Treasurer and Acting Prime Minister Wayne Swan has announced the government is unlikely to deliver on its surplus budget promise this financial year.
Mr Swan today announced the government would abandon the pledge as this is the most fiscally responsible course of action.
"We're a Labor government, and nothing is more important to us than jobs and job security," he said in a Canberra press conference this afternoon.
The surplus has been in doubt for some time due to slowing revenues and a contracting Chinese economy.
The federal Labor government has doggedly stuck to its surplus pledge as economists expressed increasing doubts about their ability to deliver one, while also promising big ticket spending items.
The announcement will be a huge blow to the government, which has staked its economic credentials on its ability to deliver a surplus on time.
More to come.