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Duncan Kennedy on how Canberra balances its books
The Australian government is set to end four years of public spending deficits and return to a budget surplus this year, as it looks to shore up support.
Treasurer Wayne Swan is due to announce deep cuts in spending, but also cash payments for the low-paid in his budget.
He said the surplus would allow the central bank to cut interest rates.
It comes with support for Prime Minister Julia Gillard and her minority government near record lows.
Mr Swan will deliver the budget to parliament at about 19:30 Canberra local time (09:30 GMT).
The BBC's Duncan Kennedy, in Sydney, says this is a budget that could determine Julia Gillard's political future, with elections due to be held in November 2013.
Australia's economy has weathered the global financial crisis better than most developed nations because of the demand for its resources from China and other countries.
"We are coming back to a modest surplus in (2012-2013), building those surpluses over time because we have low unemployment, we have solid growth, we have a very big investment pipeline, we have contained inflation," said Mr Swan on Tuesday.
He said the surplus would allow Australia's central bank flexibility to cut borrowing costs further, after a surprise easing last week of 50 basis points.
A lower cost of borrowing, now at 3.75%, provides relief for mortgage holders facing high real estate prices.
