With the 2013 Federal Budget being handed down today NAB’s Chief Economist, Alan Oster, takes his first look at what it means for Australia.

“As initial reaction to the budget I think the main thing you would say is this is very different from last year. All of the rhetoric about having to get to surplus straight away for credibility is sort of gone. It’s a budget that seems to be recognising we’ve got a weak economy. The surplus is not really reappearing until 2016 and the government is really not doing a lot about it so the impact in terms of fiscal tightening on the economy is much less. So the deficit is still around until 2015-16.

“There’s been some important structural improvements in terms of saves but they tend to kick in towards the very end of the forecast period. Some of the welfare benefits have gone, and the focus on spreading the benefits of the boom they’ve all sort of gone, you’ve had increases in Medicare levy to help pay for national disability and you’ve also had some tightening up generally in corporate profits.

“So these things are sort of good in the long run, but it’s basically a budget that essentially reflects the fact that they’re seeing a very weak economy and are basically are preparing to say well we’re not going to try to make things worse, we’re not helping much but we’re not going to make it any worse. But overall a very different budget and one that’s obviously got lots of politics in it.”

As we continue to break down this year’s budget and what it means for you, check out Federal Budget 2013.