The budget update must be a wake-up for the government to return a disciplined May budget, the Business Council of Australia says.

Business groups hope the mid-year budget update will be a wake-up call to the Abbott government to deal with the challenges it now faces.

The mid-year economic and fiscal outlook (MYEFO) released on Tuesday forecasts the 2013/14 budget deficit ballooning to $47 billion, rather than the $30.1 billion predicted in August, and there will be further deficits over the next 10 years if no action is taken.

Business Council of Australia chief executive Jennifer Westacott said the government faces a decade of committed reform to put the budget on a more sustainable footing.

“MYEFO shows Australia faces a decade of deficits if the federal government does not begin to correct the excessive spending that has left the fiscal position weaker than it should be and exposed to future global economic volatility,” she said in a statement.

She said a disciplined 2014/15 budget that included structural measures to contain government expenditures over time needs to be matched by greater efforts to boost economic growth and productive capacity to greatly assist the budget repair job.

“The ongoing weakness of revenues also highlights the critical role that tax reform will need to play both in shoring up the strength of the revenue base and increasing efficiency to drive economic growth,” she said.

Welfare groups believe the government must align social and economic goals.

UnitingCare Australia national director Lin Hatfield Dodds says the political debate has become locked into rhetoric about debt and deficit, rather than having “smart, evidence-based” debates about effective public policy and improving the quality of life of all Australians.

“Current policy debate is thin, impoverishing us all,” she said in a statement.

“Achieving a better balance will require collecting more tax, and could be achieved by winding back inefficient and unfair tax concessions.”

Australian Education Union federal president Angelo Gavrielatos said the government had broken promises not to make cuts to education.

Trade training centres took a billion dollar hit and another $450 million was cut from before- and after-school care in the budget review.

“Vital national funding for trade training and before- and after-school care is being taken away so money can be given to the WA, NT and Qld governments that they don’t even have to spend in education,” Mr Gavrielatos said.

Retailers were concerned the gloomy budget update could take the wind out of the final days of Christmas shopping.

But Australian National Retailers’ Association chief executive Margy Osmond was hopeful households and business would feel they now had some certainty about what was going on with the nation’s finances.