Australians are facing a tough couple of years after the Albanese government's first budget warned power bills will rise and real wages will fall.
Households are looking at a spike in prices, with electricity bills forecast to rise by an average of 20 per cent this year and by 30 per cent in 2023/24.
Gas prices could rise by 20 per cent in both this financial year and the next, according to Treasury.
Wages growth isn't expected to outstrip inflation until at least mid-2024 and the government said measures like childcare and paid parental leave will help some families struggling with some cost of living issues.
Treasurer Jim Chalmers maintained Labor had delivered "a budget for the times".
Dr Chalmers said Labor was exercising restraint in cost of living relief to avoid adding to rising inflation, which is tipped to peak at 7.75 per cent in the December quarter of 2022.
"We've got our fair share of challenges right now. What we were able to do was provide some cost of living relief in a way that doesn't push up inflation," he told ABC TV on Wednesday.
While the budget papers point to a better-than-expected deficit for 2022/23 of $36.9 billion, the deficit is on track to blow out to $51.3 billion in 2024/25.
The economy is forecast to grow by 3.25 per cent this financial year, but growth will slow sharply to 1.5 per cent in the next financial year.
Prime Minister Anthony Albanese rejected suggestions the government didn't take tough decisions in its first budget, after banking almost all of the recent extra revenue driven by higher commodity prices.
"Putting 99 per cent of the revenue gain back into paying off debt is a good thing for us to do, a tough thing for us to do," he told the Nine's Today program.
"We know people are doing it tough out there. But had we had a cash splash, that would have just added to inflation and would have been counterproductive."
But NSW Treasurer Matt Kean said the government needed to give more money back to the community because the budget was propped up by soaring coal and gas prices.
"I'm asking them to return some of that to struggling households," he told ABC radio.
Mr Albanese said he stood by his election pledge to cut electricity prices by $275 a year.
Dr Chalmers said the government would consider regulatory steps to ease power prices while acknowledging global factors like the war in Ukraine were adding to the pressure.
Assistant Treasurer Stephen Jones said spending needed to be targeted towards families doing it toughest.
"So childcare, aged care, medicines, reduction and a new housing program to deal with rental affordability," he told AAP.
"We can't do everything, which is why we've targeted our support at those parts of the community that are the most in need."
Childcare will be made cheaper for 1.26 million people, while more than $530 million will be spent expanding paid parental leave to 26 weeks by 2026.
An extra $787 million has also been set aside to reduce co-payments for the Pharmaceutical Benefits Scheme, while money has been allocated to support pay rises for low-paid workers.
A national housing accord has set a target of one million new homes to be built over the next five years.
The NDIS will also be boosted by an extra $8.8 billion over the next four years, while $235 million will be spent on urgent care clinics and $750 million to strengthen Medicare.
© AAP 2022