Budget deficit expected to be halved in Frydenberg's first update

Treasurer Josh Frydenberg's first budget update is expected to show Australia will have its lowest deficit since 2007/08 in the current financial year.

Treasurer Josh Frydenberg says the coalition is on track to deliver a surplus in 2019/20. (AAP)

Australia will have its lowest budget deficit in more than a decade in the 2018/19 financial year, a major budget statement is expected to show.

Treasurer Josh Frydenberg's first budget update, to be handed down on Monday, will also show the coalition is on track to deliver a surplus in 2019/20.

The mid-year economic and fiscal outlook will outline the projected size of the surplus, the government's revised budget projections and account for the costs of recent policy announcements.

That includes the $552.9 billion boost to aged care funding it announced on Sunday.

The coalition's May budget had forecast a $14.4 billion deficit for 2018/19, but higher-than-expected tax revenues and fewer government payments mean the deficit for the year is expected to be half that size.

The windfall, helped by jobs growth and good global conditions, would bring the figure to its lowest level since 2007/08.

The achievement is a product of "disciplined budget management", Mr Frydenberg said.

It will be Treasurer Josh Frydenberg's first budget update Source: AAP

"Our economic fundamentals are strong with the unemployment rate down to five per cent, economic growth faster than all G7 nations except the United States and our AAA credit rating reaffirmed," he said in a statement on Monday.

"A strong economy means we can deliver tax relief for individuals as well as small and family businesses.

"It also means we can deliver the essential services like health care, disability support, aged care and schools which Australians rely on."

Labor has been trying to play down the likely budget improvements, suggesting they are a product of good luck and drawing attention to the nation's debt.

"They have got billions rolling through the door courtesy of the global economy, and the budget is improving despite their efforts and not because of them," Labor spokesman Jim Chalmers told the ABC News channel on Sunday.

"Despite billions of dollars rolling through the door, we still have skyrocketing debt, which is double what the Liberals inherited when they came to office in 2013."