NEXT week's budget update will reveal spending cuts and revenue measures worth an extraordinary $4 billion this financial year - a task made all the more difficult by the fact the year has only eight months to run.

Shocking revenue downgrades to be included in the update reveal that since May, deteriorating international conditions and collapsing export prices have knocked $21 billion from projected tax revenue over the forward estimates and $4 billion from forecast tax revenue this financial year.

"In balancing the budget, the Gillard government has made sensible spending cuts while winding back inefficient and outdated tax concessions" ... Treasurer Wayne Swan. Credit:Alex Ellinghausen

Without action the downgrades would wipe out this year's planned $1.5 billion surplus and those planned for the next two years as well.

Writing in today's Herald, the Treasurer, Wayne Swan, reaffirms his commitment to balance the budget next week but says he will cut with care, doing "everything possible to protect jobs and help pave the way for classic Labor reforms".