POLL: PM eyes September 7 election

– AUSTRALIA: No longer the 'lucky country'?

Kevin Rudd plans to visit the Governor-General on Sunday or Monday to seek approval for an election on September 7.

Sources say the Prime Minister has settled on the date for what promises to be one of Australia's most intense political contests.

The official start to the election campaign follows the government's mini-budget designed to position the government to meet changing economic circumstances.

Softening conditions could force an extra 70,000 Australians out of the workforce, as growth slows and Commonwealth revenues collapse by $33.3 billion over the next four years.

The worsening picture has shredded Labor's budget forecasts made only 10 weeks ago.

Mr Rudd holds a solid personal lead over Opposition Leader Tony Abbott as preferred prime minister, but Labor and the Coalition are evenly poised on 50 per cent each in recent national opinion polls.

In a sign of its vulnerability to attack on education, the Coalition backflipped on Friday, moving to match dollar-for-dollar Labor's Gonski education funding plan, vowing that no school would be worse off no matter which side was elected.

According to Friday's mini-budget, unemployment is expected to hit 6.25 per cent in 2013-14 and 2014-15.

Falling terms of trade and declining tax revenues have lifted this year's projected deficit $12 billion to $30.1 billion, despite $17.4 billion in spending cuts.

A promised budget balance in 2015-16 has gone by the wayside despite Treasurer Chris Bowen and Finance Minister Penny Wong sticking with a promised surplus in 2016-17.

But to get there, they plan to send the economy deeper into the red first with projected deficits of $24 billion in 2014-15 and $5 billion in 2015-16.

Mr Bowen laid much of the blame on a slowing Chinese economy.

But opposition Treasury spokesman Joe Hockey said Labor's economic management was ''chaotic'' and its budget was in ''free-fall''.

Fellow Coalition frontbencher Jamie Briggs attacked Labor's economic record via the micro-blog Twitter. ''Rudd/Bowen combo delivers a bigger deficit, higher debt, lower growth, higher taxes and higher unemployment, and we thought Swanny was bad,'' he tweeted.

Mr Hockey said nearly 800,000 Australians were likely to be jobless in coming months.

A jump in tobacco excise is the main revenue measure, reaping almost $6 billion over the next four years, but there were other savings outlined in the mini-budget, including a near doubling of the public sector efficiency dividend from 1.25 per cent to 2.25 per cent, requiring public servants to again do more with less.

Other moves to save money include a lower take-up of disability support pensions and of drugs listed on the Pharmaceutical Benefits Scheme, with that alone securing around $2 billion over the forward estimates period. Another $582 million has been garnered from gaining access to small inactive superannuation accounts.

Revealed is the expected cost of Mr Rudd's Papua New Guinea solution, which the budget papers show will cost $1.1 billion over four years, with operating costs of $175 million in 2013-14.

That is to be ''partially funded from a $423 million reduction in the operating costs of the onshore detention network (a net impact of $632 million) over the four years to 2016-17''.

Another $194 million has been earmarked for capital costs to expand the rudimentary Manus Island facilities.

The mini-budget also reveals the cost of PNG's compliance with Canberra on asylum seekers, with an extra $420 million in aid to flow to Port Moresby over four years.

That will be offset by a further slowing in the growth of the broader foreign aid budget, bringing a rebuke from Greens leader Christine Milne.

''If the Australian government is going to bribe PNG … they should have found that money additional outside the aid budget,'' she said.

Mr Bowen defended his department's forecasting record, saying: ''The world economy is more volatile than it's been for a long time and that makes forecasting more difficult.''

Mr Bowen said the measures outlined marked a contrast with the policies of the Coalition, which was refusing to explain its policies and costings and yet proposing an audit of the budget after the election if it wins.

Prime Minister Kevin Rudd after the swearing-in ceremony at Government House with Governor-General Quentin Bryce, in Canberra on July 1, 2013. Picture: Alex Ellinghausen

Prime Minister Kevin Rudd after the swearing-in ceremony at Government House with Governor-General Quentin Bryce, in Canberra on July 1, 2013. Picture: Alex Ellinghausen