Tuesday’s budget will include $15.4 billion for “unavoidable” spending needed to keep critical programs going that are due to soon run out.

Among the measures are extending funding for health programs for palliative care and cancer supports, as well as the federal COVID response and boosting operations for myGov services.

Finance Minister Katy Gallagher said while the aim was to still provide a surplus, the funding cliff for key programs would mean a weaker-than-expected budget position in coming years compared to earlier forecasts.

“Australians expect a responsible government to identify sensible savings to reinvest in higher quality spending and keep existing programs in place to prevent any cuts to the services that Australians rely on,” she said.

“Our approach to this budget … is to reduce gross debt and identify responsible savings to take the pressure off inflation, while also continuing to make the investments Australians expect.”

The government has flagged a further $27.9 billion in savings, with defence to bear the brunt of the changes.

Reprioritisations within defence will produce $22.5 billion in savings, while the budget will gain an extra $1 billion from reduced spending on external labour such as consultants and contractors.

An extra $3.8 billion will be earmarked for savings measures, to be announced on Tuesday when Treasurer Jim Chalmers hands down his third budget.

Employment growth figures have come out stronger than predicted, with the Treasury forecasting a 2.25 per cent rise in the year to June, compared to the 1.5 per cent put forward in December.

The department expects employment to grow into 2025, despite a softening labour market.