PM says strong start made on budget

The intergenerational report will show how far the federal government has come in sorting out the budget mess it inherited from Labor, Prime Minister Tony Abbott says.

Treasurer Joe Hockey will release the intergenerational report on Thursday, a five-yearly review that outlines the challenges facing Australia over the next 40 years.

"We have a big budgetary challenge, a very big budget challenge but a very substantial start has been made," Mr Abbott told reporters on the NSW south coast.

He said the report will show where the budget would have been under Labor's policies, where his government is attempting to go and how far it has already gone.

"I'm really pleased with the very strong start this government has made to sorting out the budgetary mess we were left by out predecessors," he said.