The federal government’s 2013/14 budget deficit has ballooned to more than $30 billion.

The unemployment rate is expected to jump above six per cent as the government grapples with a $33 billion revenue writedown.

Treasurer Chris Bowen and Finance Minister Penny Wong this afternoon released an update to the May budget which warned of tough global conditions.

A further $33.3 billion has been wiped off revenues over the next four years, forcing Labor into $17.4 billion of “responsible savings”.

“The government considers that these savings can be managed while maintaining growth in jobs and the broader economy,” the ministers said in a statement.

The budget deficit is now expected to be $30.1 billion in 2013/14 rather than the $18 billion estimated in the May budget.

Bigger deficits are also forecast in the next two years before returning to a budget surplus of $4 billion in 2016/17, which is smaller than the $6.6 billion project two months ago.

“The outlook for world growth has weakened, including in China, and the world price of key commodities has fallen leading to lower forecast terms of trade,” the government’s statement said.

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Economic growth has been cut to 2.5 per cent in 2013/14 from 2.75 per cent, while unemployment is expected to be 6.25 per cent in 2013/14 and 2014/15 rather than 5.75 per cent.

Nominal gross domestic product, which has a major impact on expected tax receipts, is below a 20-year average.

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“With the economy currently facing a period of transition and falling terms of trade, cuts in the near term to offset the lower than expected tax receipts and other variations in the budget would put jobs and growth at risk,” the statement said.

“The government has made $17.4 billion of responsible savings decisions to provide a pathway to expected surplus in 2016/17.”

Savings include a previously announced increase in tobacco excise over the next four years, raising more than $5 billion, and changes to fringe benefit tax arrangements on cars, bringing in $1.8 billion.

The government is providing an extra $99 million in funding to the tax office over four years to address unpaid tax and superannuation, which is expected to improve the budget bottom line by $827 million.

The government is also setting up an insurance fund to gradually build over time to a target size of 0.5 per cent of total banks deposits.

This will add $733 million to the budget over forward estimates.

Additional costs to the budget include $3.8 billion from moving to a emissions trading scheme one year earlier than planned and $1.3 billion in addition asylum seeker management costs.

LABOR’S ECONOMIC UPDATE – WHAT’S CHANGED

Budget

• bigger deficits this year and next, another deficit in 2015/16
• projected surplus in 2016/17 smaller than expected
• 2013/14 deficit $30.1 billion vs $18 billion forecast in May budget
• 2014/15 deficit $24 billion vs $10.9 billion
• 2015/16 deficit $4.7 billion vs $800 million surplus
• 2016/17 surplus $4 billion vs $6.6 billion surplus

Economy

• 2013/14 growth rate now 2.5pct vs 2.75pct in May budget
• Growth in forward years to 2016/17 unchanged at 3pct
• Unemployment rate rising to 6.25pct this year and next
• Unemployment rate falls back to 5pct in 2015/16 and 2016/17
• Inflation remains relatively contained
• Consumer Price Index 2.5pct this year, 2pct next year
• Consumer Price Index unchanged at 2.5pct in following years

Revenue

•  $33.3 billion write down in receipts in four years to 2016/17
•  $7.8 billion decline in 2013/14
•  Declines driven by lower terms of trade, wages and business tax receipts
•  Individual tax receipts is the biggest factor – down $18.1 billion
•  Company receipts will be $9.7 billion lower

Savings or budget improvements

• total savings of $17 billion
• public service efficiency dividend rises to 2.25pct from 2014/15
• mining tax proceeds rising in forward years, to $2.3 billion in 2016/17
• $879 million from slowing aid budget growth rate
• $5.8 billion from 12.5pct increases to tobacco excise from December 2013
• $1.8 billion from changes to car fringe benefits tax arrangements
• $827 million from recovery of unpaid tax and superannuation collection
• $733 million from bank deposits levy for Financial Stability Fund from 2016

 Spending

•  $175 million for PNG solution in 2013/14
•  $1.1 billion for PNG solution over four years
•  $250 million to defer $2000 cap on work-related education cost deductions
•  $3.8 billion for faster move to emissions trading scheme
•  Extra $99 million to Treasury for unpaid tax, super crackdown