THE high dollar and lower terms of trade have resulted in a $7.5 billion sledgehammer hit to revenue in the federal budget, Treasurer Wayne Swan said.

Mr Swan said from late last year and early this year there has been a unique economic event - lower terms of trade but a dollar that didn't budge.



This had a "dramatic impact" on the profitability of companies and prices in the economy.



"As a consequence of that, that's caused a hit, like a sledgehammer to revenues in the budget, since the mid-year update of something like $7.5 billion," Mr Swan told ABC TV today.



"Of course the impact won't just be to this financial year but it will also be across the forward estimates."



Mr Swan said the next budget was being delivered in "very challenging circumstances".



Mr Swan reiterated his focus on protecting jobs and supporting growth in the upcoming budget.



He said it would be a "tragic mistake" to wield savage cuts to return to surplus earlier, which was the approach endorsed by the opposition.



Mr Swan accused the opposition of hiding a $70 billion crater in their budget bottom line.



"What they want to do is take the (Queensland Premier) Campbell Newman approach and hide their future plans for spending cuts behind an audit commission," he said.



"People have seen how that's played out in Queensland and have wised up."



Mr Swan is in Washington this week for the spring round of top level Group of G20 industrialised nations and International Monetary Fund meetings.



He said the global growth outlook was looking "fragile".



"Conditions in some of the major advanced economies are very challenging," Mr Swan said, slamming the application of "mindless austerity" in Europe.



"You can't cut your way to growth," he said.