Much lower than expected wage growth has knocked a hole in the government's budget projections, blowing out deficits right through until 2019-20.

The worse position, confirmed by Treasurer Scott Morrison, comes despite a doubling in the price of coal and a 50 per cent jump in the price of iron ore.

It will unveiled in a mid-year budget update to be released on December 19.

Mr Morrison said the government would adopt a "cautious" approach to commodity price assumptions in the update, allowing projections of weaker personal and company taxes from weaker wage growth to overwhelm projections of improved company tax revenue from better resource prices.