The Abbott government has failed to win Senate approval for legislation lifting the commonwealth debt ceiling to $500 billion.
Instead the upper house passed an amendment limiting the cap to $400 billion.
The Labor amendment, supported by the Australian Greens, needs the approval of the House of Representatives, where the government has a majority.
Australian Greens Leader Christine reminded the chamber that when Prime Minister Tony Abbott was in opposition and Labor was seeking to lift the debt limit by $50 billion, he said that it should be forced to justify the increase.
"That is exactly what the Greens and indeed the Labor Party are asking of the government," Senator Milne said.
Assistant Treasurer Arthur Sinodinos said current trends suggest that the peak face value of government securities on issue will exceed $400 billion, and on expert advice there should be a limit of $500 billion.
"It is the responsible course of action," Senator Sinodinos said.
"It means that we don't have to come back hopefully in the term of this parliament to ask for a raise in the limit."
He said the $500 billion limit is not a target to be reached.
"It's not a debate about Australia making its way to $500 billion because this government is committed to getting the debt under control."
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