits with the annual total set to pass $60 billion in 2023 unless governments take tough action to "share the pain", an expert panel has warned.

The Grattan Institute's assessment comes as Treasurer Wayne Swan confirms the budget has taken a $7.5 billion hit since the midyear update in October.

Attractive solutions won't buy that much money: John Daley, the Grattan Institute chief executive.

He told the ABC from Washington: "We have seen the terms of trade come down but the dollar didn't move. That's caused a hit, if you like a sledgehammer, to revenues in the budget since the midyear update of something like $7.5 billion. And of course the impact won't just be in this financial year. It will also be across the forward estimates."

The institute says that while notionally on track to surplus now, the combined state and federal budget deficits should reach 4 per cent of gross domestic product by 2023, which is about $60 billion in today's dollars and would be about $100 billion in 10 years' time.