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The Treasurer is set to lay out a "pretty standard bread-and-butter" budget, but warned challenges would choke spending.
Treasurer Jim Chalmers on Tuesday revealed the final budget outcome next week would see a near $50 billion improvement in the deficit, but warned oversights from the previous government were creating spending pressures.
The outcome will coincide with a cut to the fuel excise on September 28, however the Treasurer insisted motorists would not feel the full brunt of the hike.
Labor also revealed a probe into the rising cost of childcare in the upcoming October budget, and is set to come at a cost to the taxpayer of $10.8 million.
Dr Chalmers urged Australians to view the October budget as "the beginning, not the end" of national conversation on the economy.
Improvements in the budget position has been fuelled by significantly more tax revenue brought in mostly from higher commodity prices. Lower than expected budget payments are also expected to assist the bottom line.
"This substantial improvement is welcome, but the bulk of it is driven by temporary factors," Dr Chalmers said.
"On the revenue side, commodity prices remained higher for longer than expected over 2022, but they've already begun to drop.
"[I] really encourage you not to see the improvement in 21-22 as an ongoing improvement. On the contrary, some of the improvements in the budget last year create additional issues for us and for the expenditure review committee."
The Australian Competition and Consumer Commission will head Labor's 12 month childcare review.
Education Minister Jason Clare is poised to introduce the government's childcare reforms to the House of Representatives next week, which will seek to make care cheaper for 96 per cent of the population.
"At the moment about 60 per cent of mothers of children under six who work, do part-time hours," Mr Clare said.
"A lot of Australians would want to work more, but if they did all of that pay would be gobbled up by the childcare bill. It means it's not worth it."
On the budget, Dr Chalmers who was accompanied by Finance Minister Katy Gallagher, both outlined spending headwinds over the forward estimates presented major challenges to the budget.
Minister Gallagher said the previous government provided no provisions for ongoing programs.
"There were decisions taken where ongoing programs were not funded in an ongoing sense and that is creating pressure in those forward estimate years as well," Senator Gallagher said.
"We're telling you that there are enormous pressures and the budget is in structural deficit."
Dr Chalmers also noted these pressures were squeezing the economy and falling commodity prices would likely see a lowering in incoming tax revenue.
"I encourage you to see this budget ... as the beginning, not the end, of a big national conversation about the structural position of the budget," he said.
Motorists are set for a hip-pocket hit at the end of the month, when the removal of the fuel excise cut is set to see petrol prices spike.
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Responding to soaring cost-of-living pressures weeks before the May federal election, the Coalition halved taxes paid on fuel by 22c per litre.
But with the relief set to expire on September 28, Dr Chalmers insisted the full cost would not flow on to motorists at the bowser.
"We're under no illusions that this will be difficult for people. It's a difficult decision for us to take as well, but we put a premium on responsible budget management," he said.
"We need to remember that fuel prices in most parts of the country at the moment are now around 50c a litre below the peak recorded in July."
Coalition spokesman for Treasury Angus Taylor claimed the Treasurer should be acknowledging the budget has improved.
"What we saw from Labor was a $50 billion windfall, a huge improvement in the budget position based on a very, very strong economy," Mr Taylor said.
"But we saw no plan other than spending Australians' money."
Reserve Bank minutes also pointed to a number headwinds which were presenting as ongoing risks to economy.
The central bank noted both the US Federal Reserve and the European Central Bank were flagging higher inflation globally, which was more persistent than first thought.
However, the RBA believes inflation within Australia will begin easing next year and return to the 2 to 3 per cent target band by 2024.
"The board expects to increase interest rates further over the months ahead, but it is not on a pre-set path given the uncertainties surrounding the outlook for inflation and growth," the RBA said in its minutes.
"The Board is seeking to return inflation to target while keeping the economy on an even keel. The path to achieving this balance remains a narrow one and clouded in uncertainty."
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Finn McHugh
