The Labor treasurer said Tuesday's budget was "right for the times," but warned of hard decisions ahead for fiscal repair, as inflation and interest rates increase.
Cost of living measures were a centrepiece of the 2022/23 budget, with Dr Chalmers saying targeted initiatives were needed in order to avoid further inflationary pressures on household budgets.
The government will also deliver on key election promises such as a national anti-corruption commission and aged care reform, along with funding boosts to core spending areas such as Medicare and the NDIS.
Child care will be made cheaper for 1.26 million people, which is set to cost $4.7 billion over the next four years, while more than $530 million will be spent expanding paid parental leave to 26 weeks by 2026.
An extra $787.1 million has also been set aside to reduce co-payments for the Pharmaceutical Benefits Scheme, while money has been allocated to support pay rises for low-paid workers.
While the underlying cash deficit of $36.9 billion for this financial year is more than $41 billion better than expected, the deficit is on track to rise to $51.3 billion in 2024/25.
The economy is forecast to grow by 3.25 per cent during 2022/23, but will ease to just 1.5 per cent growth the following financial year.
Inflation has been tipped to peak at 7.75 per cent in the December quarter before easing over the next two years.
Dr Chalmers said while the budget was getting a boost from higher employment rates and bigger commodity prices, it was set to be short lived.
He warned bigger spending pressures on the budget were only set to increase.
"In the longer term, there's a bigger job to do, to put the budget on a more sustainable path," he said.
"This is just the beginning of our budget repair work, and it's just the beginning of the conversation we need to have as a country ... about the choices we need to make on what's affordable and what's fair."
The government has identified more than $28 billion of savings to be made over the next four years in what will be the start of budget repair work.
Of that, $22 billion will come from spending cuts such as reprioritising several infrastructure projects, as well as cutting down on external contractors.
The government will also crack down further on multinationals tax avoidance and extend Australian Taxation Office compliance programs, which is expected to improve the budget bottom line by $4.7 billion over four years.
Dr Chalmers said there needed to be a "premium on restraint" in order to give the budget a buffer in the event of further economic downturn.
While Australia had weathered many of the worldwide economic storm better than similar nations, the budget warned the country was not immune from the impact of global downturns.
The full impact of recent flooding along the east coast of Australia also remained unclear, but the budget forecast it would lead to a drop in economic growth and exacerbate critical supply chains.
Despite the pressures, the budget delivered on a number of key Labor election promises.
A new national housing accord has set a target of one million new homes to be built over the next five years, with $350 million set aside for the next five years for social housing.
A $10 billion investment will also be used for a Housing Australia future fund.
The NDIS will also be boosted with an extra $8.8 billion over the next four years, while $235 million will be spent to rollout urgent care clinics and $750 million for a strengthening Medicare fund.
There will be $2.5 billion for aged care reform, with schools to get $474.5 million to help students bounce back after years of COVID disruptions.
The government has also set aside $262.6 million to set up its National Anti-Corruption Commission.
A further $75.2 million will be spent on preparing for the referendum on an Indigenous voice to parliament.
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