The Morrison government has abandoned a key part of its budget strategy to give itself more financial firepower to deal with shocks, after cutting $22 billion from its forecast surpluses due to a slowing economy and deteriorating jobs market.

Breaking its pledge to eliminate net debt by the end of the next decade, the government went further on Monday and dumped its five-year promise to get to a surplus of at least 1 per cent of gross domestic product "as soon as possible". Now it will reach that milestone only "when economic circumstances permit".

Treasurer Josh Frydenberg reassured workers "the outlook for the Australian economy remained positive". Credit:Alex Ellinghausen

While Treasurer Josh Frydenberg reassured workers "the outlook for the Australian economy remained positive", the change in strategy represents a significant shift in the Morrison government's economic fortunes.

Wages, employment and economic growth were all downgraded in Monday's mid-year economic and fiscal outlook. Trade tensions, drought and low productivity forced Mr Frydenberg and Finance Minister Mathias Cormann to write down overall revenues by $33 billion over the next four years.