New figures reveal cut to federal government debt

The government expects to save about $80 billion in interest costs over the decade to 2032/33.

Debt as a share of gross domestic product is also expected to peak lower compared with mid-year economic and fiscal outlook forecasts.

Dr Chalmers said Labor was getting the budget back in better nick.

"Debt will peak significantly lower than was projected at the time of the election thanks to our responsible economic management," he said.

"These are some of the dividends of our responsible economic management."

The treasurer said the government's third budget was not the time for "scorched-earth austerity".

But neither would it be "some kind of free-for-all" of spending.

Dr Chalmers suggested a second consecutive surplus was in reach.

Tax revenue is expected to be $25 billion higher over the next four years.