CANBERRA, Feb 9 (Reuters) - Australia's budget deficit may be a quarter lower than previously forecast due to an economic recovery that has delivered higher-than-expected tax revenues and less-than-expected welfare spending, a newspaper said on Tuesday.
A stronger budget outcome for the six months to December meant that the forecast A$57.7 billion ($49.91 billion) deficit for fiscal 2009/10 could be up to A$15 billion lower, the Australian Financial Review said in an unsourced report.
Treasurer Wayne Swan has said that the next budget, due on May 11, will lock-in spending curbs and resist the temptation to offer election-year largesse as economic recovery gathers pace.
A stronger budget and an earlier return to surplus, currently not expected until 2015/16, would be a political boost for Prime Minister Kevin Rudd, allowing him to neutralise criticism from conservative opponents who say he has borrowed too heavily.
Rudd remains well ahead in opininion surveys and is on track to win a second term in elections expected around November, but the conservatives have been gaining ground under a new leader.
The Finance Department had in December reported revenues were A$2.8 billion higher than forecast for the first six months, helping limit the deficit for the period to A$32.9 billion, versus a previous estimate of A$39.5 billion, the newspaper said.
At the same time, government half-year expenses were almost A$6.4 billion lower.
The government has imposed a 2 percent cap on spending growth that will be triggered when economic growth hits 3 percent. Economic growth is forecast at 3.25 percent this year from about 2 percent in 2009, according to central bank forecasts.
But Australia's economy is recovering faster than expected, driven largely by Chinese resource demand, and some economists see growth of 3 to 3.25 percent in fiscal 2011, up by as much as half a percentage point from November estimates.
($1=1.156 Australian Dollars)
(Reporting by Rob Taylor; Editing by Mark Bendeich)
((rob.taylor@thomsonreuters.com; +612 62733700; Reuters Messaging: rob.taylor.reuters.com@reuters.net)) Keywords: AUSTRALIA ECONOMY/BUDGET
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