$23 billion of national debt tipped to be sliced off

Treasurer Scott Morrison is set to unveil his budget update this morning - and it's expected to be one the Turnbull government will try to claim as a political win.

For the first time since the Global Financial Crisis, we're heading for a massive reduction in gross debt.

That could potentially leave the door open for income tax cuts.

In the May budget this year, debt was expected to reach $606 billion over four years.

Now it's on track to reach no more than $583 billion - $23 billion dollars lower.

Nine's Finance Editor Ross Greenwood said this was mainly due to the government receiving more tax revenue from middle-income earners.

"When people get a wage rise, they eventually bump themselves up into a higher tax bracket. What occurred in 2016 is they raised the tax threshold from almost the average wage of $80,000 to $87,000," he told the Today Show.

"But people continued to have wage rises, and as a result this has collected the government billions upon billions of dollars."

Some of the other factors leading to an improved budget outlook include higher-than-expected coal and iron ore prices.

This has increased company profits in the resources sector, which has meant the government has been able to collect more tax.

Greenwood said jobs growth had also contributed.

"371,000 jobs created over the past 12 months means there's that many more taxpayers putting billions of dollars in," he said.

"This is the reason why the government is now in a position where probably not only has it got a situation where it can pay down debt, but in the future also to hand out tax cuts to those middle-income earners."

While the Turnbull government will be rather pleased with itself over this budget update - it is likely to be less pleased with the latest Newspoll.

For the 25th time in a row, it's lagging behind Labor in the Newspoll.

The latest has Labor leading 53 to 47, on a two-party preferred basis.

It also places the Opposition ahead in the Primary vote, leading 37 to 36 percent.

Malcolm Turnbull has maintained his lead as preferred Prime Minister, 41 to 34.

The Newspoll also places Labor ahead on cost of living issues.

Nine's Political Editor Chris Uhlmann says the positive budget update will help the Turnbull government end the year on a high note - after already gaining momentum with the legalisation of same-sex marriage, two by-election wins and the departure of Labor Senator Sam Dastyari.

"He's had the best month of his year in the last month of this year, he needs to work out how he can turn that into a good 2018."