Cyclone's blow to budget as food, building costs hit

Treasurer Jim Chalmers has confirmed a budget deficit after posting two surpluses as he announces more cyclone-aftermath support.

An additional $1.2 billion will go toward disaster payments and rebuilding local communities and forms part of a broader $13.5 billion natural disaster response package in the budget.

The treasurer announced a $1000 disaster recovery payment would be extended to more Queensland and NSW localities hit by ex-tropical cyclone Alfred.

The tropical cyclone wrought a 0.5 per cent hit to GDP which added a substantial cost to fiscal pressures on federal finances, Dr Chalmers said.

"We can anticipate some upward pressure on building costs," he told reporters in Brisbane on Monday.

"We also anticipate that there will be some impact on fruit and vegetable costs depending on how much of the farmland has been impacted."

The full impact of the cyclone will be unveiled in the budget, which will be delivered on March 25.

Despite the budget returning to the red, the deficits were lower than predicted, Dr Chalmers said, defending the government's decision to bank extra revenue in previous years rather than spending it.

The government was focused on rolling out already announced measures, such as reformed tax cuts, energy bill subsidies and fee-free TAFE, rather than announcing new relief.

"We've made it clear that when we can afford to provide more cost-of-living help in a responsible way, of course, we will consider that," Dr Chalmers said.

Discussions about further support for cyclone-stricken communities in NSW and Queensland continue, Finance Minister Katy Gallagher said.

Asked whether the government would take up a Greens offer to pass Labor cost-of-living pledges before the election, such as slashing student debts by 20 per cent and extra health funding, Senator Gallagher said the schedule was tight.

"We have a very short sitting week that week and we'll see what we can get done," she told reporters in Canberra.

Medicare has become the centrepiece of Labor's election campaign and although the Liberals have matched an $8.5 billion promise to expand bulk billing, the government continues to attack the opposition on health.

Opposition Leader Peter Dutton pledged to reduce inflation further and has flagged government spending cuts, including by laying off tens of thousands of public servants.

"We have a track record of dealing with economic management and making economic decisions, including tax cuts," he said.

Politicians have been warned against "election sweeteners" as economists flag growing fiscal holes in Australia's budget.

The Deloitte Access Economics' Budget Monitor forecasts a $26.1 billion underlying cash deficit and revenue downgrades of $11.3 billion over four years.

The projection is slightly smaller than the $26.9 billion deficit predicted in the December mid-year economic and fiscal outlook.

Report co-author Stephen Smith remains worried about the deterioration of the budget bottom line, saying projected deficits well into the future should be a "reality check for politicians" who want to announce big-ticket sweeteners.

Budget holes in the medium term were getting bigger, report co-author Cathryn Lee said, raising concerns the election could make politicians "put an outsized focus on flashy proposals designed to woo voters".

Since the mid-year update in December, the government has already announced more than $18 billion in new spending, including its Medicare boost, student debt relief and $7.2 billion for the Bruce Highway.