Nearly $10 billion in savings have been clawed back as part of the mid-year federal budget review.

The savings will cover new spending, such as the federal government’s response to the robodebt royal commission.

The $22 million in funding will cover more face-to-face service support options and a raft of other reforms recommended by the investigation into the unlawful automated debt collection tool.

Other areas of new spending include $1.5 billion to wrap up the pandemic event visa, which was introduced during COVID-19 for temporary visa holders so they could stay in Australia and work while international borders were closed.

In the lead-up to the mid-year economic and fiscal outlook, Finance Minister Katy Gallagher said the work of identifying money that could be returned to the budget or redirected was ongoing and would fund $5.2 billion in unavoidable spending.

“The Albanese government is focused on putting the budget on a sustainable footing and continuing its responsible economic management,” Senator Gallagher said.

In total, the government says $49.6 billion in savings and reprioritisations have been delivered since the 2022 election.

Due for release on Wednesday, the mid-year update is expected to reveal a substantially improved budget bottom line than what was predicted in May.

The federal treasurer has played down the prospect of a second year in the black for the 2023/24 financial year, though a smaller deficit than the $13.9 billion predicted back in May can be expected.

In 2022/23, a $22.1 billion surplus was delivered — well above the $4.2 billion predicted in the budget — as sky high commodity prices and the strong labour market beefed up revenues.

Several economists, including the team at Westpac, expect the budget to remain in the black this financial year.

In a note, the bank’s economists said revenue in October was $8.4 billion ahead of forecasts “on upsides to population, jobs, and commodity prices”.

On current policy and program costs, the bank’s economists are expecting another year in surplus, and note that Treasury’s cautious estimates on future commodity prices mean its predictions tend to be conservative.

Despite an improvement in the bottom line in the short to medium term, the federal budget still faces long term structural pressures.

Interest payments are now the fastest-growing area of expenditure due to ballooning borrowing costs.

Other rapidly growing spending areas include the National Disability Insurance Scheme, hospitals, aged care and defence.

The intergenerational report, released in August, found an ageing population is expected to put pressure on the nation’s finances as a shrinking pool of workers support extra spending on aged care and health.

-AAP