The share market was unmoved by the Federal Government's decision to abandon the push for a surplus, maintaining earlier gains and again closing near a 17-month high.
The All Ordinaries put on 0.3 per cent to 4,647 and the ASX 200 saw slightly stronger gains, adding a third of a per cent to 4,634.
Retail, healthcare and banking stocks led the gains, while the resource and energy sectors retreated.
Dominating the headlines was the Government's backflip on the budget surplus promise.
Economists have praised the decision, saying the penny-pinching required to achieve a surplus when the economy is slowing would have risked creating an even weaker outlook for economic growth and hence weakening budget revenue further.
The Treasurer says a $4 billion shortfall in government revenue, due to the slowing global economy, forced the decision.
In company news, the Australian Competition and Consumer Commission gave draft approval for a Qantas-Emirates alliance, but only for five years rather than the 10 years they sought.
Shares in Qantas ended 0.7 per cent higher while its rival Virgin ended flat.
Shares in Billabong lost another 6 per cent, ending close to a record low at 80 cents, as investors continued to rail against yesterday's earnings downgrade and potential voiding of a takeover offer.
After the market closed, the surfwear company announced its chief financial officer was leaving.
Graincorp, meanwhile, held its annual general meeting (AGM) and moved to reassure shareholders it was committed to their interests as it stared down a takeover approach from US food giant Archer Daniels Midland.
Agribusiness company Elders also held its AGM, apologising to shareholders for the company's poor performance over the past year.
It said it would sell forestry assets to help it return to profitability.
The Australian dollar was rising in late trade and at 5:30pm AEDT it was worth 104.8 US cents.
On the cross rates it was worth 79.3 euro cents, 64.5 British pence and 87.9 Japanese yen.
West Texas crude was worth $US89 a barrel, Tapis was higher at $US116, while spot gold was $US1,667 an ounce.