But the treasurer will use the speech to push back at calls for spending cuts, saying they would hurt the economy, jobs and wages.

“In this environment, it would be irresponsible to slash and burn and cut too much. Our more balanced approach is tackling inflation without crunching the economy,” he will argue.

Shadow treasurer Angus Taylor said the national accounts should have been a wake-up call for the government.

He accused the government of wasting money, including its yet-to-be-legislated $13.7 billion in production tax credits for the critical minerals sector.

“While the RBA has its foot firmly on the brake, the Albanese Labor government continues to slam the accelerator,” he said.

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“We are facing a deadly combination of high inflation and household recession.”

Taylor said the government needed to put in place a cap on tax as a proportion of GDP, ensuring the economy grew faster than public spending, and have a plan for a structural budget surplus while “ending the waste” and “inflation-fuelling spending”.

The pain from previous interest rate increases and higher inflation is now widening across the economy.

The Council of Financial Regulators, which includes the Reserve Bank, the federal Treasury, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission, on Tuesday revealed more people were falling behind on their home loans or going into insolvency.

It said it appeared risks to the financial system from lending to businesses and households remained contained. But there were growing signs of pressure across the economy.

“Members observed that the share of borrowers falling behind on mortgage payments has continued to rise, as have financial hardship applications, but from a low level,” it said.

“While personal insolvencies remained near historically low levels, the council noted that there had been an increase in insolvencies for both individuals and companies, particularly small and medium-sized enterprises, over the previous 12 months.”

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The closely watched NAB monthly business survey, released on Tuesday, revealed growing pessimism among companies as they faced a slip in activity.

Business conditions are now below their long-run average while trading conditions and profitability measures both fell. Forward orders are still in negative territory, led by the retail, wholesale and construction sectors, although the survey did show a lift in employment intentions.

NAB chief economist Alan Oster said economic activity had probably remained subdued into the June quarter, with consumer-dependent sectors bearing the brunt of a reduction in household spending.

“There are warning signs on the outlook for growth but at the same time reasons to be very wary about the inflation outlook, and we expect the RBA to keep rates on hold for some time yet as they navigate through these contrasting risks,” Oster said.