The Turnbull government is forecasting a larger surplus of $10.2bn in 2020-21, revised up from $7.4bn, after unveiling new cuts to welfare, family payments and higher education.

In a six-monthly update of the May budget, the government says higher than expected commodity prices in 2017, stronger than expected company profits and superannuation taxes, and more Tax Office enforcement activity, have seen tax receipts revised up by $3.6bn in 2017-18.

But historically-weak wages growth is weighing on the budget, with wages in both the public and private sectors being more subdued than expected six months ago, with one consequence being that nominal GDP growth has been revised down to just 3.5% in 2017-18, from 4% in May.

While the government will trumpet the improved trajectory to surplus, it has used the end of year Treasury update to unveil new cuts to the university sector worth $2.1bn.

Two days after its Bennelong byelection victory, the government has abandoned a higher education package outlined at the May budget that would have cut $2.8bn from the sector and replaced it with cuts worth $2.1bn. The revised package will see students having to repay debts once their income reaches $45,000.

The government has produced a new savings measure worth $1.2bn over four years achieved by broadening the criteria for waiting periods for newly arrived migrants before they can access welfare payments.

From July 2018, the current two-year waiting period for family payments, including family tax benefit, paid parental leave and carers allowance, will be extended to three years.

The government will save $400m by withholding lump sum payments under family tax benefits for people with outstanding social security, student assistance, or paid parental leave debts from December 2018.

The government will also save $1bn over four years by tightening payments to family day care services as it transitions to the New Child Care Package that will begin on 2 July 2018.

Speaking at a press conference on Monday after the budget-update was released, Treasurer Scott Morrison said the Coalition’s plan to return the budget to surplus by 2020-21 was still on track, with Treasury estimating the deficit for 2017-18 would be $23.6bn, an improvement of $5.8bn from six months ago.

He said the government expected the deficit to decline further in 2018-19, to $20.5bn, and then to $2.6bn in 2019-20, before recording a higher-than-expected surplus of $10.2bn in 2020-21.

But those numbers will have to be achieved in the face of historically-weak wages growth and worryingly-weak consumer spending.

The forecast for GDP growth in 2017-18 has been revised downwards, from 2.75% to 2.5%, after Treasury factored in the larger-than-expected fall in consumer spending in July, August, and September that followed cuts to public holiday and Sunday penalty rates on 1 July.

Despite the concerns about consumption growth, GDP growth is forecast to rise again to 3% in 2018-19, and stay there until 2020-21.

The budget update also shows net debt is expected to peak at $365.2bn in 2019-20 (18.5% of GDP), up from an estimated $191.5bn (12.1% of GDP) in the Coalition’s 2013-14 mid-year budget update.

Morrison said the economy was in good shape heading into the new year, and the government was still reducing the pace of spending growth.

“Across the social services portfolio, payments are expected to be up to 2% lower [over the next four years],” he said.

“This is due to the changes we have put in place, despite the opposition of the Labor Party over several budgets, and getting people back into work. We now have the lowest level of welfare dependency of working age Australians in almost 25 years.”