Revenue losses caused by flat wages growth is set to rival the tens of billions of dollars being written off as a result of the plunging iron ore price, next week's federal budget will reveal.

Senior sources have told The Australian Financial Review that not only has the wages slowdown impacted heavily on expected income tax receipts, it is also keeping more families than expected below the $100,000 income eligibility threshold for family tax benefits.

One source said the impact of the increased FTB eligibility alone had created enormous headaches for the Expenditure Review Committee, or budget razor gang.

"You're talking billions. It's a real issue," he said.

With the budget to be handed down on Tuesday next week, the ERC will this week put a dollar figure on the estimated revenue write-downs based on the latest assessments from Treasury.

In the annual budget monitor by Deloitte Access Economics to be released on Monday, respected budget economist Chris Richardson forecasts that the income tax write-down alone will jump from $900 million this financial year to $5.4 billion in 2015-16.

BRACKET CREEP OFFSET

This would be offset to some extent by bracket creep, which Access forecasts will start adding more than $2 billion a year to the personal tax take unless there are income tax cuts. He forecasts more than $150 billion in deficits over four years, almost $50 billion higher than estimated in December.

"We still see deficits as far as the eye can see with the repair task getting harder, both because of economics – commodity prices and wages – and because of politics," Mr Richardson said.

On Monday, Labor leader Bill Shorten will use his key pre-budget speech to accuse Prime Minster Tony Abbott of squibbing on budget reform next week to save his leadership after the perceived unfairness of last year's budget sent the government crashing in the polls and almost cost Mr Abbott his job.

The government has jettisoned some of the more contentious measures from last year, another $27 billion remain stuck in the Senate with no hope of passage and Mr Abbott has promised a dull budget this time that will spare households.

"I am absolutely convinced that on budget night it will be seen as responsible, measured and fair. It is a budget which is going to deliver jobs, growth and opportunity. It's a budget which is going to make Australians feel more optimistic and confident about their future," he said on Sunday.

When Treasurer Joe Hockey told the Financial Review last month the government was considering including an iron ore price of $US35 in the budget – down from what was thought to be a conservative point-of-departure price of $US60 in the mid-year budget update released in December – he said that would cause a revenue writedown of about $6.25 billion a year, or $25 billion over the four-year budget cycle.

WAGE INCREASE CHALLENGES

At the time, he noted there were "challenges with wage increases".

Recently, Mr Abbott revealed the government had written off $30 billion due to the ore price since last year's federal budget.

Mr Richardson said even if the GST was extended to cover fresh food, it would not replace the revenue written off over the past six months due to iron ore alone.

Access estimates total revenue write-downs due to commodities, wages and other factors will see $5.2 billion in revenue disappear this financial year and "an ugly $10.8 billion in 2015-16".

It forecasts $154 billion in deficits for this and the next three financial years, which is $47 billion higher than the four-year deficit outlook in the December update.

It forecasts a deficit this year of $45.9 billion, up $5.5 billion from the December update, and $45.3 billion next year, up $14 billion from December.

ANYTHING BUT 'DULL'

Mr Richardson said Mr Abbott might describe the budget as "dull" but the forecast deficits were anything but.

"We are dropping back to where we began [before the mining boom]. That suggests there is a risk that the budget boom of the past decade is now embarking on a bust. Let's pray that isn't the case," Mr Richardson said.

Mr Hockey has conceded already the deficits will be larger then forecast in December but smaller as a proportion of the economy. The Access figures support this.

The two significant items of expenditure in this year's budget will be a small business package and a revamped childcare package, both of which the government said will be offset by a combination of savings and redirected funds.

The biggest change to childcare will be combining the means-tested childcare benefit and the non-means tested 50 per cent rebate into a single, means-tested payment.

It will be skewed heavily towards families with a combined income of less than $165,000. Those on the highest incomes of $250,000 and above will receive about 20 per cent rebate, down from the 50 per cent they receive now.

HIGH-INCOME EARNERS SUPPORT WARRANTED

Mr Abbott said on Sunday it was warranted giving support to the high-income working families because childcare support was a productivity measure, not welfare.

"It is important that childcare is seen not as welfare but as a way of strengthening our economy, because the more people we can get who are contributing, well, the better for everyone," he said.

Social Services Minister Scott Morrison said an important element of constraining growth in welfare payments was "moving away from an entitlements culture to a needs-based payment system".

"Welfare is for people who are in genuine need, not because they just have a sense of entitlement about it. And that's what we're focusing on, and that's how we'll deal with it over a long time. But it is a big cultural shift."