Company tax collections are expected to climb by $59 billion. But as a share of government revenue,they will shrink from 19.3 cents in the dollar to 17.8 cents.

As the budget relies more heavily on personal income tax,the government will have to spend far more on services,primarily those aimed at older Australians and those on the National Disability Insurance Scheme.

The combined cost of aged care,the age pension and the NDIS is expected to climb from 21 per cent of all government expenditure to more than 23 per cent.

The PBO said for the tax system to be sustainable,it had to be able to absorb changes in society over time.

The growing share of older Australians needing more support and the decline in the share of working-age people were putting increasing strain on the budget’s sources of revenue.

“With an ageing population,Australia’s tax mix poses a risk to fiscal sustainability,” it said.

“For the current tax mix,with its high dependence on personal income tax,there is a trade-off between providing sufficient support for the ageing population and maintaining intergenerational fairness for younger Australians whose primary income is wages.

“Intergenerational considerations,together with projections of increasing expenditure pressures to meet the needs of the ageing population,suggest that Australia’s concentrated tax mix may pose a risk to the long-term sustainability of the tax system.”

The PBO noted that the last time Australians went more than four years without personal tax cuts was in the 1960s. The reduction in the tax burden on workers that will flow from the stage three tax cuts will be effectively wiped out by the end of the decade.

The government has been under pressure internally to re-visit the stage three tax cuts that are legislated to begin from July 1 next year. The largest gains from the cuts will flow to high-income earners,although people earning down to $46,000 will see a modest reduction in their annual tax bill.

Chalmers will use an address to the World Mining Congress in Brisbane on Thursday to argue the government is repairing the budget to protect the Australian economy from the impact of global uncertainty,higher costs and higher interest rates.

He will argue the larger-than-expected surplus would help strengthen the foundations of the nation’s finances.

“This surplus for our first year in office will be even bigger than what we forecast in May. We were deliberately restrained,cautious and conservative,methodical and responsible,” he will say.

“We wanted to rebuild our buffers,and we are. We wanted to take pressure off inflation,and we are.”

Cut through the noise of federal politics with news,views and expert analysis from Jacqueline Maley. Subscribers can sign up to our weeklyInside Politics newsletter here.