Treasurer Josh Frydenberg has lauded the economy's strong foundations while conceding it faces some "significant challenges".
His comments come after meeting with Reserve Bank governor Philip Lowe, who appears surprisingly upbeat on Australia's economic outlook.
This is despite having lowered the cash rate twice in recent months and after the parliament passed personal income tax cuts.
Mr Frydenberg says the challenges include the impact of droughts and floods, trade tensions between the United States and China as well as softening household consumption.
"While the economy does face some significant challenges ... the fundamentals - in Phil Lowe's words - of the economy are strong," he told ABC's Insiders program on Sunday.
Mr Frydenberg also boasted about the coalition creating 1.4 million jobs since winning government six years ago, and workforce participation being at a record high.
The treasurer met with Dr Lowe on Friday, during which the central bank governor lauded Australia's strong fundamentals.
Dr Lowe has repeatedly urged the government to do more to support the economy beyond the tax cuts, admitting that interest rate cuts on their own cannot do the required heavy lifting.
But Mr Frydenberg has not indicated further stimulatory measures, saying the government will keep an eye on how the tax cuts will flow through the economy.
He has also played down calls for additional government infrastructure spending, pointing to the coalition's 100 billion dollar, 10-year plan.
Mr Frydenberg said this year's financial results have improved, but that a surplus was still not projected for 2019/20.
"Don't get your hopes up for an early surplus," he said.
Financial markets are yet to be convinced about such optimism from the treasurer and Dr Lowe, and are still predicting a further interest rate cut by the end of the year, which would take the cash rate to a paltry 0.75 per cent.
Assistant Treasurer Michael Sukkar expected a large proportion of the tax cuts - which came into force from July 1 and will be available when a person lodges their tax return - to be spent in the economy.
He told reporters on Saturday that Australians were responding to the tax cuts "in spades", with 1.3 million tax returns lodged as of Friday, some 600,000 more tax returns compared to the same time last year.
"We would not presume to tell the Australian people how they should spend their tax refunds," Mr Sukkar said.
'But our expectation is that a large part of the tax refund will be spent in the economy and we know that does great things for confidence."
Australian Associated Press
