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Federal Budget (Australia)
Encyclopedia
The Australian Federal Budget is a document that demonstrates the Australian Government's planned financial performance, and the framework it intends to conduct its operations in the following financial year. Revenue that is spent in the budget is raised via the Australian taxation system
, with government spending representing a sizeable proportion of the overall Australian economy
.
, Federal Treasurer
, and Minister for Finance and Deregulation, meet to establish the policy priorities and strategy for the coming financial year.
The outcome of the Senior Ministers' Review determines how the different portfolios will prepare their Budget Submissions for Cabinet
. Agencies within each portfolio do not submit a request for new funding, because their potential savings within the agency are unfounded. After Finance has agreed to the costings, the Submissions are circulated for coordination comments and lodged with the Cabinet Office by late February.
The Expenditure Review Committee (ERC), a committee of Cabinet, meets in March to consider all Submissions. They decide which proposals will be funded and the level of funding each will receive. At the end of the ERC, the Ad Hoc Revenue Committee meets to make decisions on the revenue streams of the Budget. A pre-Budget review of the estimates is conducted after all decisions have been finalised to ensure that they are reflected in AIMS.
Budget documentation commences at the end of the ERC process. Agencies prepare two components - the Portfolio Budget Statements and the Mid-Year Economic and Fiscal Outlook.
The Portfolio Budget Statements provide additional details and explanations of the Budget and the Statement of Risks, which is included in Budget Paper No. 1.
The final Budget is presented and tabled in Parliament by the Treasurer on Budget night.
The Charter provides for:
and Sky News Australia
. It is hosted on the ABC, without interruption from 7:30 pm to 8 pm, normally followed up with a report by a panel assessing the changes, benefits and flaws in the budget.
Before the presentation of the Budget, the day is spent behind locked doors briefing media and interest groups on various aspects of the budget. This is known as the Budget lock-up. Those invited to attend the briefings are not allowed access to the outside world until the Budget has been presented by the Federal Treasurer.
A convention in Australian politics is that the Leader of the Opposition
delivers a "right of reply
" speech in Parliament that is also broadcast on live TV.
In comparison with similar economies,Key indicators of economic activity in Australia, such as cost-push inflation and manufacturing and retailing sector productivity, are usually compared with other Organization for Economic Cooperation and Development member countries. Australia's government spending is relatively low. For the twenty year period from 1960 to 1980, the growth in spending roughly matched percentages in Japan and the United States.
In the first half of the 1980s, spending surged by approximately 3% of gross domestic product
and the tax rate
surpassed that of Ronald Reagan
's administration. However, it is important to note that government accountability was a highly contentious issue in the late 1970s, and John Howard
maintains that under Fraser "spending went up... at about two per cent per year in real terms... Reagan [didn't do] better than that".
As the debate played out, the free-market politicians turned to attacking the political parties which were in power in the Australian States, and public sector
medium enterprises came to be seen as inefficient. The economic term "current account deficit" was in vogue.
Riding on strong economic growth in the latter part of the 1980s, the Hawke Government brought forward an agenda for public sector reform that had been pioneered in the United States. Declaring a number of debt reduction strategies ranging from tariff rate
reductions to privatisation and competitive tendering, Australia's public sector significantly declined in the period.
Spending in the 1990s saw significant shifts in social policy expenditure as part of a broader scheme of "low inflation targeting". Although outlays for services to industry increased, the budget outcome remained the same throughout the early 1990s recession. The Howard Government
actually reduced expenditure by 1.3% of gross domestic product in its first two years, making large cutbacks to outlays for the hospital system and education. Overall the government continued to run down public debt
and promote asset trading in the private sector
.
International:
Taxation in Australia
There are many forms of taxation in Australia. Individuals and companies in Australia may be required to pay taxes or charges to all levels of government: local, state, and federal governments...
