Federal Treasurer Scott Morrison wants Australians to think of the country's debt as either "good debt" or "bad debt", and will change the way it is reported in the budget.

Key points: Treasurer Scott Morrison says "good debt" increases productivity while "bad debt" is used to support the welfare system

Treasurer Scott Morrison says "good debt" increases productivity while "bad debt" is used to support the welfare system Mr Morrison says he is willing to take on additional debt to invest in infrastructure

Mr Morrison says he is willing to take on additional debt to invest in infrastructure In this year's budget, Mr Morrison will report the difference between the Government's revenue and expenditure

Mr Morrison has used a speech to the Australian Business Economists to make the case for distinguishing between the types of government spending.

He told the lunch good debt increased productivity.

"It can be very wise for governments to borrow, especially while rates are low, to lock in longer-term financing and invest in major-growth-producing infrastructure assets, such as transport or energy," he said.

He argued it was time to distinguish between that spending and what he called "bad debt".

"To rack up government debt to pay for welfare payments, Medicare costs or other everyday expenses is not a good idea," Mr Morrison said.

Opposition Leader Bill Shorten said drawing a distinction between different types of debt was "an admission of failure".

"They say they can't get on top of the debt so they will redefine the debt — this is surrender by the Government," he said.

The "good debt", "bad debt" distinction was first made by the Treasurer one week before the mid-year economic update in December, and amid concerns for Australia's credit rating.

At the time, Mr Morrison told a finance conference he was willing to take on additional debt to invest in infrastructure once recurrent spending was under control.

Economic analysts had warned Australia faced a one-in-two chance of having its AAA credit rating downgraded with borrowing costs tipped to increase.

With the federal budget less than two weeks away, the Treasurer appears to have adopted a similar strategy for setting expectations.

While in opposition, the Coalition ruthlessly attacked the Labor government for its spending record and vowed to reduce the deficit.

In recent years, Labor has attacked the Coalition for its financial management with shadow treasurer Chris Bowen claiming net debt has increased by $100 billion this year.

Departments to reveal their share of debt

The budget always reports the country's underlying cash balance, which was forecast to be a $36.5 billion deficit in 2016/17 in the Mid-Year Economic and Fiscal Outlook (MYEFO).

This year, Mr Morrison will also report the net operating balance alongside it, which he said would help Australians distinguish between the type of debt being incurred.

The net operating balance is the difference between the Government's revenue and expenditure.

The Treasurer said it would bring the Federal Government's reporting in line with that of the states and territories, and with New Zealand and Canada.

He said he would also allocate debt to individual Government portfolios.

"Portfolios will be held responsible for the debts they are incurring for future generations as a result of their expenditure," Mr Morrison said.

"We all need to understand what is driving the growth in our public debt."

Mr Bowen said "no amount of smoke and mirrors" would hide the budget bottom line.

But he said the Opposition was considering similar changes to budget reporting and would consider the Government's proposals in detail.

The budget will be handed down on May 9.