The government will reveal a larger deficit when it hands down its mid year budget update next week, Treasurer Joe Hockey has confirmed, as well as a longer delay in returning the country's finances to surplus.
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The Treasurer has also admitted the government "made a mistake" in communicating with voters earlier this year, conceding "we neglected the conversation" about some of the tough measures the May budget contained.
In an interview with Sky News on Friday, Mr Hockey said the budget had faced significant "headwinds" including a global economic slow down, falling iron ore prices and a hostile Senate.
He said Monday's update would reveal a deeper deficit and the return to surplus would be pushed back beyond 2018. A number of reports have anticipated a larger deficit in recent months, with analysts anticipating a budget hole of as much as $51 billion.
But the Treasurer defended the government's handling of the economy, saying whenever it had not had to rely on the Senate it had been able to offset expenditure with savings.
He laid some of the blame with Labor for not agreeing to pass savings measures, including some that it had supported in government.
"When you're dealing with people who are completely hypocritical in relation to their own savings and they have the power to block it and block your initiatives it becomes difficult," Mr Hockey said.
"But having said all of that, we have a better than expected result on Monday because we've faced significant headwinds in the Senate and we've faced significant headwinds with commodity prices.
"There's no doubt in my mind that the Australian economy has a good trajectory.
"We are saying that on Monday."
Mr Hockey conceded the government could have done more to market some of the unpopular budget measures it revealed in May – a $7 GP fee and changes to the dole for young people among them.
"We made a mistake," he said.
"I fully accept we could have done more marketing.
"We could have spent more time explaining what we were doing to the Australian people – and we should have.
"But we were so focused on getting the outcomes that strengthen the economy, that build more jobs that we neglected the conversation."
Mr Hockey said there would be more "modest" spending cuts announced next week, but would not comment on speculation that the money would be drawn from the foreign aid budget, which has already faced large cuts.
"There will be savings," he said.
"There has to be savings.
"But they will have no negative impact on the Australian economy."