, with government spending representing a sizeable proportion of the overall Australian economy
Economy of Australia
The economy of Australia is a developed, modern market economy with a GDP of approximately US$1.23 trillion. In 2011, it was the 13th largest national economy by nominal GDP and the 17th largest measured by PPP adjusted GDP, representing about 1.7% of the World economy. Australia was also ranked...
.
Process
The exercise of putting together the Budget begins in November when the Accrual Information Management System (AIMS) is updated with the latest estimates, and the Senior Ministers' Review, where the Prime MinisterPrime Minister of Australia
The Prime Minister of the Commonwealth of Australia is the highest minister of the Crown, leader of the Cabinet and Head of Her Majesty's Australian Government, holding office on commission from the Governor-General of Australia. The office of Prime Minister is, in practice, the most powerful...
, Federal Treasurer
Treasurer of Australia
The Treasurer of Australia is the minister in the Government of Australia responsible for government expenditure and revenue raising. He is the head of the Department of the Treasury. The Treasurer plays a key role in the economic policy of the government...
, and Minister for Finance and Deregulation, meet to establish the policy priorities and strategy for the coming financial year.
The outcome of the Senior Ministers' Review determines how the different portfolios will prepare their Budget Submissions for Cabinet
Cabinet (government)
A Cabinet is a body of high ranking government officials, typically representing the executive branch. It can also sometimes be referred to as the Council of Ministers, an Executive Council, or an Executive Committee.- Overview :...
. Agencies within each portfolio do not submit a request for new funding, because their potential savings within the agency are unfounded. After Finance has agreed to the costings, the Submissions are circulated for coordination comments and lodged with the Cabinet Office by late February.
The Expenditure Review Committee (ERC), a committee of Cabinet, meets in March to consider all Submissions. They decide which proposals will be funded and the level of funding each will receive. At the end of the ERC, the Ad Hoc Revenue Committee meets to make decisions on the revenue streams of the Budget. A pre-Budget review of the estimates is conducted after all decisions have been finalised to ensure that they are reflected in AIMS.
Budget documentation commences at the end of the ERC process. Agencies prepare two components - the Portfolio Budget Statements and the Mid-Year Economic and Fiscal Outlook.
The Portfolio Budget Statements provide additional details and explanations of the Budget and the Statement of Risks, which is included in Budget Paper No. 1.
The final Budget is presented and tabled in Parliament by the Treasurer on Budget night.
Charter of Budget Honesty Act
The Budget has to be presented within the framework that has been established by the Charter of Budget Honesty Act (1998).The Charter provides for:
- sound fiscal management of the Australian economy
- open dissemination about the status of public finances
- transparency in Australia's fiscal policy
Budget Night
The Federal Treasurer presents the Budget on Budget Night, which is traditionally the second Tuesday in May. In modern times, the budget has always been broadcast live from Parliament House on the ABCAustralian Broadcasting Corporation
The Australian Broadcasting Corporation, commonly referred to as "the ABC" , is Australia's national public broadcaster...
and Sky News Australia
Sky News Australia
Sky News Australia is an Australian 24 hour cable and satellite news channel available in 2.5 million homes on Foxtel, Austar, Optus Television and Neighbourhood Cable subscription platforms....
. It is hosted on the ABC, without interruption from 7:30 pm to 8 pm, normally followed up with a report by a panel assessing the changes, benefits and flaws in the budget.
Before the presentation of the Budget, the day is spent behind locked doors briefing media and interest groups on various aspects of the budget. This is known as the Budget lock-up. Those invited to attend the briefings are not allowed access to the outside world until the Budget has been presented by the Federal Treasurer.
A convention in Australian politics is that the Leader of the Opposition
Opposition (Australia)
Her Majesty's Loyal Opposition in Australia fulfils the same function as the official opposition in other Commonwealth of Nations monarchies. It is seen as the alternative government and the existing administration's main opponent at a general election...
delivers a "right of reply
Right of reply
The right of reply is the right to defend oneself against public criticism in the same venue where it was published.In Europe there have been proposals for a legally enforceable right of reply that applies to all media, including newspapers, magazines, and other print media, along with radio,...
