Treasurer Josh Frydenberg says the need to keep the budget in surplus is not only important to cope with current demands but also the long-term challenges, especially the "economic time bomb" of an ageing population.

Setting the scene for both next month's mid-year budget update and next year's Intergenerational Report (IGR), which forecasts the budget cost of essential services 40 years in advance, Mr Frydenberg indicates there will be no largesse in coming months.