The federal treasurer has unveiled the mid-year budget update.
The Australian economy is heading in the right direction, Treasurer Scott Morrison insists.
Mr Morrison on Tuesday released the mid-year economic and fiscal outlook which revealed a 2015/16 budget deficit of $37.4 billion, up from the $35.1 billion forecast in May.
"Strengthening our nation's finances is a core component of our national plan for jobs and growth," Mr Morrison told reporters in Perth.
Mr Morrison said government spending as a share of GDP had been pared back to 25.9 per cent and will fall to 25.3 per cent.
All policy decisions taken since the budget, including the cost of Senate negotiations, had been more than offset by the savings measures in MYEFO by almost $400 million.
"These results better the average of market expectations that have been reported over the last few days and are the result of the government focusing on what it can control rather than on the things it can't," the treasurer said.
"We have adopted a measured approach that avoids extreme responses that would place a handbrake on household consumption and business investment growth and unnecessarily threaten the fresh new momentum emerging in our transitioning economy."
Mr Morrison likened the journey back to surplus to a family holiday.
"The family saying are we there yet, are we there yet?" he said.
"The path back to budget balance is similar to that. We need to take a safe and careful route and one that does not put at risk our jobs and growth."
The government's plan was about restraining expenditure while supporting economic growth to lift revenue, Mr Morrison said.
Finance Minister Mathias Cormann said the government had stuck to its fiscal discipline.
A key savings measure was a crackdown on welfare cheats by using better data matching to ensure payments were within the rules.
"Importantly, the spending reductions that we have been able to achieve are sensible, they are measured, they are focused on improving consistency, integrity and efficiency across commonwealth government payments," he said.
They also help the government continue to head in the right direction and get the budget back into balance as soon as possible.