Budget 2023 earns AAA rating from Fitch but consumers less impressed

Ratings agency Fitch has confirmed the country's triple-A rating with a stable outlook, the highest it offers, after assessing the strength of the budget, including the achievement of a small surplus this financial year due to a combination of robust revenue and spending restraint.

"The recent outperformance of public finances relative to our expectations further supports the stable outlook," Fitch said in a statement, adding that the promise to save most of the revenue windfall over the next five years "signals a commitment to prudent fiscal management".

But the agency quibbled with the government's forecast for return to a narrow 0.5 per cent of gross domestic product deficit in 2023-24, arguing Treasury is being too pessimistic about the strength of commodity prices and nominal growth and the deficit will turn out to be smaller than it predicts.

Treasurer Jim Chalmers said Fitch's assessment was a "resounding endorsement" of the government's economic and fiscal strategy.

"Our responsible budget management means lower deficits, less debt and savings on interest costs," Dr Chalmers said.

The triple-A rating allows the government to access funds at a lower cost relative to other borrowers. Australia is one of nine countries to receive the top rating from all three major credit agencies.

But Fitch warned the government had to do more to achieve long-term improvement in the Commonwealth's finances.

"The government took some initial steps to address structural pressures in the ... budget through revenue measures and adjustments to NDIS," the agency said. "Even so, longer-term pressure remains in the absence of additional structural reforms."

Consumers gave the budget a much less rosy review.

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The Westpac-Melbourne Institute Consumer Sentiment index plunged almost 8 per cent as households absorbed the impact of the budget and the Reserve Bank of Australia's unexpected rate hike the previous week.

The ANZ-Roy Morgan Consumer Confidence Rating, meanwhile, dropped 1.8 points to 75.9 points, its lowest mark since the depths of the pandemic shock in April 2020.

Westpac chief economist Bill Evans said the steep downturn in mood most likely reflected the unpleasant surprise of a further rate hike and disappointment the budget did not include greater assistance for households.

More than 15 per cent of those surveyed for the Westpac study thought they would be better off as a result of the budget while 27 per cent expected to be worse off.

Mr Evans said the 11.5 percentage point gap between self-assessed winners and losers was much narrower than most other recent budgets and thought the result was encouraging for the government.

"[The] historical comparison, and the clear inflation-related limitations on policy suggest the ... government should be satisfied with the consumer response," he said.

The mood was most grim among low-income households, renters, those with a mortgage and women, and more than two-thirds of those surveyed expected more rate hikes.

The ANZ survey found there was a small improvement in people's assessment of current economic conditions, which ANZ senior economist Adelaide Timbrell said may reflect the fact the budget was in surplus for the first time in 15 years.

But the study's measure of people's current financial circumstances fell to reach the lowest point since 2001.