The Reserve Bank may believe it's okay for the budget to slip into deficit in the current economic climate, but Opposition Leader Malcolm Turnbull says it would be a sign of failure.
Voters appear to have the same concern.
Prime Minister Kevin Rudd, speaking to reporters in Lima where he was attending a meeting of Asia-Pacific leaders, was firm in his commitment to a budget surplus.
"Under the current circumstances, we don't see the need to borrow for the purposes of government spending and investment," Mr Rudd said.
"Circumstances rapidly change, they have been changing, we will level with the Australian people, as we are now, based on every piece of information we've got."
Mr Turnbull said he was concerned the government was trying to get a "leave pass" to run the budget into deficit.
Comments by RBA governor Glenn Stevens last week appeared to give the nod to a further loosening in fiscal policy even if it involved "prudent" borrowing.
A new report released by the well-regarded Access Economics on Monday predicted the budget would fall into a $1 billion deficit in the 2009-10 financial year as a result of the global financial crisis pricking the resources boom bubble.
It also expects the government will fall short of its predicted $5.4 billion budget surplus for 2008-09 by around $500 million.
Mr Turnbull told the National Press Club that a budget deficit would be an admission that Mr Rudd could not maintain a strong economy and could not live within his means.
"Given the strong public finances Mr Rudd has inherited, and the growth forecasts we're relying on for next year, Australians rightly regard the prospect of a deficit budget next year as a failure in economic management," he said.
The latest Newspoll, published in The Australian on Monday, reveals 56 per cent of those polled would be concerned if the government took the budget into deficit.
But Labor still retains its electoral support 12 months into its first term of power, holding a two-party preferred lead of 10 per cent over the coalition.
Access is forecasting a $1.16 billion deficit for 2009-10 compared with the government's projected $3.6 billion surplus, which has already been savagely revised down from an original forecast of $19.7 billion.
"We are headed for deficit pretty fast, China is now slowing, Australia is now in trouble," Access economist Chris Richardson told ABC Radio.
"Even if Australia's economy gets no worse and the government doesn't spend another cent into this downturn, we're in deficit by a billion dollars next financial year, four billion dollars a year in the years after that."
Opposition treasury spokeswoman Julie Bishop said that taking the budget into deficit may prove addictive, because Labor governments were fixed on deficits.
"It's like a drug - you can't get them off the debt," she told reporters.
But Mr Richardson argues the previous Howard government was guilty of being a spending junkie.
"We pissed the good years up against the wall in the usual ill-disciplined blow out of tax cuts and big spending during the boom," he said in the latest Access Economics Budget Monitor.