Wayne Swan is warning the unemployment rate is set to rise as some mining jobs disappear.
In his pre-Budget speech in Melbourne today, the Treasurer will also announce that the budget will stay in the red for longer than previously forecast''.
Swan says while the Australian jobless rate is lower than Europe, the economy here is in a transition stage which may include "bumps along the way, including in the labour market as resources projects enter a less intensive phase and the non-mining economy takes time to pick up''.
Despite previous Budgets predicting a return to surplus, Swan said this one would set out a "pathway to surplus'', The Australian reported.
It comes as speculation is mounting that the federal government will axe the fuel tax credit for mining companies as a way of raising an estimated $2 billion to fund the Government’s big ticket spending commitments.
This week Julia Gillard announced a $12bn hole in tax revenue forecasts this financial year.
As the mining boom slows, companies continue to reassess their expenditure, with labour often the first to go.
In the last few months alone we have seen job cuts by major mining companies including Rio Tinto, Newcrest, Whitehaven Coal, Griffin Coal, and Iluka.