Politicians have been warned against “election sweeteners” as economists flag growing fiscal holes in Australia’s budget.

Treasurer Jim Chalmers has started feeding commitments to the public ahead of next week’s federal budget.

He is also expected to announce disaster recovery funds for Queensland and northern NSW communities battered by ex-tropical cyclone Alfred, amid estimations it dealt a billion-dollar-plus hit to the economy.

More promises are expected in coming days, but politicians have been urged to be prudent as the Deloitte Access Economics’ Budget Monitor, released on Monday, has forecast a $26.1 billion underlying cash deficit and revenue downgrades of $11.3 billion over four years.

The projection is slightly smaller than the $26.9 billion deficit predicted in the December mid-year economic and fiscal outlook. But report co-author Stephen Smith remained concerned about the deterioration of the budget bottom line.

“[This should be] a reality check for politicians wanting to announce election sweeteners in the weeks ahead,” he said.

“The long-term budget projections show deficits as far as the eye can see and ineffective spending is the last thing Australia needs.”

Treasury’s commodity price assumptions look less conservative than in previous years, when stronger-than-expected sales of minerals such as iron ore and gold meant the bottom line ended up solidly better than forecast at each budget update.

But surprisingly negative economic outcomes mean revenues are “simply not going to measure up”, with slower growth and softer company profits expected to downgrade revenue in later years.

At the same time, spending pressures are escalating in areas such as health, aged care, defence and the National Disability Insurance Scheme.

As a result, the report estimates the underlying cash balance will be cumulatively $13.1 billion worse off over the four years to 2027/28 compared to the mid-year outlook, pushing net debt to 23.9 per cent as a share of GDP, up from 19.6 per cent this financial year.

Compounding this is the growing trend for governments to squirrel away spending “off budget”, like Labor’s changes to student debt repayments, blowing out the headline deficit and hampering public spending capacity long-term.

“Unfortunately, the election is more likely to put an outsized focus on flashy proposals designed to woo voters who are focused on their day-to-day,” report co-author Cathryn Lee said.

“This will distract from a pressing policy issue facing the nation: The fiscal holes in Australia’s medium-term budget outlook are getting bigger, not smaller.”

During his budget preview speech at the Queensland Media Club on Tuesday, Chalmers will announce extra money to fund recovery in the aftermath of ex-tropical cyclone Alfred.

“We have been primarily focused throughout on the human cost of these natural disasters, but there will be a very substantial
economic cost as well, and recovering and rebuilding from natural disasters will be a key influence on the budget that Katy Gallagher and I will hand down in eight days’ time,” he said in Brisbane on Monday.

“Around five million Australians were in harm’s way, when it comes to Cyclone Alfred. Around two million homes. At one point, there were than 450,000 homes without power.”

Chalmers said the initial assessment of the costs of Alfred would be reported in next Tuesday’s federal budget.

“Treasury expects there will be about a $1.2 billion hit to economic output, just as a consequence of ex-tropical cyclone Alfred,” he said.

“That is about a quarter of a percentage point in GDP – and also a impact on fruit and vegetable costs, depending how much of the farmland has been hit, but also building costs.”

Alfred’s financial impacts are still being calculated but it also cost the economy 12 million work hours, and could put upwards pressure on inflation.

“We’ve made a heap of progress on inflation numbers in building, but we can anticipate some upward pressure on building costs as a consequence [of Alfred],” Chalmers said.

The federal government will detail an extra $1.2 billion in funding for disaster payments and to rebuild communities. It is part of a $13.5 billion commitment blocked out for disaster support at the mid-year economic and fiscal outlook.

Since MYEFO in December, the government has already announced more than $18 billion in new spending, including its $8.5 billion boost to Medicare, student debt relief and $7.2 billion for the Bruce Highway.

“A defining feature of our first three budgets was responsible economic management. That will be a defining feature of the fourth as well,” Chalmers said.

“Even this year, when we will be printing a deficit  … it will be much, much smaller than what we inherited from our political opponents, and that shows the progress we have been able to make.”

The federal budget will be delivered on March 25.

-with AAP