Jim Chalmers has warned there will be little room for more cost of living support in his fifth and “most responsible” budget yet, as he ruled out an immediate extension of the 26-cent cut to the fuel excise and downplayed hopes for additional tax relief for workers.

The treasurer also said Australian voters would forgive Labor for breaking a pre-election vow not to touch negative gearing rules for landlords, which is set to form part of a package that would also scale back the capital gains tax discount in the name of intergenerational fairness.

As the Reserve Bank’s monetary policy board began its two-day meeting that most economists predict will end with a third straight interest rate hike on Tuesday, Chalmers promised that the budget in a week’s time would play “a helpful, not a harmful role in the fight against inflation”.

“Australians are already paying a very hefty price for this war in the Middle East. We had some inflationary pressures in our economy before the war. The war has turbocharged those inflationary pressures,” he said on Monday.

“That’s one of the reasons why the budget must be, and will be, so responsible. We will save more than we spend in the budget.”

With no end in sight for the US-Israel war on Iran and the associated global shock to the supply of oil and other critical commodities such as fertiliser, Chalmers said the government had “a whole range of contingencies” should the economy deteriorate more quickly than expected.

But he said next Tuesday’s budget would not extend the temporary halving of the federal fuel excise, noting that petrol prices had come off “substantially” from their March highs.

“When it comes to the fuel tax cut, that will be in the budget up until the end of June. Clearly, if the economy deteriorates quicker and worse than what we’re anticipating in the budget, of course we will consider our options at that point.”

Labor is poised to announce changes to the CGT discount and negative gearing rules, as part of reforms Chalmers said were aimed at addressing community concerns that younger generations are being left worse off under current tax settings.

Anthony Albanese explicitly ruled out changes to negative gearing, opening the government up to accusations of breaking an election promise to not touch the popular tax break for landlords.

Chalmers harked back to Labor’s “necessary and warranted steps” to redirect more of the Coalition’s stage three tax cuts to lower and middle class workers, despite vowing not to touch them.

“Our responsibility is to calibrate the budget to the conditions, to understand and respond to the very real pressures that people are under now, and in intergenerational terms as well.

“You build trust by taking the right decisions for the right reasons and explaining, if you’ve come to a different view over time, being upfront and explaining why that has been the case.”

The treasurer also flagged the mooted changes to investor taxes would not be used to pay for extra tax relief for Australian workers.

“We’ve already got tax cuts coming,” he said when asked about the prospect for further income tax relief.

Labor at its last, pre-budget election promised to reduce the lowest income tax rate from 16% to 15% from mid-2026, and then to 14% from mid-2027 – minor reductions that would deliver at most $268 in tax relief next financial year, and $538 in the next.

A big part of the budget will be the more than $2.5 billion we’re spending on the fuel tax cut, and we’ve got the standard deduction coming as well,” he said.

“So, I’ve seen some speculation about tax cuts. I would just remind everyone that this is a government cutting taxes, cutting income taxes. We’ve done it once, we’ll do it two more times, and the standard deduction will provide a bit of additional tax relief as well. That’s already in the system.”