AUSTRALIA FACING "DIFFICULT TIMES": TREASURER.

SYDNEY, Feb 1 Asia Pulse - Federal treasurer Wayne Swan says the nation is facing "difficult times", and his government's first budget will be framed to tackle inflation.

The budget, to unveiled in May, would contain initiatives aimed at winding down the record levels of inflation seen in recent months, Mr Swan told an audience in Sydney last night.

"It will be designed to bare down in inflation because inflation has hit a 16-year-high in the months of October, November and December last year," the treasurer said.

"... During the recent (election) campaign, the prime minister and I described ourselves as economic conservatives.

"We're economic conservatives because we do know that to meet the big challenges of the future we do need a combination of tight fiscal discipline and foresight.

"That's what this forthcoming budget will be about."

Mr Swan also said in the eight weeks since his Labor party had been in government, one thing had become "very clear".