The Parliamentary Budget Office says the Morrison government’s plan to deliver a budget surplus by 2021-22 is still relying on big increases in personal income taxes.

Despite the government’s recently legislated cuts, the PBO says the average personal income tax rate is still projected to increase from 22.9% to 25.2% over the next decade, and the largest increase in average tax rates will occur in “the low- to middle-income groups”.

A projected fall in payments including family tax benefit, pharmaceutical benefits and the disability support pension will contribute to the improvement in the budget position, the PBO says.

And the recent decision not to proceed with corporate tax cuts for businesses with an annual turnover above $50m will improve the budget balance over the period 2018-19 to 2026-27, if not offset by other measures.

The findings can be found in the PBO publication 2018-19 Budget: Medium-term projections, which was released on Thursday.

The publication is an independent assessment of the government’s budget position, using the government’s own assumptions.

It projects the budget’s “underlying” cash balance will move from a deficit of 1% of GDP in 2017-18 to a surplus of 0.8% of GDP by 2021-22, as the government has been saying.

It says the government’s projected surpluses over the coming decade are predicated on above “trend economic growth” for much of the period, and a return to close to “trend wages growth” by 2020-21.

The PBO warns the government’s projections for its budget position have become more sensitive to those macroeconomic assumptions because of the effect of its personal income tax cuts.

This week’s national accounts data, which showed wages growth under pressure, will certainly put pressure on those projections.

The PBO also says, based on the 2018-19 budget, projected tax receipts will not reach the government’s tax-to-GDP cap of 23.9% of GDP until 2027-28 but that cap could be reached earlier now that the large corporate tax cuts are not going ahead.

The PBO says there are risks in the government’s projections for consumption taxes.

“Ongoing weakness in the consumption tax base would lead receipts and the budget balance to be lower than our central projections,” the report says.

The PBO also says the government’s projections of spending assume no new spending initiatives over the next four years, and it wonders if the government will be able to keep that self-control.

“The spending restraint seen over the past few years may be increasingly difficult to maintain with an improving budget outlook,” it says.

Overall, the PBO says the budget’s underlying cash balance is projected by the government to move from a deficit of 1% of GDP ($18.2bn) to a surplus of 0.8% of GDP ($16.6bn) by 2021-22.

The PBO projects the surplus to reach 1.3% of GDP ($42.3bn) by 2028-29.

On Wednesday, economists warned that though the economy was growing at a strong annual rate of 3.4%, the growth was being supported by strong consumer spending that will not be sustainable in coming years.

They said the ongoing weakness in wages in Australia explained why households were continuing to draw down on savings to fund consumption.

In the June quarter, the household savings ratio fell from 1.6% to 1% of disposable income – its lowest level since December quarter 2007.