Federal budget deficits will increase by more than $10 billion in coming years as the Government battles low wage growth and falling company profits, but it insists it will still return a surplus in 2020/21.

MYEFO at a glance: 1. Budget deficit this financial year has shrunk by $600 million to $36.5 billion 2. Deficits over the four year forward estimates have grown by more than $10 billion 3. The Government is still projecting a return to surplus in financial year 2020-21 4. Net debt as a proportion of economic output will peak at 19 per cent in 2018-19 5. Real economic growth estimates have been revised down slightly 6. MYEFO says "commodity prices remain a key uncertainty" 7. Estimated tax receipts are down by $3.7 billion since the pre-election budget update 8. Tax receipts are predicted to be $30.7 billion lower over four years 9. Tax receipts are down despite recent bounces in key commodity prices 10. Sluggish wage growth and and non-mining company profits are dragging down tax receipts 11. The Government has confirmed it is scrapping the Green Army program, saving $224 million 12. MYEFO reveals extra staff for crossbenchers and other politicians will cost $35.8 million over four years 13. The Government is closing the Asset Recycling Fund 14. A Commonwealth penalty unit will rise from $180 to $210

Three credit ratings agencies, including Standard & Poor's, indicated they would not strip Australia of its AAA credit rating, but S&P said it remained pessimistic about the Federal Government's ability to return the budget to surplus by the end of the 2021 financial year.

The Government's Mid-Year Economic and Fiscal Outlook (MYEFO) revised down the nation's deficit of $37.1 billion in 2016/17 — as announced in the May budget — by $600 million to $36.5 billion.

The deficit will climb from $26.1 billion to $28.7 billion in 2017-18 and from $15.4 billion to nearly $20 billion in 2018/19, when net debt as a proportion of GDP will peak at 19 per cent.

In a bid to claw back savings, the Government will increase the cost of Commonwealth fines from $180 to $210 per penalty unit, which is expected to raise $90 million by 2019/20.

The Green Army program, established under former prime minister Tony Abbott, will be terminated, saving $224.7 million over four years and $9.3 million this financial year.

The Government's pilot nanny program — also introduced during Mr Abbott's tenure — will be scrapped on January 1 after falling demand, resulting in $170.4 million over four years.

It will also scrap the Assets Recycling Scheme, announced in the 2014/15 budget, which is expected to reduce gross debt by $20 million by 2019/20.

The budget will set aside $1.6 million for the establishment of a black economy taskforce, which was announced by Revenue Minister Kelly O'Dwyer last week and will police tax avoidance and welfare fraud.

The MYEFO also confirmed the end of the same-sex marriage plebiscite with the Government banking $154 million in savings.

The Government will save $724 million this year by paying less in childcare rebates and benefits than initially expected. With revised forecasts, the Government now expects to save $7.6 billion over forward years.

Slower than expected growth in aged care pension payments will save a further $656 million this year, or $2.7 billion by 2020.

The budget figures have been updated with close to $21 billion of the Coalition's $40 billion worth of savings passing Parliament since the July election.

These savings include changes to the superannuation system in November that will claw back nearly $3 billion of savings over forward years.

Plans to privatise the Australian Security and Investment Commission have been dropped after an evaluation found it would cost the Commonwealth.

Commodity prices and wage inflation

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 9 minutes 10 seconds 9 m Scott Morrison says the economy needs increased investment going forward.

Treasurer Scott Morrison said surging commodity prices in 2016 had proven "a particular challenge" for economic forecasts and the Treasury had adopted a conservative approach.

Cabinet members sought to soften the ground before the MYEFO release, warning an increase in commodity prices alone was not enough to offset low wage inflation, income tax receipts and company profits.

Forecasts in the May budget were based on an iron ore price of $US55 per tonne, but that figure skyrocketed to a two-year high in November of around $US80 a tonne.

This increase was not enough to offset the lowest wage growth since the 1990s at 1.9 per cent last month, which was close to half the 2012 rate and struggled to match the rising cost of living.

"Some of the factors driving iron ore and coal prices are likely to be temporary and prices are widely expected to retrace some of their recent gains," the MYEFO report said.

"With spare capacity in the labour market expected to persist, growth in household incomes and domestic prices are forecast to remain subdued."

Labor calls for a 'more realistic budget'

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 7 minutes 36 seconds 7 m Chris Bowen says the projected 2021 surplus is 'wafer-thin'.

Labor's shadow treasurer Chris Bowen called on the Government to adopt its proposed changes to negative gearing and capital gains tax.

"[MYEFO] confirms the fact that this Government has no proper, well thought-out plan that can pass the Parliament to see our budget surplus protected," he said.

"The Government should have a better plan than this."

Labor's finance spokesperson Jim Chalmers also called on the Coalition to end corporate tax cuts to reduce deficits.

"We have an economy which is shrinking, deficits that are growing and full-time jobs that are disappearing," he said.

"It is no wonder that Scott Morrison risks being the first treasurer in three decades to have the credit rating downgraded on his watch."