Finance Minister Mathias Cormann says the government is having to juggle spending to fund the additional costs of tighter national security.
But he reaffirmed the government won't be trying to compensate for loss of revenue from falling iron ore prices with savage cuts.
"It means reprioritising the expenditure across the whole of the government," Senator Cormann told ABC television.
"We won't be chasing down the falling revenue."
It will mean wherever there has been a need to spend money on higher priorities, that will be offset by savings in areas that are a lower priority, he said.
Treasurer Joe Hockey is due to hand down his budget update in the next couple of weeks.
Economists expect the budget will show larger deficits across the four-year estimates than was predicted in May.
The budget was expected to be close to balanced in 2017/18.
"We will be working to achieve a balanced budget as soon as possible," Senator Cormann said.
"We are very confident that we will be achieving a surplus more quickly than the Labor Party would in government."
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