" speech in Parliament that is also broadcast on live TV.
Budgetary policy developments
In the first half of the 1980s, spending surged by approximately 3% of gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
and the tax rate
Taxation in Australia
There are many forms of taxation in Australia. Individuals and companies in Australia may be required to pay taxes or charges to all levels of government: local, state, and federal governments...
surpassed that of Ronald Reagan
Ronald Reagan
Ronald Wilson Reagan was the 40th President of the United States , the 33rd Governor of California and, prior to that, a radio, film and television actor....
's administration. However, it is important to note that government accountability was a highly contentious issue in the late 1970s, and John Howard
John Howard
John Winston Howard AC, SSI, was the 25th Prime Minister of Australia, from 11 March 1996 to 3 December 2007. He was the second-longest serving Australian Prime Minister after Sir Robert Menzies....
maintains that under Fraser "spending went up... at about two per cent per year in real terms... Reagan [didn't do] better than that".
As the debate played out, the free-market politicians turned to attacking the political parties which were in power in the Australian States, and public sector
Public sector
The public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range...
medium enterprises came to be seen as inefficient. The economic term "current account deficit" was in vogue.
Riding on strong economic growth in the latter part of the 1980s, the Hawke Government brought forward an agenda for public sector reform that had been pioneered in the United States. Declaring a number of debt reduction strategies ranging from tariff rate
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
reductions to privatisation and competitive tendering, Australia's public sector significantly declined in the period.
Spending in the 1990s saw significant shifts in social policy expenditure as part of a broader scheme of "low inflation targeting". Although outlays for services to industry increased, the budget outcome remained the same throughout the early 1990s recession. The Howard Government
Howard Government
The Howard Government refers to the federal Executive Government of Australia led by Prime Minister John Howard. It was made up of members of the Liberal–National Coalition, which won a majority of seats in the Australian House of Representatives at four successive elections. The Howard Government...
actually reduced expenditure by 1.3% of gross domestic product in its first two years, making large cutbacks to outlays for the hospital system and education. Overall the government continued to run down public debt
Government debt
Government debt is money owed by a central government. In the US, "government debt" may also refer to the debt of a municipal or local government...
and promote asset trading in the private sector
Private sector
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...
.
See also
- Australian Government Future FundAustralian Government Future FundThe Australian Government Future Fund is an independently managed investment fund into which the Australian Government deposits its budget surplus. The purpose of the fund is to meet the government's future liabilities for the payment of superannuation to retired civil servants of the Australian...
- Australian national debtAustralian national debtThe Australian government had a budget deficit of $54.8 billion in 2009-10. The result was a $2.3 billion improvement on the $57.1 billion deficit estimated at the time of the May budget.-Total debt:...
- Commonwealth Grants CommissionCommonwealth Grants CommissionThe Commonwealth Grants Commission is an Australian government body that advises on Australian Government financial assistance to the states and territories of Australia with the aim of achieving Horizontal Fiscal Equalisation....
- Taxation in AustraliaTaxation in AustraliaThere are many forms of taxation in Australia. Individuals and companies in Australia may be required to pay taxes or charges to all levels of government: local, state, and federal governments...
- Fiscal imbalance in AustraliaFiscal imbalance in AustraliaThe term fiscal imbalance is used in Australia in relation to the flow of funds between its federal, state and territorial governments. Currently in Australia, the Commonwealth government raises greater tax revenue than the state and territory governments...
International:
- Government budget by countryGovernment budget by countryThis article includes a chart representing revenues, expenditures and resulting deficit or surplus of government budget. The countries are ranked by budget revenues. The data is taken mainly from CIA World Factbook....
External links
- Australia Federal Budget
- Charter of Budget Honesty Act (1998) at ComLawComLawComLaw is an Australian government web site run by the Attorney-General's Department providing online copies of Commonwealth legislation and related documents. The website was redesigned and re-released early in 2011....