Treasurer Joe Hockey says trying to make up lost revenue through new or higher taxes would "unquestionably harm" the Australian economy.
Mr Hockey on Monday handed down his mid-year budget review, which showed the deficit has blown out to $40.4 billion for 2014/15 from the $29.8 billion predicted in the May budget.
There are also larger deficits over the next three years.
It says a 30 per cent collapse in the iron ore price and weaker-than-expected wage growth has resulted in tax receipts being revised down by $31.6 billion.
"To try and recover these falling revenues now, through new or higher taxes would unquestionably harm the Australian economy," Mr Hockey told reporters in Canberra.
The budget review says a surplus of 0.8 per cent of GDP is projected for 2019/20.
Mr Hockey emphasised that while a surplus was possible on current settings, he could not say if he was confident about achieving that.
"I have been at pains not to do that having witnessed the ugly episode of my political opponents in trying to do that," he said.
"Maybe we can do better, maybe we can't."
But he said if the government did not get back to living within its means, Australians would be saddled with more debt and a weaker economy.
The coalition was the only party that had a plan on the table to get the budget back to surplus, Mr Hockey said.
"We are rolling out that plan, the fiscal consolidation is continuing, it is credible," he said.
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