The federal treasurer has banked a boon to the government's coffers from higher commodity prices and more people paying tax, as the government readies to unveil what could be the first surplus budget in 15 years.
Treasurer Jim Chalmers said upward revisions to the budget have been saved to close the hole in the budget.
"Our much more responsible approach has meant that we have let most of that flow through to the bottom line so that we can get the debt trajectory a bit lower and pay less interest on it," Mr Chalmers said.
"My predecessors used to spend most of those upward revisions to revenue. I have saved most of it."
Mr Chalmers said the budget needed to be put on a more "sustainable footing" for the future.
Net debt has risen from about 15 per cent of gross domestic product to about a third in the past decade, according to the Australian Bureau of Statistics.
But successive federal governments have delivered budgets in the red every year since the global financial crisis.
The previous Coalition government announced in 2019 the budget was forecast to be "back in the black" within its term, but that ambition was abandoned in the face of the COVID-19 pandemic.
But Shadow Treasurer Angus Taylor said yesterday "a drover's dog could deliver a surplus" this year, thanks to the fiscal position the former government had passed on.
Mr Chalmers said Mr Taylor's comments insulted his own party.
"It's a pretty humiliating line of attack which seems to be that anybody could deliver a surplus except the Liberal Party in office," Mr Chalmers said.
"They are demanding of us something that they weren't able to achieve in office in nine attempts.
"[Shadow Finance Minister] Jane Hume and others were posing with 'back in black' mugs but went zero for nine."
$14.6 billion cost of living package won't fuel inflation, Treasurer says
Despite Mr Chalmers saying the federal government would pocket much of the additional revenue it was receiving, the treasurer flagged the budget would contain a $14.6 billion package of support to ease cost of living pressures.
"We recognise people are under the pump, and so what we have done is carefully calibrated and designed this budget so that it takes pressure off the cost of living rather than add to it," Mr Chalmers said.
"The Treasury advice is pretty clear, the impact on the inflation forecast is pretty clear."
The treasurer pointed to yesterday's announcement that 5.5 million households would receive a subsidy to help pay for rising electricity bills, which would also help to lower the measure of inflation, the consumer price index.
Senator Hume said the federal government should be reining in spending to bring down inflation.
"The only way that this budget is a genuine cost of living budget is if Labor reins in its spending and delivers a plan to tackle inflation," Senator Hume said.
"This isn't delivering long-term, sustainable cost of living relief because the only way you can do that is to bring inflation down.
"Otherwise you're simply spending money that is going to get eroded away."
Senator Hume said the government had committed to saving 90 per cent of any upward revisions at the last budget, but only 40 per cent for this budget.
Mr Chalmers said the federal government had found $40 billion worth of savings between this budget and the one he delivered in October.
