Opposition Treasury spokesman Joe Hockey has defended the personal income tax cuts delivered by the former Coalition government, which were today cited in two official reports for contributing to an ongoing "structural" deficit in the budget.

The federal Treasury and the newly established independent Parliamentary Budget Office (PBO) have released fresh estimates of the structural budget balance, both painting a dire picture of the underlying position of the nation's coffers.

The structural budget balance is a measure Treasury says adjusts for temporary factors and can provide "insight into the sustainability of current fiscal settings".

Both reports show the budget will remain in structural deficit until at least 2018-19.

Replying to last week's federal budget in a speech to the National Press Club, Mr Hockey acknowledged the structural difficulties and said they must be addressed now.

However, he would not concede that the Howard government tax cuts have had a detrimental effect.

"We make no apologies for having delivered tax cuts - I think it was every year for our last five or six years," he said.

"In fact, Labor was so impressed with that that they went on to deliver our tax cuts when they got into government."

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Mr Hockey said the challenge in the future is to have "stability in tax" and pointed to the Coalition's plans to axe both the carbon and mining tax.

"We do not apologise for tax cuts that involve the abolition of the carbon tax and the mining tax because those two taxes are a handbrake on the Australian economy," he said.

However, he repeated the Opposition's statement that "we are not in a position to further cut taxes beyond that".

Next government will inherit 'big problems'

Economist with Deloitte Access Economics Chris Richardson says the reports from Treasury and the PBO show that the next government will inherit "big problems" with the budget.

"The usefulness of the figures out of both the Parliamentary Budget Office and the Treasury is it's underscoring the fact that the budget is in more trouble than it looks," he told The World Today.

"We overdid it. We've overdone it for a decade."

In its first major report since it was formed in February last year, the PBO has revealed that the structural budget position declined steadily over the period 2002-03 to 2011-12 as receipts fell but Government payments grew.

It says the fall in receipts was largely due to the "cumulative effect of the successive personal income tax cuts granted between 2003-04 and 2008-09" - by the Howard and Rudd governments.

The PBO also cites the Howard government's decision to freeze the indexation of petrol excise and a fall in the consumption of cigarettes, leading to a drop in tobacco excise receipts, as significant factors in the decline of the structural budget balance.

It goes on to say that the structural budget position "showed a sharp improvement" last financial year and it expects a gradual improvement to the year 2016-17, when it will still remain in a structural deficit of between 0.25 and 1.5 per cent of GDP.

'Message politicians aren't telling us'

Mr Richardson has hailed the PBO figures as akin to a "whistleblower" document, saying the release marks a "great day for Australia".

"Treasury is a magnificent institution but quite correctly it works for the government of the day," he said.

"The Parliamentary Budget Office has that greater degree of independence and Australians need to hear the message that the politicians on both sides aren't telling us."

Treasurer Wayne Swan says the PBO document shows the structural deficit began in 2001 and accelerated under the final years of the Howard government "when they went on a spending spree and they spent like drunken sailors".

"Since that time we've been putting in place $300 billion worth of structural saves to support our budget, to provide for good fiscal policy and to make room in the budget for fundamental schemes that change our nation, like DisabilityCare and the school improvement program - we're proud of that," he said.

The PBO agrees that the Government's savings over the forward estimates for its Gonski schools plan and DisabilityCare do add to the improved budget picture, but says that over time the schemes will cost more.

"Beyond the forward estimates years," the PBO report says, "these savings will be largely consumed by the costs of the schemes and, therefore, they will no longer be available to alleviate pressure on the [structural budget balance]."

Non-partisan analysis of budget cycle

Overall, it says "the government's balance sheet is in a strong position", with net debt forecast to peak at 11.4 per cent of GDP in 2014-15, "low by international standards".

It believes this gives the Government plenty of "fiscal space" to move in addressing the structural shortcomings.

The role of the PBO is to provide independent and non-partisan analysis of the budget cycle, fiscal policy and the financial implications of policies.

The updated Treasury estimates of the structural budget balance also show that the budget position deteriorated from the mid-2000s, largely because of the temporary fiscal stimulus measures put in place by the Government to buffer Australians from the global financial crisis.

However, it also points to the "successive large cuts in personal income taxes" as a factor.

It shows the structural budget position returning to surplus in 2018-19.