Australia's ability to repay its debt will be unaffected by the government's admission it's unlikely to deliver a budget surplus this financial year, a global ratings agency says.
Treasurer Wayne Swan today backtracked from Labor's commitment to a $1.1 billion surplus in 2012/13 saying falling tax revenues meant it was "unlikely" to eventuate.
Ratings agency Standard & Poor's said Australia's top line triple-A sovereign debt rating had not been "immediately" affected by the announcement.
The agency expects the federal government's "conservative attitude to budgeting" to persist and for it to run a balanced budget over the medium term.
Major investment banks backed the government's announcement, with some urging it to go further.
Citigroup economists implored Mr Swan to "officially jettison" his surplus pledge.
"To have sought to achieve a surplus when the economy was slowing would have risked creating an even weaker outlook for economic growth and hence weakening budget revenue even further," Citigroup economists said in a statement.
TD Securities head of Asia-Pacific Research Annette Beacher says there should be no implications for the Australian economy if there isn't a surplus this financial year.
"Delaying the return to fiscal surplus by a year or so does not compromise the overall objective of achieving balance over the business cycle," Ms Beacher said.
She said other triple-A rated countries had multiples of Australia's net debt to gross domestic product (GDP) profile.
But the federal opposition was not as forgiving, with the coalition's finance spokesman Andrew Robb tweeting: "Swan says surplus is `all too hard', throws hands in the air and gives up."
Nationals senator John Williams was also quick to use Twitter to attack the government.
"Why is anyone surprised Labor won't deliver a surplus. They can't spell the word."
The Australian Council of Social Services agreed the surplus should be delayed, urging the government to fund the National Disability Insurance Scheme and reform funding of schools.
"Sticking to a fixed budget surplus target is not the right strategy under these conditions," ACOSS chief executive Cassandra Goldie said.
Acting Australian Greens leader Adam Bandt called on the government to formally abandon its commitment to delivering a surplus.
"Labor has finally been mugged by the reality of the revenue crisis and accepted what the Greens, economists and the business community have been urging for some time," he said in a statement.
"The next budget should stimulate an economy under pressure from the mining boom and an uncertain international outlook."
