Mr Abbott said the changes were too expensive in the current budget context and that many things could be done to improve education without spending "vast dollops of new money".

“In the absence of anything which is clearly dramatically, and affordably dramatically better, I think we are better fine-tuning the existing system,” Mr Abbott told Sky News on Sunday morning.

Mr Abbott's comments came as Treasurer Wayne Swan revealed budget revenues had taken a $7.5 billion hit due to changes in the terms of trade and the continuing high Australian dollar.

"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 the ABC on Sunday.

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

Mr Abbott said the state of the budget meant the Coalition would announce policies that cost less than Labor's during the election campaign.

However Mr Abbott rejected the suggestion his would be an "austerity government".

“That is not a term that will escape my lips because in the end I want the Australian people to have much better services than they have now,” Mr Abbott said.

“But I do need to be truthful and realistic. In the short term at least we do understand that government is spending too much and the government will have to spend less.”

Mr Abbott also said he was working with the Department of Finance to cut the pay of his director of policy, Mark Roberts, who last week threatened to "cut the throat" of the not-for-profit Australian Indigenous Education Foundation, by cancelling its funding, if the Coalition were elected in September.

Mr Abbott said he did not believe Dr Roberts deserved to be sacked but that he had "paid a price" for his "unacceptable" behaviour.

Mr Abbott also repeated his statements from last week when he said he was prepared to consider giving Coalition MPs a conscience vote on the issue of gay marriage after the federal election.