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.
"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.
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