Sort out debt while times are good: RBA

Reserve Bank governor Glenn Stevens has urged Australia to take the opportunity now to lower its government debt burden so as to protect itself should there be a significant downturn in the future.

Addressing the federal House of Representatives economic committee, the central bank chief said while there isn't a debt problem, it is on a trend that needs to be changed in the medium term.

"I'm not saying there is a disaster waiting for us but I think the path we are on isn't the right path and will prove to be a significant problem," Mr Stevens said.

He said the community, through the political process, wants certain things but there has yet to be a conversation how they are going to be paid for.

"That still has to be had," he warned.

"As we have seen over the past year or so, reform here is not easy."

He said the budget is supposed to return to a surplus in five years or so, but that assumes nothing goes wrong.

Economies do have downturns, which could see the budget deficit grow from two per cent of GDP to five or six in a "heart beat".

At that point debt is added far more quickly and financial markets would be less accommodating.

"I'm not forecasting that, I'm try to prevent it," he said.