Treasurer Joe Hockey might have sympathy for mining billionaire Andrew Forrest's beef that BHP and Rio Tinto are flooding the global iron ore market but Treasury expects the iron ore glut to continue for years.

"Despite the fall in prices over the past year, expansion of low-cost supply is set to continue for some time," according to the budget's economic overview.

Treasury expects another 50 million tonnes of new of iron ore exports in 2015 alone.

"The continued ramp-up in 2015 will see Australia confirm its position as the single largest supplier globally," with Australia's 70 million tonnes of exports representing about a third of global production, according to the budget papers.

This spells bad news for Mr Forrest, who was reported in the Australian Financial Review on Tuesday to have Mr Hockey's sympathy for his view that Rio Tinto and BHP Billiton were producing a glut of iron ore by oversupplying the market and forcing prices – and federal budget tax receipts – down.

On the other side of the equation, the budget forecasts that demand from China is not likely to pick up quickly: "The weakness in China's housing sector is expected to weigh on" China's continued demand for iron ore.

"This reflects the substantial stock of unsold housing that has built up over recent years, as housing starts have consistently outstripped sale," it said.

With the iron ore price halving over the past year and trading as low as $US43 a tonne, pressure has been put on government finances, as well as companies such as higher-cost and lower-quality ore producers like Mr Forrest's Fortescue Metals Group.

"I have a lot of sympathy for Andrew Forrest and all of the workers in the sector," Mr Hockey said on Monday. "Markets go up and markets go down. If there is untoward conduct, it must be dealt with. We've been following this closely."

Treasury is predicting the iron ore price will stay at around level of $US48 a tonne, but estimated the impact of a $US10 movement above or below this forecast.

If the price moves to $US38 per tonne, Treasury estimates there will be a nominal hit to GDP of $9.8 billion in 2015-16 and $13.4 billion in 2016-17. In contrast, $US58 per tonne means an extra $9.8 billion in 2015-16 and $13.4 billion of GDP in 2016-17. It is a potential swing of some $26.8 billion.

In terms of tax receipts, a $US38 a tonne price will lower the take for Treasury by $2.1 billion in 2015-16 and $4.4 billion in 2016-17, while $US58 a tonne will lift the tax take correspondingly. So the difference between the top and bottom forecasts could be $8.8 billion in two years' time.

However, the outlook is not entirely negative, with Treasury noting that demand from Japan and Korea, which account for 11 and 7 per cent of iron ore exports respectively, will continue to underpin Australia's exports.

Among major risk factors identified in the sector were the future path of Chinese steel output, and potential changes in company production plans.