PM cites measured budget as business frets

Prime Minister Tony Abbott has changed his view of what the May budget will look like, but only slightly.

After predicting last week that it would be a "dull affair", he now prefers the term "measured" - hardly a description to enthuse concerned business groups.

They are worried the government is going soft on reform after spending nearly 12 torturous months trying to sell its first budget.

Two members of Mr Abbott's commission of audit agree.

Commission chairman Tony Shepherd says the government has to be consistent and persistent on difficult savings to continue the work started in the audit and set out in the intergenerational reports.

Amanda Vanstone, a minister in the Howard government, is concerned Australians are becoming "dangerously complacent" with a she'll-be-right-mate attitude.

"I worry about what will happen to our economy if we have another crisis like the GFC and we would have to borrow large amounts," she said.

Asked to respond to their worries, Mr Abbott said the budget would be "measured, responsible and fair".

Opposition Leader Bill Shorten took the advice to mean the government was being told to "get the axe out, go harder".

But Mr Abbott said that was just scaremongering, accusing Labor of sabotaging the solution to the budget problem it had created in government.

As Treasurer Joe Hockey plans to kick-start his tax review next week, a new row emerged over distribution of GST revenue to the states and territories.

The Commonwealth Grants Commission, which decides what each state gets, has reportedly circulated options that would allow greater distribution flexibility.

Western Australia has long argued for a greater proportion of GST, more so now it has been hit by a steep drop in the iron ore price.

One option reported is the use of a "lagged five-year moving average" for iron ore prices rather than a three-year average.

It would provide WA with $547 million more from the GST carve-up for a state that receives just 35c in every dollar of GST it pays now.

Labor MP Alannah MacTiernan said NSW and Victoria would go "completely feral" if they were in the same position.

Mr Abbott said the commission's options would be dealt with "in the fullness of time", dismissing claims NSW would lose $200 million under the option.

"It's all just scare," he said of Labor warnings to NSW voters two days out from a state election.