The Labor government -- due to announce the election date by the end of the week -- booked a spending deficit of US$17 billion as it unveiled a swag of surprise tax cuts and pre-poll sweeteners.
It pledged to overhaul the country's creaking military, and set aside almost US$2 billion to catalyse a homegrown "green" metals industry.
Treasurer Jim Chalmers said Australia would fortify its economy against damaging US tariffs and a "volatile" global economy.
"Our best defence against global pressures is a stronger economy," he said.
"It's clear that the rules that underpinned global economic engagement for more than 40 years are being rewritten.
"This budget is our plan for a new generation of prosperity in a new world of uncertainty."
Big ticket budget items included wiping 20 percent off all university student loans, which typically run into tens of thousands of dollars.
More than US$1 billion was earmarked for public hospitals, and a series of modest tax cuts have been planned for some of the country's lowest earners.
The government also announced a two-year freeze on excise taxes for draught beer -- a measure sure to be popular in one of the world's heaviest drinking nations.
Another budget centrepiece was US$1.9 billion to seed the growth of Australia's "green" metals industry.
Steel and aluminium production typically relies on polluting coal-fired power but Australia and other countries are seeking to power these factories with renewable electricity, lowering emissions in the process.
This would help Australia become "an indispensable part of the net zero economy", Chalmers said.
With US tariffs and retaliatory measures starting to bite around the globe, Chalmers announced a new "Buy Australian" marketing campaign targeting domestic consumers.
Australia also used the budget to bring forward around US$600 million in defence spending.
"It means defence funding will grow beyond 2.3 percent of GDP by the early 2030s," Chalmers said.
Washington has been piling pressure on close allies such as Canberra to pour more money into training, weapons and other military hardware.
Australia is already in the middle of an ambitious programme to re-tool its defence force, stocking up on long-range strike weapons as China flexes its naval might in the region.
Prime Minister Anthony Albanese is widely tipped to call a general election later this week.
Australia must hold the election by May 17 at the latest.
Recent polls show Albanese's Labor government locked neck-and-neck with its conservative Liberal party rivals.
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