Joe Hockey can rest easy - Australia's triple-A rating is safe for now.
While it's a relief for a treasurer a month from delivering his second budget, one of the world's major credit rating agencies warns he should not get too complacent.
Moody's Investors Service says Australia is supported by a flexible economy, relatively robust growth and government debt that is lower than similar-rated peers.
However, in an analysis released on Wednesday, Moody's says the economy faces challenges on several fronts, citing a significant increase in household debt and property prices in recent years.
It also says lower corporate tax revenues from the resource sector is making it harder to return the federal budget to surplus.
The shift from a surplus to a deficit in 2009 has resulted in government debt rising to more than 30 per cent of gross domestic product from below 10 per cent in 2008.
"Although the current debt ratio compares favourably to many AAA-rated peers, if fiscal deterioration is not reversed, it could eventually pose sovereign credit risks," Moody's says.
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