The Australian economy is robust enough to withstand current global uncertainty, but not immune, Treasury boss Martin Parkinson has told a Senate hearing.
Dr Parkinson warned that the situation in Europe was "quite fluid" and the local economy would not be immune if the situation deteriorated further.
He said that at this stage there was little impact on Australia's trade or banks from the European crisis.
"From where we sit, our economy is quite sound and our prospects are very good," he told an estimates hearing in Canberra.
It was important to get the budget back to surplus against this global backdrop, while there was scope to do more through monetary policy.
Australia's banks were better financed than they were in the run-up to the global financial crisis, Dr Parkinson said.
They could maintain existing lending levels without going into wholesale funding markets should the global financial system clog up.
But Australia would be impacted if things deteriorated dramatically, he said.
"I don't want to leave anyone with any impression that there are no risks in Australia."But, equally, if things deteriorated dramatically, there is no way we would be immune to some of that fall."