Scott Morrison has said it is “most sensible” for Australia to return to surplus in 2019-20, an indication the government intends to spend a $19bn improvement in the budget bottom line rather than engage in budget repair.

The prime minister made the comment to Radio National on Wednesday in an interview suggesting that extra money would be spent on schools and health rather than an improvement to unemployment benefits because the government can’t say “let’s make whoopee” in response to the positive news.

On Tuesday the 2017-18 final budget outcome revealed that the deficit had shrunk to $10.1bn, a $19.3bn improvement triggered by higher tax receipts and lower government spending on items including welfare payments.

Morrison said the trajectory in the 2018 budget – to return to a surplus of $2bn in 2019-20 – would be updated in the mid-year economic and fiscal outlook.

“What the final budget outcome does is tell us what happened in 2017-18 and that showed in just two budgets we came from the [20]15-16 position of almost a $40bn deficit down to a $10bn deficit.”

Morrison noted that the Coalition government had already moved up the projected surplus from 2020-21 to 2019-20, adding “and I believe that remains the most sensible [outcome]”.

“We’ll update those figures at the end of this year to see how things are tracking out over the forward [estimates] but I don’t think there’s any reason at this point to suggest that there be any change to that trajectory.”

Under Morrison the Coalition has announced a $4.6bn 10-year package of funding for Catholic and independent schools, and leaks indicate that the Turnbull government was planning to drip-feed announcements from a $7.6bn roads and rail package in the run-up to the election.

Despite the extra commitments, the treasurer, Josh Frydenberg, has cast himself as a man prepared to say no to his colleagues to impose spending restraint.

But on Tuesday Frydenberg sidestepped a question about whether the government would drop its rule that all new spending must be accompanied by savings elsewhere.

On Wednesday Morrison said the requirement for additional spending to be offset by savings was still “the budget rules”.

The fiscal improvement was triggered in part by government spending being $6.9bn lower than expected, including $894m less for the age pension, $790m less for family tax benefits and $335m less on jobseeker payments.

Asked whether the government would increase the rate of Newstart – which hasn’t increased in real terms in 24 years – Morrison said despite the improvement the budget was still $10bn in deficit.

“I don’t think you can all of a sudden go, ‘Oh, let’s make whoopee.’”

Morrison said increasing Newstart “is a very expensive undertaking and there’s not the room in the budget at this point to do that”.

Deloitte Access Economics has found that increasing unemployment benefits by $10.71 a day for the more than 700,000 people who receive Newstart would cost the federal budget $3.3bn a year.

Morrison said the government would “continue to consolidate the budget” to pay for priorities including additional school and hospital funding, affordable medicines and the national disability insurance scheme.

“The best thing I can do for someone who’s not in a job is get them in a job and this government has had the greatest success of any government at getting Australians into work.”

Asked about wage stagnation, Morrison said “of course” he wanted to see stronger wage growth and he expected that would now occur. He said the government had offered personal income tax cuts and company tax cuts to ensure companies were more profitable.

“They’re starting to do better … one swallow doesn’t make a summer – you need to have sustained increases in profitability [to lift wages].

“These are businesses that were for many, many years not making any profits at all – particularly small and medium-sized businesses – we’ve given those businesses tax relief.”

Morrison said the government planned to immediately release the banking royal commission interim report – due on Friday. He refused to pre-empt its recommendations by weighing in on whether some conduct uncovered by the commission should result in criminal charges.