Treasurer Jim Chalmers and Finance Minister Katy Gallagher released the mid-year budget update yesterday.

The update revealed the stark reality of Australia's economic landscape.

Projections are showing spending will be up over $42 billion in the coming years with health, aged care and structural costs driving the increase. These figures mean we can expected recurring deficits through to the end of the decade.

Finance Minister Katy Gallagher told Peter Fegan on 4BC Breakfast, 'we found about $92 billion in savings since we came to government and a lot of that spending that you were seeing in the mid-year update is what we call parameter variations.'

'So, about $8.5 billion in what we would say is unavoidable spending, important spending. So there's no doubt there's pressure on the budget.

I'm not going to pretend otherwise, but we've made some progress.'