Even then, the office says, the budget would barely return to balance, recording a wafer-thin surplus of just 0.3 per cent of GDP, well short of the government's target of 1 per cent. The PBO expects the income tax take to rise with wage growth and bracket creep until 2022-23. And it has doubts that the budget's projected "sharp acceleration in wages growth" will come to pass. Wages are growing at an annual rate of 1.9 per cent, well down on last year's budget forecast of 2.5 per cent and this year's budget forecast of 2.5 per cent, climbing to 3 per cent. "The significant slowdown in wages growth experienced in the past few years suggests that this projected increase is subject to downside risk," the report says.

The office expects the income tax take to rise with wage growth and bracket creep until 2022-23, when the total tax take is projected to hit the government's self-imposed ceiling of 23.9 per cent of GDP. After that, the income tax take will continue to climb, although more slowly, to make up for tax lost as a result of the budgeted company tax cuts. The company tax take would climb from 3.9 per cent of GDP to 4.6 per cent by 2022-23, before slipping as a result of the tax cuts to 4.2 per cent. Almost all of the projected budget improvement is due to a higher tax take. The projection has total receipts climbing 2.2 per cent of GDP and total payments falling by just 0.1 per cent of GDP. The office has little confidence in the projected decline in spending.

"Experience over the past decade suggests that the fiscal restraint necessary to containing spending growth has been difficult to achieve," it says. The National Disability Insurance Scheme accounts for the biggest spending increase over the 10-year projection period, more than quadrupling in cost from 0.2 per cent of GDP to 0.9 per cent. The office expresses scepticism about the projection, saying there are risks that the longer-term costs associated with the scheme may increase. Defence spending is also projected to climb, from 1.8 per cent of GDP to 2.2 per cent. Spending on schools is projected to barely increase as a proportion of GDP, despite the extra funding offered in the budget, climbing from 1 per cent of GDP to 1.1 per cent. Spending on road and rail infrastructure is expected to slide from 0.4 per cent of GDP to 0.2 per cent, as a number of projects move off budget, including Sydney's WestConnex and the Melbourne to Brisbane inland rail link.

The cost of the age pension is expected to stay flat despite population ageing as a result of a budget change that increases the rate at which the pension is reduced beyond the assets test threshold. Follow Peter Martin on Twitter and Facebook