The federal budget is set to fall back into deficit this financial year and stay that way for the next four decades, as an ageing population increases spending pressures, the tax base erodes, and climate change ravages traditional revenue sources while imposing extra costs on the economy.

The latest Intergenerational Report, released in full on Thursday by Treasurer Jim Chalmers, also shows that without remedial policy change and the seizing of new opportunities, the nation will stay mired in debt for the same period and beyond.