While promising to save much of the windfall that is flowing into federal coffers due to high prices for key commodities, Mr Frydenberg is expected to deliver cost-of-living relief to low- and middle-income earners.

In contrast to its big-spending agenda at the 2019 election, Dr Chalmers will argue that Labor will have to prioritise its policies and sequence them over time.

He will say the best way to fix the budget is to grow the economy and lift employment, rejecting calls for a sharp reduction in spending.

“Our fiscal strategy recognises now is not the time to flick the switch to austerity. Nor is it time to spray money around unnecessarily,” he will say.

A growing concern is the lift in global interest rates, with interest on government debt up by 0.7 percentage points since the mid-year budget update in December. A full percentage point increase in rates would add $10 billion to the budget’s interest bill over the forward estimates.

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This will all be factored into a second budget this year with a focus on boosting productivity and winding back “wasteful” spending if Labor wins government.

“We’d take advice on the best specific timing and confer with Treasury on the possibilities, with an eye to bringing down a proper budget before the end of 2022,” Dr Chalmers will say.

“We’d have a chance to look at the full extent of nearly a decade of rorts and waste and start dealing with it.”

He will make the comments after the release of a report by the Committee for Sydney that calls for whichever party wins this year’s election to embark on serious reform across a range of areas.

In its federal election agenda, the committee says there needs to be better access to affordable childcare to boost women’s workforce participation. Some women are in effect priced out of working by the cost of care.

It wants a $5 billion lift in the childcare subsidy for low-income earners and the hourly rate cap to be axed. It estimates that for about 60 per cent of families, the cost of care would fall to less than $20 a day.

Parental leave should change, it says, with each parent entitled to six weeks’ paid leave and another 12 shared between them. Single parents would be entitled to all 24 weeks.

To further boost the jobs market, the committee says all foreign students who complete a bachelor’s degree or above should have access to a four-year post-study work visa. Students who remain in Australia during this period would have a pathway to permanent residency.

On tax, the committee believes the GST should be broadened to fresh foods, health and education.

“Among its benefits, this switch would mean older, wealthier households that are living off savings and investments rather than earning a salary would contribute more,” it said.

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