Politicians will no longer get the benefit of frequent flyer points when they travel, Treasurer Wayne Swan says.

Mr Swan will hand down his third budget on Tuesday, for the 2010/11 financial year.

He said Finance Minister Lindsay Tanner has been able to make "considerable savings" of $160 million over the next four years in the area of government travel.

"He's done that by renegotiating travel contracts," Mr Swan told the Nine Network.

"One of the things he has done ... is to get rid of the frequent flyer perks for politicians and their staff."

At the moment politicians and their staff accumulate frequent flyer points for business travel purposes.

The government has pledged a two per cent cap on spending in efforts to get the budget back to surplus as well as making savings.

"We are going to have a disciplined budget, we need to impose that discipline on ourselves," he said.

Mr Swan dampened speculation that some initiatives from the Henry tax review, that was released last weekend, may be included in the budget papers.

This included a 40 per cent tax discount on income from savings.

"Certainly I indicated when we launched the independent tax inquiry that they were worthy initiatives," Mr Swan said.

"But they are not ones at this stage that we have been able to commit to and to fund as we go forward."Mr Swan said the budget deficit will be less than the government had forecast a year ago, but companies were still suffering from "significant losses" incurred during the global recession, which remain a drag on government revenues.

At the time of the Mid-Year Economics and Fiscal Outlook (MYEFO) late last year the government forecast a revenue writedown of $170 billion over four years.

The outlook forecast a deficit of $57.7 billion for 2009/10 before narrowing to $46.6 billion in 2010/11.

"Certainly the deficit will be less than we were forecasting a year ago," Mr Swan said.

"The outlook will be better, will be stronger and that will be there in the forecasts on budget night."

But he reaffirmed that there won't be the giveaways normally associated with a pre-election budget.

"It is certainly going be a no-frills budget. We are not engaging in a Peter Costello/John Howard spend-a-thon in election year. There is no room for that," he said.

"We are serious about our strict budget rules."