Debate over sharing GST revenue and funding for disability services is expected to dominate discussions among the nation's leaders when National Cabinet meets on Wednesday.
As the Treasurer Jim Chalmers and Finance Minister Katy Gallagher put the finishing touches to the mid-year budget update due out next week, Prime Minister Anthony Albanese is preparing to meet with his state and territory counterparts for talks about GST revenue and National Disability Insurance Scheme funding that could become intense.
The federal government is facing pressure from the states and territories to permanently guarantee that they will not be left worse off under GST revenue sharing arrangements as well as the impact of its plans to restrain growth in the NDIS.
On Monday, Dr Chalmers said the negotiations with the states over the GST no-worse-off guarantee was "a live conversation".
The treasurer said the commonwealth was aiming to work with the states and territories over the issue, adding that, "we think there's a deal to be done here".
But he warned that it would not be a deal "at any cost".
"It would be good if we could come to some kind of understanding but if we can't, we can't."
On the NDIS, Senator Gallagher said the the growth in its cost had to be contained or otherwise it would become unsustainable.
Spending on the scheme is currently growing by around 14 per cent a year and the government wants to peg that back to 8 per cent.
"If we don't constrain the growth, it will continue to take larger parts of the budget, which means other areas of government miss out. So, we take this really seriously," the minister said. "We will continue to work through to make sure that people with a disability get the care they need, but in a way that the budget and you know, state and territory budgets, can afford."
The scheme is jointly funded by the commonwealth, states and territories and the federal government has demanded that the other jurisdictions shoulder a greater share of the funding burden.
Meanwhile, Senator Gallagher said the mid-year budget update would have "some spending in it" but talked down the prospect that it would include major living cost relief, saying the government was "very mindful" of not adding to inflation.
"The mid-year economic update will be more of a routine economic update," the minister said. "Obviously, there'll be some spending in it. But...we are very mindful of the need to ensure that the decisions we take don't add to the inflation challenge and put further pressure on interest rates."
A $23 billion package of measures including energy bill rebates, increased rent support payments and childcare subsidies announced in the May budget is "flowing through the economy right now", the minister said.
The government is facing mounting calls to do more to ease the pressure on millions of households whose finances have been crunched by soaring living costs and high interest rates.
Treasurer Jim Chalmers admitted on Monday that "people are under substantial cost of living pressure" and said the government's assistance was taking "some of the edge off" extra expenses without adding to inflation.
But the Opposition has accused the government of making the inflation challenge worse because of its spending.