The mining investment boom has peaked and the other parts of the economy are taking a while to start growing again.
Housing construction is looking solid and retail spending is going through a bit of a rough patch after a spurt and the end of 2013.
Mining and resources exports are expected to come on strongly but prices for those exports won't be anywhere near the 150-year highs hit in 2011.
"Coal prices are expected to remain weak, while iron prices are expected to ease further in line with growing world supply," Tuesday's budget papers said.
The Treasury forecasts economic growth to fall to 2.5 per cent in 2014/15, from 2.75 per cent this financial year.
After that, it is expected to rise to three per cent in 2015/16 and then hit 3.5 per cent in the following two years.
The government says record low interest rates have helped the housing sector improve since December.
"Household consumption and retail trades incomes have improved recently, consistent with gains in household wealth," its budget papers said.
"This is partly offset by weaker business investment intentions particularly for the non-resources sector."
The one disappointing part of the economy has been the unemployment rate.
It hit six per cent in January and February and then fell to 5.8 per cent in March and April.
When the latest official figures were released last Thursday, many economists thought the unemployment rate had peaked.
Treasury doesn't agree.
It predicts the unemployment rate will rise to 6.25 per cent in the next two years before dropping to six per cent in 2016/17 and 5.75 per cent the year after.
"Mining and resources represent about 10 per cent of our economy but two per cent of our employment," Treasurer Joe Hockey said in his budget speech.
"It has, however, done much of the heavy lifting over the decade."
To encourage more investment in the non-mining parts of the economy the government is increasing spending on roads, railways airports, and funding for medical research.
"We need to fire up the rest of the economy," Mr Hockey said.
The good news is that inflation won't be a hindrance to keeping interest rates low.
Treasury expects inflation to stay within the Reserve Bank of Australia's two-to-three per cent target band over the next few years.
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