Ratings agencies cool on budget

Ratings agencies have delivered a mixed reaction to Treasurer Scott Morrison's first budget but the nation's triple-A credit rating is not in peril - yet.

Moody's Investors Services, which in April cautioned that an absence of new revenue and unconstrained spending would be a credit negative for Australia, welcomed the projected return to a balanced budget by 2020/21 but expressed scepticism about the timeline.

"We estimate that the adjustment to an environment of lower commodity prices is still underway and will continue to weigh on corporate profitability and wage growth," Moody's senior vice president Marie Diron said.

"As a result, improvements in the governments revenues may be somewhat more muted than currently budgeted."

Ms Diron said there would be no immediate review of the credit rating as a result of the federal budget.

However she noted that a slower pace of fiscal consolidation "will leave public finances vulnerable to negative shocks".

Ms Diron said that the budget's centrepiece 10-year Enterprise Tax plan would "if successful", contribute to sustain robust growth in Australia but cautioned the benefits of the support to small and medium business "will take time to materialise".

Ratings agency Fitch said its assessment was broadly unchanged following the release of the budget and remained consistent with a AAA rating.

"The government's projection for underlying cash balances in the forecast horizon are similar to those in the most recent mid-year economic and fiscal outlook," Fitch said.

"Net debt is still expected to fall after 2017/18, albeit from a slightly higher peak."

S&P Global Ratings said its current rating was AAA/Stable and it would review the budget over the coming weeks.

"As we've previously highlighted, improving budget balances remain important to the rating to offset Australia's high vulnerability to shifts in offshore financial market sentiment," S&P analyst Craig Michaels said.