The federal budget has suffered a $30 billion revenue write-down over the next four years because of the collapsing iron ore price, according to Prime Minister Tony Abbott.

Mr Abbott has revealed the growing revenue black hole at a business lunch in Sydney on Wednesday.

"Since last year's budget, collapsing iron ore prices and the subsequent write-down in tax receipts have already driven a cut in government revenue of more than $30 billion over four years," he said.

After a recent bounce, the benchmark Tianjin iron ore spot price in China crept back just above $US50 a tonne yesterday, but is still less than half the $US117 a tonne it was this time last year and well off peaks above $US180 a tonne in 2011.

Treasurer Joe Hockey has said Treasury is contemplating a price as low as $35 per tonne in its estimates.

Mr Abbott also used today's speech to formally confirm that the Government will not go ahead with a promised company tax cut for big businesses.

But larger companies will not be forced to pay a levy that was designed to help fund the Prime Minister's dumped paid parental leave scheme.

"On July 1, the tax arrangements previously flagged — a company tax cut coupled with an offsetting levy to pay for a more generous parental leave scheme — won't go ahead," Mr Abbott said at the Sydney function.

"I can confirm, though, that the budget will have measures to cut small businesses' tax bills in ways that will stimulate investment, boost productivity, generate new jobs and make existing jobs more secure."

But a tax cut of at least 1.5 per cent will go ahead for small business from this July and small business may also benefit from other measures, including an increased depreciation rate on capital items.

Australian Chamber of Commerce and Industry chief executive Kate Carnell said big business had been bracing for the blow.

"We're disappointed about the company tax not coming down, although we are very pleased the paid parental leave scheme, as outlined by the prime minister, is not going ahead — we don't think that would have been good for business at all," she told the ABC's AM program.

"We are pleased though that something will go ahead for small businesses who desperately need an injection of confidence, but also an injection of capacity to invest."

Innes Willox from the Australian Industry Group welcomed support for small business, but said company tax needed to come down.

"We need to find ways to make our corporate taxes competitive, we're relatively high among OECD nations for corporate taxation, we need to drive it down," he said.

Mr Abbott also announced earlier this year that his signature PPL wage replacement scheme would not go ahead, just six months before it was due to begin.

Dumping PPL will 'more than' cover cost of small business tax cut

Mr Abbott said today that savings from abandoning the PPL plan will "more than" cover the cost of the small business tax cut.

But it will potentially leave Australia with a two-tier tax system, creating difficulties in defining exactly what size business would qualify.

A second option is reportedly on the table, that would give the tax cut to all businesses on the first $5 million in profits and then go up to 30 per cent for income above that.

The other key spending measure in the budget — a families package focused on the cost of childcare — will also have to be offset by savings.

"Our childcare initiative for families is contingent on the delivery of savings to pay for it - because we can't have the spending without the saving to make it sustainable," he said.

Social Services Minister Scott Morrison has issued a warning to the Senate, that cuts from last year's budget must be passed to make way for more support for families.

"There are existing savings already before the Senate on a whole range of measures, and if those measures are passed, then we will be able to make those investments," he said.

About $10 billion in budget measures remain blocked — including reducing the rate of increases to pensions, freezing family payments and forcing young unemployed people to wait for six months to access benefits.

With less than a month before the Government's second budget is handed down, Mr Abbott also stressed that the Coalition is still working towards achieving a surplus — but he gave no date the budget may hit black.

"We are steadily working our way through last year's unfinished business while also pressing forward with new elements of our plan," he said.

"The deficit will decline every year; each year will bring us closer to a surplus."

The latest Treasury update in December projected the budget would just reach into surplus territory in 2019-20, but speaking from New York overnight, Treasurer Joe Hockey said current economic conditions meant the path back to surplus would need to be "tempered a little".

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 6 minutes 43 seconds 6 m RBA board member urges PM to call double dissolution election to pass budget measures

Meanwhile, Reserve Bank Board member and former Woolworths boss Roger Corbett said governing in Australia had become "almost impossible" and Mr Abbott should consider calling a double dissolution election.

The leading businessman told 7.30 an early election could help break the deadlock in the hostile Senate to pass contentious budget measures.

Mr Corbett, who is a Liberal Party member, said at present the Upper House was not allowing the Prime Minister to do his job.

"If I'd been the Prime Minister I'd be very inclined to call a double dissolution and say 'people of Australia you've elected me, I can't govern'. And if we've got a split Senate we cannot hold our Government responsible to act as we voted them," he said.

"I think the voting people of Australia, all of us are responsible for the split Senate that we have that really makes government in Australia almost impossible."