A surging tax-take has blessed Australia's center-right government with the smallest budget deficit in a decade and the means to fund a host of voter-friendly spending promises as it struggles in the polls.
The Liberal-National Coalition led by Prime Minister Scott Morrison has to face the nation by May next year and trails badly after dumping former leader Malcolm Turnbull in a bout of internecine party warfare a month ago.
Swelling coffers offer the chance to throw money at some long-standing political problems, such as an A$4.6 billion ($3.33 billion) injection into Catholic and private schools announced just last week.
Addressing a news conference on Tuesday Treasurer Josh Frydenberg said a combination of higher tax receipts and restrained welfare spending had shrunk the budget shortfall to A$10.1 billion in the year to end June.
"We absolutely continue to have a very disciplined approach when it comes to our Budget management," he told reporters.
"This (deficit) should be lower based on the economic performance, but will be dependent on policy changes," said Belinda Allen, a senior economist at Commonwealth Bank of Australia.
Morrison has already decided to scrap a rise in the retirement age to 70, from the current 67, and is widely expected to accelerate planned tax cuts for small business.
The progress on the deficit had been enough to earn a nod from S&P Global Ratings, which last week lifted the outlook on Australia's triple-A rating to stable and thus removed any risk of a politically damaging downgrade. ($1 = 1.3808 Australian dollars) (Reporting by Wayne Cole Editing by Shri Navaratnam)