Treasury Secretary Martin Parkinson has defended decisions taken in the budget, saying economic growth alone would not drive a surplus.

Australia cannot rely on economic growth alone to drive the federal budget back into surplus, Treasury boss Martin Parkinson says.

The Treasury secretary says last week’s budget has attempted to tackle head-on the sustainability challenge of what the public expects of government and what government can actually do, and what people are prepared to pay for.

In his traditional post-budget speech to economists, Dr Parkinson said the budget is projected to return to a structural balance by around 2017/18 and to be in structural surplus beyond that.

“That will place us in a better position to respond to future economic shocks,” Dr Parkinson told the Australian Business Economists’ lunch in Sydney.

He said while the pace of fiscal consolidation is measured, the government’s focus on long-term savings that build over time means the structural payoff is large.

Infrastructure initiatives in the budget are timely as large resource sector projects reach completion.

“This infrastructure investment is good for economic growth in the short term and can help support productivity over time,” he said.

He said structural changes in the budget will also provide opportunities for future tax cuts and prevent taxpayers moving into higher tax brackets even if their wages don’t keep up with inflation.

This has the biggest impact on lower incomes, he said.

He said the budget’s measures that aim to increase Australia’s economic potential through productivity growth and workforce participation are only the first step if growth in living standards is to be sustained.

He said Australia is at a “critical juncture”.

“It is also useful to recall that the economic reforms during the 1980s and 1990s faced stiff opposition at the time,” he said.

However, they transformed Australia into a globally competitive economy and set it up for more than two decades of continuous economic growth.