CANBERRA, AAP – The federal budget won’t contain any “knee-jerk reactions” to help deal with the rising cost of living, according to the prime minister.

Ahead of next week’s budget, Scott Morrison said the government was aware of rising living costs that had been driven by the invasion of Ukraine.

“They’re having a real impact on people right now, so we’ve been conscious of that,” Mr Morrison told Brisbane radio 4BC.

“But what we do as a government is we don’t have knee-jerk reactions, we think through carefully how we can best provide the sort of support that we believe the federal government can deliver.”

Treasurer Josh Frydenberg is reportedly considering a temporary cut to the 44.2 cents per litre fuel excise, as petrol prices rise above $2 per litre.

Mr Morrison said next week’s budget would focus on addressing the impacts of the costs of living ahead of the federal election.

The government hopes to use the budget as a springboard for its re-election campaign, with the poll due to be held by May 21 at the latest.

“You can’t support pension increases unless you have a strong economy and that’s why the budget will focus very heavily on keeping that economy strong,” he said.

“It’ll all be about … addressing those cost of living impacts where they’re really putting pressure on families, keeping out small businesses going, and ensuring they can continue to grow out of this pandemic.”

The federal government on Monday announced a further $60 million for its recycling modernisation fund aimed at tackling problematic plastics like bread bags and chip packets.

The investment, to be included in the March 29 budget, will increase the fund to $250 million, as it helps drive a $1 billion transformation of the waste and recycling sector.

Mr Morrison said the government was committed to stopping harmful plastics from entering the oceans, choking up waterways and destroying marine life.

“This new funding stream, dedicated to helping solve the problem of hard to recycle plastic waste, demonstrates our determination to invest in Australian industry, to growing the recycling sector and to creating a stronger economy and stronger future for Australia,” he said in a statement.

“Three years ago I made a commitment at the UN to stop plastic waste from entering our oceans, a commitment that has sparked a recycling revolution in Australia.”

Mr Frydenberg could hand down a much-improved budget position due to a stronger economic recovery from the COVID-19 pandemic and a commodity price boom caused by the war in Ukraine, Deloitte Access Economics economist Chris Richardson says.

For the 2021/22 financial year, he is forecasting a deficit of $68.8 billion, compared to the $99.2 billion predicted in December’s mid-year budget review.

“We are getting a COVID recovery and a commodity boom, the biggest really that we have had,” Mr Richardson told AAP, as he released his twice-yearly budget monitor.

Meanwhile, the government wants a significant shake-up of Australia’s payments system aimed at supporting growth, investment, jobs and innovation.

“Cryptocurrencies and assets are a global phenomenon and as more Australians invest in these new asset classes and embrace the new technologies underpinning them, it is critical that we have a robust and competitive tax and regulatory regime in place,” Mr Frydenberg said.

“Tax certainty for investors and those transacting will also be vital.”

As such, the government has initiated a Board of Taxation review into the appropriate tax settings for these assets.