Canberra, Sep 29 (IANS): Australian Treasurer Jim Chalmers on Thursday ruled out a return to budget surplus within the next three years.

Chalmers urged Australians to "be realistic" ahead of handing down the ruling Labor Party's first federal budget since it won May's general election, reports Xinhua news agency.

The budget is expected to be austere, with few major spending measures as the government seeks to address the rising cost of living and record debt levels.

The Treasury on Wednesday released the final budget outcome for the financial year 2021-22, revealing a deficit of A$32 billion ($20 billion) -- or 1.4 per cent of the gross domestic product.

It marked a significant improvement from about A$80 billion for 2021-22 projected by the former government.

Despite the improvement, Chalmers said the budget would not project a surplus in any year through to the next election in 2025.

"When it comes to a surplus this term of the parliament, I think we need to be realistic about the fiscal situation and I don't think that Australians should expect that the budget that I hand down in October will have a surplus in any of the forward years," he said at a press conference.

"I think Australians understand that given the fiscal and budget circumstances that we've inherited, it will take much more than one budget to turn that around."

The budget improvement was mostly driven by a A$27.7 billion boost in government receipts -- more than half of which came from higher-than-expected company taxes as a result of high global commodity prices.