Budget spending cuts essential: ACCI

A key business group says spending cuts must be at the heart of the government's budget strategy.

Australian Chamber of Commerce and Industry chief Kate Carnell said ahead of the release of the mid-year budget review on Tuesday the government's innovation statement was only one part of the solution.

"No country in history has ever grown their way out of a significant budget deficit," Ms Carnell told Sky News.

"We can't achieve the end we need without downward pressure on expenditure."

She said the government continued to spend $1.1 billion a day while raising $1 billion in revenue.

"That means every day we have to borrow $100 million," she said.

"When you have a look at the base figures here, if we don't get our budget back into balance sooner rather than later we will lose our triple-A credit rating."

The government needed to differentiate between essential spending on health and other services and the "nice to have" things which should be put on hold until the budget recovered.