Treasurer Scott Morrison.
Treasurer Scott Morrison.

MYEFO: Budget deficit set to hit $37.4 billion

FALLING commodity prices, declining returns from corporate and income tax, and ailing economic growth has punched a $37.4 billion hole in the Turnbull government's budget, delaying its projected surplus another year to 2020-21.

Treasurer Scott Morrison released the government's mid-year budget update today, showing Gross Domestic Product growth had dropped to 0.25% from 2.75% since the May budget.

Mr Morrison said the "destination" of a surplus was still the aim, but the government's task was to ensure the transition from mining to a more diversified economy was successful.

The $34 billion hole in revenue has compounded the government's underlying cash deficit, which has risen from $35.1 billion in the May budget to $37.4billion.

Delays and trade-offs with the Senate over a raft of legislation have cost government coffers $5.8billion over four years.

The government has spent an extra $3.5 billion on new commitments since May, offset by about $4billion in budget cuts - mostly in health - and a crackdown on social services payments.

Labor treasury spokesman Chris Bowen said the update showed the government no longer aimed to reach a budget surplus.