The federal budget's bottom line is running slightly better than predicted three-quarters of the way through this financial year.
The underlying cash deficit of $39.9 billion is about $800 million less than forecast in December's mid-year review, Finance Minister Mathias Cormann revealed on Friday.
Slightly less revenue was more than offset by lower cash payments.
The government is putting the final touches on its 2016/17 budget which Treasurer Scott Morrison will deliver on May 3.
Prime Minister Malcolm Turnbull has warned it won't please everyone as it focuses on supporting enterprise, investment and jobs.
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"We've got to get the budget back into balance," he told a small business roadshow in his own electorate of Wentworth on Friday in answer to a question about Australia's high rate company tax when compared to the UK.
"So it won't be to everybody's satisfaction, naturally, because it's a balancing exercise."
But Mr Turnbull insisted the budget would be seen as prudent in a fiscal management sense.
In plain English, that means "living within our means".
"We need strong economic growth in order to remain a prosperous, first-world, high-wage, generous social welfare net economy," the prime minister said.
Earlier cabinet minister Christopher Pyne said a budget surplus would be achieved over a "sensible" timeframe.
"We're not going to slam the handbrakes on by just stopping government spending," he said.
