The Federal Government has posted a smaller-than-expected budget deficit, firming up its expectations of delivering a surplus this financial year.

Key points: The Federal Government has announced the 2018-19 budget ended with a $690 million deficit

The Federal Government has announced the 2018-19 budget ended with a $690 million deficit Treasurer Josh Frydenberg said the Government took in $13.8 billion more than it expected

Treasurer Josh Frydenberg said the Government took in $13.8 billion more than it expected He reaffirmed the Coalition's commitment to deliver a surplus this financial year

The latest Treasury figures show last year's budget deficit was $690 million for the 2018-19 financial year.

The Government in April projected a $4.2 billion deficit for that financial year.

"The Australian economy is strong and ready for the challenges ahead," Treasurer Josh Frydenberg said.

A boost in commodity prices and exports contributed to the budget improvement.

Shadow Treasurer Jim Chalmers said a National Disability Insurance Scheme (NDIS) underspend was "propping up" the budget.

He said net debt had more than doubled to $374 billion since the Coalition won government in 2013.

Where the budget stands: The country ended the financial year with a deficit of $690 million

The country ended the financial year with a deficit of $690 million In April the EOFY deficit was predicted to be $4.2 billion

In April the EOFY deficit was predicted to be $4.2 billion Nominal GDP grew by 5.3 per cent over the financial year, or 1.9 per cent in real terms

Nominal GDP grew by 5.3 per cent over the financial year, or 1.9 per cent in real terms The labour market grew by 2.6 per cent across 2018-19

The labour market grew by 2.6 per cent across 2018-19 Net debt stands at $373.6 billion

Mr Frydenberg said there had been a $13.8 billion improvement in the underlying cash balance since the budget was released in 2018.

"These outcomes demonstrate the Government's economic plan is working and confirming the budget is on track and will be back in the black for the 2019-20 year," he said.

"Importantly, Australia has completed its 28th consecutive year of economic growth, and maintains its triple-A credit rating, with more than 1.4 million jobs created since we came to Government."

Mr Frydenberg said employment grew 2.6 per cent, which was above the forecast of 1.5 per cent.

That fails to take into account levels of under-employment, which the Coalition has faced criticism over.

Mr Chalmers attributed the budget condition to a low Australian dollar and high iron ore prices, rather than Government action to address the economy.

"The Government should not be patting itself on the back for these numbers today," he said.

"The Government needs to bring forward a plan to turn around the floundering economy.

"We've got the slowest growth in this economy in the 10 years since the [global financial crisis] — wages are stagnant, household debt is at record highs."

The Treasurer said nominal gross domestic product (GDP) grew 5.5 per cent, which was above the forecasted 3.25 per cent.

"This was as a result of stronger than expected employment growth and higher commodity prices than expected," Mr Frydenberg said.

Iron ore prices hit five-year highs in July, thanks in part to a deadly dam disaster in Brazil in January.

The Treasurer conceded the Coalition had been "conservative" in its iron ore price forecasts for the 2018-19 financial year.

But he argued the budget was better off because of jobs growth rather than commodity prices.

NDIS underspend facing criticism

The budget papers confirm a $4.6 billion underspend on the NDIS in 2018-19.

Labor has repeatedly criticised the Government's improved budget situation as coming at the detriment of people with a disability.

"It's a national shame, it's a disgrace," Labor NDIS spokesman Bill Shorten said.

"The fact of the matter is, the Morrison Government is balancing its books off the backs of Australians with disabilities and their loved ones."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 26 seconds 26 s Shadow Treasurer Jim Chalmers says NDIS cuts are "propping up the budget"

The Government blames that underspend on a slower-than-expected uptake of people going onto the NDIS, which the Coalition blames on state governments.

Finance Minister Mathias Cormann said spending on the NDIS more than doubled in 2018-19, with participants in the program reaching around 300,000 by the end of June this year.

He said he expected 500,000 Australians would receive NDIS payments in the next five years.

But the Finance Minister dismissed suggestions the Coalition should have directed the underspend into disability services.

"It makes absolutely no sense to put money aside when the money will be there," Senator Cormann said.

"Essentially, in any budget, at any budget update you have movements up and down. You have demand that is higher than expected and you have to pay more. Sometimes you have demand lower than expected.

"The situation with the NDIS is unique, because we are going for a massive transition.

"We are going through a transition from a state-based funding arrangement, where there was a lot of unmet demand and a lot of inadequate support for Australians with a disability, to a situation where every Australian who has a demand for disability services, will receive that support tailored to their needs."

Mr Shorten said the underspend wasn't merely the result of a lack of demand.

He dubbed the NDIS "constipated" because money wasn't reaching the people who needed it.

"The reason why the NDIS has an underspend of $4.6 billion is not because the demand isn't there, it's because the system is not allowing the resources that the taxpayer allocates to the system to get to the people who need it," he said.