Where has all this cash come from? What has delivered the windfall that will cut more than $50 billion from the deficit predicted just five months ago?

There are two reasons: one is related to good management, the other to sheer good luck.

Given our reputation for being The Lucky Country, let's start there.

Despite an almost complete breakdown in relations between Australia and China that has manifested in an escalating trade war, the Middle Kingdom is delivering a large chunk of the windfall gains for tonight's federal budget.

Last year, Treasurer Josh Frydenberg was banking on $55 a tonne for iron ore. It was always a conservative estimate and the government long has operated on the maxim that it's best to under-promise and over-deliver.

But no-one would have been brave enough to predict this.

Prices began to surge as China emerged from the grip of the pandemic last year, with its infrastructure-led stimulus programs boosting demand for the red dirt.

Prices then were supercharged by production problems out of Brazil that drastically reduced global supply.

In the past few months, iron ore prices have ratcheted up to just under $US200 ($255) a tonne, which has left most pundits stunned.

In the past few weeks, they've soared to just under $US230 a tonne.

It means a lot more tax revenue as the big miners rake in the profits. Here is a rough guide on how it works:

For every $US10 movement in the price of iron ore, federal government revenue shifts by around $2 billion. Obviously, the shift has to be sustained. But even a back-of-the-envelope calculation on the difference from $US55 and an average of $US185 delivers somewhere just shy of $30 billion.

That's money the Treasurer never thought he would have.

The other big influence is the far-lower-than-expected rate of unemployment. And that's where the good management comes in.

Early last year, we were given a bleak choice. Either live with the threat of a debilitating virus, which meant remaining open for business. Or suffer a total economic collapse.

That turned out to be wildly off the mark. The economies that have best performed are the ones that have pursued isolationist policies and virus eradication, like Australia.

Rather than economic collapse, our closed borders delivered us a booming internal economy.

In December's mid-year update, the federal government pencilled in a jobless rate of 7.25 per cent by the end of the financial year, but it has fallen far more quickly than anticipated.

In March, it dropped to 5.6 per cent, and there were more Australians working than before the pandemic hit.

That has a double whammy impact on the budget. Fewer people out of work means fewer people on social security. So, that's a saving.

And more people working means more people paying tax. So, that's a big lift in income.

We won't get the full breakdown until tonight, but it appears the improved jobs position will deliver a direct budget impact of more than $5 billion, with indirect effects rippling through to higher tax takes.

It's a handy turnaround that has provided the means for an election-year budget.

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