Australia's trillion-dollar debt burden is becoming much more expensive, with Treasurer Jim Chalmers warning that rising global borrowing costs will blow a multibillion-dollar hole in the federal budget and heap fresh pressure on taxpayers.

The warning comes as the Albanese Government battles mounting deficits and soaring interest repayments, now among the fastest-growing areas of Commonwealth spending.

Appearing on the Money Café podcast on Wednesday, Chalmers said the budget faced growing strain from rising bond yields, which set the cost of government borrowing.

'We've got these rising bond yields putting quite extreme pressure on borrowing costs as cheaper debt has to be refinanced for more expensive debt,' he said.

His comments come ahead of the Mid-Year Economic and Fiscal Outlook, which is tipped to reveal a substantial increase in debt servicing costs as financial markets demand higher returns for lending to governments globally.

Australia's 10-year government bond yield has climbed to about 5.3 per cent, up from around 4.8 per cent at the beginning of the year.

The sharp rise means the Commonwealth must pay billions more in interest over coming years, as existing debt is rolled over at higher rates.

Estimates from RBC Capital Markets suggest the increase in bond yields since May alone could add around $6billion to budget deficits over the next four years.

That would be on top of the $146.3billion already budgeted for interest payments over the same period.

Labor's fiscal management is under greater scrutiny as Commonwealth gross debt has now surpassed $1trillion for the first time.

During the interview, business commentator Stephen Mayne questioned how Australia could face decades of deficits despite its resource wealth.

'We've got the world's greatest dowry of resources and yet there's 40 years of deficits,' he said.

'We're starting with a trillion dollars in debt. Shouldn't we be the richest country in the world? How is it that we can't ever run a surplus over four decades?'

Chalmers defended the government's record, pointing out he'd delivered two budget surpluses during his time as Treasurer.

'I'm the only Treasurer in the last decade and a half to hand down a couple of surpluses,' he said.

'Obviously the closer you can get to balance the better.'

The Treasurer argued Australia's finances remain stronger than many comparable economies, despite the worsening outlook.

'Our debt is a tiny sliver of what we see in other countries,' Chalmers said.

'Compare us with the world and there wouldn't be many countries who want to swap places with us.'

Economists have warned the era of ultra-cheap government borrowing is over.

AMP chief economist Shane Oliver said investors had become accustomed to decades of declining interest rates and record-low government borrowing costs.

'We have become so used to the downtrend in bond yields since the 1980s that it's now hard to conceive that the trend is reversing,' he said.

The federal government is forecast to post a $64.1billion budget deficit this financial year, with deficits expected to continue for years to come.

Treasury forecasts show interest payments on government debt are expected to rise by 8.8 per cent a year over the next decade, a faster rate than nearly every other area of government spending.

Chalmers admitted an ageing population would increase pressure on the budget, but insisted Australia's compulsory superannuation system would help contain long-term pension expenses.

'One of the most important things is the absolute miracle of superannuation,' he said.

'The call on the budget from pensions is actually going down.'

Despite insisting Australia remains in a stronger position than many overseas economies, Chalmers conceded the government is facing ever-harder fiscal challenges.

'Of course the pressures are intensifying,' he said.

'The world is a dangerous place. The global economy is more volatile and less predictable than it has been probably in my lifetime.'