Pressed on Monday whether the government would honour its budget promise, Mr Frydenberg said it was too early.
“I’m not in a position to give a firm answer to that question because the full economic impact is still uncertain,” he said.
Mr Frydenberg said the economy had shown itself to be resilient in the face of drought and now bushfires, adding the budget was in a position to respond.
“The budget is back in balance for the first time in 11 years,” he said.
“What the Australian people know is that when you are responsible economic managers you have the financial flexibility to respond to crises and economic shocks whenever they may occur. This is one.”
The government has earmarked to spend $500 million this financial year on its bushfire response, although Mr Frydenberg said more was likely to be needed as extra assistance was delivered to affected communities.
By itself, the $500 million would not threaten the surplus, but Mr Frydenberg said the impact on important areas such as tourism and household consumption could be an issue.
That was evident in a trading update from the Super Retail Group, which is responsible for well-known brands including BCF and Macpac Adventure.
Company chief executive officer Anthony Heraghty revealed more than 50 of the company’s BCF outlets had been affected by drought or fire during its most important trading period of the year.
Macpac like-for-like store sales were down 9.5 per cent with NSW and Victorian outlets the hardest hit while Supercheap Auto sales were also down, particularly in regional areas. Sales through Rebel also slowed in NSW from mid-October.
“Whilst we expect the impact to be one-off, it is difficult to estimate how long it will take for sales to recover, specifically in the outdoor category,” Mr Heraghty said.
Business Council president Tim Reed said while getting the budget back into surplus was important, exceptional circumstances such as the bushfires meant the government could be excused if it delivered a deficit.
“Let me make it very clear on the budget that we believe the budget in surplus is important because we believe it gives the nation the opportunity to respond to circumstances like these when they arise,” he said.
“And [while] we do believe that these are exceptional circumstances and why we would love to see the budget in surplus, we would not like to see it in surplus at the expense of these local communities.”
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.