The federal government is forecasting a small budget surplus of about $4 billion this financial year, the first in 15 years.
If realised, Jim Chalmers would be the first treasurer to deliver a surplus since Peter Costello.
The dramatic turnaround from the $36.9 billion deficit projected in October has been driven by high commodity prices, a strong jobs market and a boost in net migration.
The near-term improvement is not expected to last, with a return to deficits expected the following year as the government grapples with rising welfare payments and increased costs from the NDIS and aged care.
The government will also return 82 per cent of revenue upgrades to the budget bottom line, down from the 99 per cent returned in the October budget.
Mr Chalmers said the budget had improved by more than $143 billion over the four years to 2025-26, compared to the Coalition's March 2022 budget.
"Our responsible economic management is all about spending restraint, substantial savings redirected to other priorities, and modest but meaningful tax changes," he said.
"What's absolutely clear is that this outcome would never have been possible without our decision to return most of the upward revisions to revenue to the bottom line.
"Despite the substantial progress we've made, it will take more than one budget or one term to clean up the mess we inherited.
"We are putting the budget on a much more sustainable footing at the same time as we provide cost of living relief and invest in the future."
Shadow treasurer Angus Taylor said a "drover's dog" could have delivered a surplus with record revenue flooding in.
"Labor should focus on not just delivering one surplus but [also on] maintaining it over the forward estimates as well," he said.
"The only way this government can do that is by putting the interests of Australians first and resisting traditional Labor principles of higher taxes and higher spending."
Why is the surplus only temporary?
Economist Peter Martin said Mr Chalmers took the surplus as a test of "economic virility off the table".
'What the budget will show is that economic growth in the year ahead will be about 1 per cent (it is usually about 3.0 per cent), population growth will be about 2 per cent," Mr Martin said.
"That means that income per person, the standard of living, will go backwards.
"You don't need to be a genius to see that when living standards fall and as commodity prices come back that revenue is going to disappear."
Mr Martin added Mr Chalmers was not going to make the same mistake past treasurers had made.
"Rather than making the mistake of the previous treasurers who were presented with a surplus and pretending it was good work and it would last, the treasurer's saying, 'Nope won't last, but we're having a surplus.'"
How did we get to a budget surplus?
Mr Martin said the cause of the surplus was "the terms of trade, which is a way of measuring the price of what we get for the prices we pay, a few months ago was at a record high."
"Given that most of the budget is income tax, the variable bit of revenue is company tax, and it's the mining companies with the big variable revenue that have driven it," he said.
"We have the highest prices ever for Australian commodities … much higher than during the mining boom."
Mr Martin added Mr Chalmers owed a lot of the surplus to what former treasurer Josh Frydenberg did in the past two budgets.
"Since [Mr] Frydenberg's final budget, we've got an extra 200,000 people in jobs, and they're paying tax," he said.
"So those two things together meant that a surplus was almost unavoidable."
What is a surplus?
A surplus is when the government collects more money than it spends.
The government is predicting a surplus of $4 billion. It will collect that extra money instead of spending it in order to help the economy recover.
Essentially, the taxes Australians are paying are greater than the money the government will be spending in the upcoming financial year.
