A global rating agency is concerned that the Turnbull government will find it difficult to reduce spending, leading to wider deficits for longer than it forecast in this week's budget.
There was some deterioration in projected deficits in the 2016/17 budget compared to expectations made in December, but Treasurer Scott Morrison stuck to his previous forecast for a surplus in 2020/21.
The deficit for the 2016/17 financial year is now put at $37.1 billion compared to $33.7 billion in the mid-year budget review.
"A slow pace of fiscal consolidation will leave public finances vulnerable to negative shocks, particularly to a potential market downturn in the housing sector and a reversal in current favourable external financing conditions," Moody's Investors Service said.
Last month Moody's warned that Australia's triple-A rating with a stable outlook could be at risk if there was a further delay in returning to surplus and debt continues to grow.
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In a new report, the agency notes that since the budget returned to deficit in 2009, debt has risen sharply and faster than other triple-A rated economies, albeit coming from a lower level.
The 22.2 percentage-point rise in Australian government debt since 2009 as a proportion to GDP is similar to that seen in Finland, which has a negative outlook, and larger than the US on a stable outlook.
However, it says the economy has shown resilience, forecasting growth of 2.5 per cent for this year and next.
While this was lower than prior to the 2008-2009 global financial crisis, it is somewhat faster than in many other advanced economies.
