Treasurer Jim Chalmers and Finance Minister Katy Gallagher released the mid-year budget update yesterday.

The update revealed the stark reality of Australia’s economic landscape.

Projections are showing spending will be up over $42 billion in the coming years with health, aged care and structural costs driving the increase. These figures mean we can expected recurring deficits through to the end of the decade.

Finance Minister Katy Gallagher told Peter Fegan on 4BC Breakfast, ‘we found about $92 billion in savings since we came to government and a lot of that spending that you were seeing in the mid-year update is what we call parameter variations.’

‘So, it’s really the costs that are being incurred, like for medicines or Medicare or child care benefit payments to veterans, those types of things and certainly that we’ve seen an increase in all of those areas,’ Gallagher said.

‘So, about $8.5 billion in what we would say is unavoidable spending, important spending. So there’s no doubt there’s pressure on the budget.

I’m not going to pretend otherwise, but we’ve made some progress.’

‘We’ve got more work to do, but at the same time, we’ve been trying to provide cost of living help to households and deal with some of the reforms like to the NDIS and aged care to make sure they’re more sustainable going forward,’ she continued.

Hear more highlights from Peter Fegan below:

Image: Getty Images/Tracey Nearmy

Download this podcast here