Australia government to boost rural spending in pre-election budget

CANBERRA (Reuters) - Australia's conservative government said on Monday it will increase spending on rural infrastructure by nearly 30 percent in its last budget before an election next month.

Speaking a day before the presentation of the annual budget for the year beginning on July 1, Prime Minister Scott Morrison said spending on rural roads will increase to A$4.5 billion ($3.20 billion) from the A$3.5 billion it promised last year.

Morrison denied the extra funding was motivated by the election, saying it formed part of the government's strategy of decentralization.

“We are committed to the satellite cities approach,” Morrison told reporters in Canberra. “We've made investments of tens of millions of dollars in supporting our communities to grow together, not grow apart.”

The spending increase was seen by analysts as a pitch to voters in rural areas - a key voter base for the National Party of Australia, the junior partner in the coalition government.

“The state election in New South Wales (NSW) showed the Nationals are hemorrhaging support so the government is throwing money at their weak-link,” said Peter Chen, professor of political science, University of Sydney.

While NSW, Australias most populous state, returned Morrison's Liberal Party to power last month, the Nationals lost several seats to the right-wing, Shooters Fishers and Farmers party.

There are strong expectations that the budget will increase overall spending substantially, although Morrison has promised earlier that the government's finances would show its first fiscal surplus since 2007/2008.

In recent days the government also confirmed the budget will include a one-off cash rebate to elderly Australians, another key voter demographic for the coalition.

Australian Treasurer Josh Frydenberg said elderly voters will receive A$75 for an individual or A$125 for couples — to help cover their next energy bills.