The Morrison government "won't simply flick the switch" on budget repair as soon as unemployment drops below five per cent, Finance Minister Simon Birmingham says.
Instead, there will be a flexible period of "some years" from stimulus to repairing the budget, Senator Birmingham told a Senate estimates hearing on Wednesday.
Debt as a share of the economy would fall, not from an agenda of cuts but from growing the economy to reduce debt as a share of GDP, he said.
He said the 26 per cent spending to GDP ratio would stabilise with fewer government payments as temporary supports come off.
The fiscal strategy was updated in the May budget to say budget repair will begin when the unemployment rate is "back to pre-crisis levels or lower".
Pre-pandemic unemployment was 5.1 per cent but the government has opted for generalised targets, not a precise figure.
"It's an acknowledgement that economic conditions will continue to evolve," Senator Birmingham said.
"The pandemic is ongoing and continues to pose challenges in Australia."
Last October, the first phase of the economic and fiscal strategy was set to end when the unemployment rate fell below six per cent. It was 5.5 per cent in April this year, after peaking at 7.4 per cent mid-2020.
Treasury has suggested 4.5 per cent as an appropriate target for repair to kick in, but Senator Birmingham said setting a figure was "an imprecise science".
Labor's Katy Gallagher said on current settings historically high levels of debt would continue beyond the medium term and into the 2030s and 2040s without cuts.
"And deficits in eternity. It doesn't add up," she said.
