This means that Australia's AAA-rating may come under threat in due course.
A deficit is where a government has expenses that are greater than its revenues, and this is reported as the underlying cash balance.
The dreaded debt pile!
When a government runs deficits, over time this tends to be reflected in increasing government debt.
It's becoming quite popular to have a whinge about Australia's national debt - such as here for example ("I look at our national debt and I despair for our generation").
There are government bonds on issue totaling a bit more than $400 billion in Australia, up from around $100 billion in the late 1990s, and not a lot before the financial crisis.
In other words, we're borrowing for long periods of time at very cheap rates.
Yields at record lows
As you can see below, as recently as 1995, the 10 year bond yield was in double digit territory. Amazing.
However, borrowing to invest for the future can be beneficial, if it is done sensibly.
Sure, in an ideal world there would be very low government net debt, the economy would be humming along, we'd be running surpluses, and when the next downturn comes we'd have more ammunition in the bank.
But is a world without debt necessarily a better place? It certainly didn't seem it when liquidity dried up through the financial crisis.
The detail of the 2016-17 budget papers show a capital expenditure budget of more than $45 billion, which creates jobs and helps the economy through the slowdown in the economy post-mining boom.
And it's the younger generations that will benefit most from the new infrastructure.
Will the government spend the money in the most efficient manner? Nope, probably not.
Sure, some government expenditure ends up leaking overseas - including to other governments - but most of it either ends up in the hands of corporations and institutions, or in the hands of the people. And they in turn spend the money again...and again.
And the interest on government debt has never been so cheap to service.