As Australians grapple with a cost of living crisis, the Treasurer has signaled that deeper cuts are on the way.

The treasurer has issued a warning that big cuts are ahead as he prepares to deliver his first budget later this year.

Jim Chalmers and his finance minister, Katy Gallagher, said they were combing through the national budget to draw a line under perceived waste and rorts.

But after inheriting a trillion dollars in debt, the potential savings won’t be enough to bring the budget back in line.

“In terms of the fiscal position, I think there needs to be a more substantial look at cutting some of this wasteful spending that we inherited,” he told the Australian Financial Review. .

The pair have already identified $350 million in savings by scrapping the Coalition’s community development program – which was used by the previous government to funnel money into marginal seats.

An additional $500 million was found by cutting a regionalization fund that had not yet started.

Speaking to Nine, Education Minister Jason Clare said it was about making sure Australians got “their money’s worth”.

“We inherited huge challenges,” he said on Saturday.

“We need to make sure that when we present the new budget in October…we get what we pay for, that taxpayers get what they pay for.”

The aim of Dr Chalmer’s first budget will be to implement Labor’s election promises.

Mr Clare insisted that core Labor promises such as cheaper childcare were all safe from the budget razor gang.

“We have to keep our promises and we will deliver on them…absolutely,” he told Nine.

But he was forced to defend Dr Chalmer’s comment that the government would not automatically push the Fair Work Commission to match wage increases with inflation.

“We also said this before the elections,” the education minister said.

“We said there were specific circumstances where real wages had fallen over the past 12 months and were projected to fall over the next 12 months.”

But the big challenge for the new treasurer will be to look ahead to the upcoming election and see how Labor can make the case for fiscal repair, signaling reform may be on the cards.

“Something has to change, in the way the nation thinks about its economic and fiscal challenges and my contribution to that is to institutionalize some of that thinking,” he said.

With inflation expected to hit 7% and fears of a looming recession, Dr Chalmers said the state looking for a document in October should look elsewhere.

“There may have been a time in the past when state budgets were obviously lower than Commonwealth budgets. But that’s not the case now,” he said.

“I have been heartened by the recognition across the country that we all have our own budgetary challenges, and that there is not a bottomless pit of Commonwealth money to solve them all.”