An Australian federal budget is a document that sets out the estimated revenues and expenditures of the
Australian Treasury in the following
financial year
A fiscal year (or financial year, or sometimes budget year) is used in government accounting, which varies between countries, and for budget purposes. It is also used for financial reporting by businesses and other organizations. Laws in many ...
, proposed conduct of
Australian government
The Australian Government, also known as the Commonwealth Government, is the national government of Australia, a federal parliamentary constitutional monarchy. Like other Westminster-style systems of government, the Australian Government ...
operations in that period, and its
fiscal policy
In economics and political science, fiscal policy is the use of government revenue collection (taxes or tax cuts) and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variab ...
for the forward years. Budgets are called by the year in which they are presented to Parliament and relate to a financial year that commences on the following 1 July and ends on 30 June of the following year, so that the budget brought down in May relates to the / financial year (1 July – 30 June , FY).
Revenue estimates detailed in the budget are raised through the
Australian taxation system, with government spending (including transfers to the states) representing a sizeable proportion of the overall
economy
An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the ...
. Besides presenting the government's expected revenues and expenditures, the federal budget is also a political statement of the government's intentions and priorities, and has profound
macroeconomic
Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole.
For example, using interest rates, taxes, and ...
implications.
Australia follows, to a great extent, the conventions of the
Westminster system. For example, the
prime minister
A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister i ...
must have the support of a majority in the
House of Representatives
House of Representatives is the name of legislative bodies in many countries and sub-national entitles. In many countries, the House of Representatives is the lower house of a bicameral legislature, with the corresponding upper house often c ...
, and must in any case be able to ensure the existence of no
absolute majority
A supermajority, supra-majority, qualified majority, or special majority is a requirement for a proposal to gain a specified level of support which is greater than the threshold of more than one-half used for a simple majority. Supermajority r ...
against the government. In relation to the budget, that requires that if the House fails to pass the government's budget, even by one dollar, then the government must either resign so that a different government can be appointed or seek a
parliamentary dissolution so that new general elections may be held in order to re-confirm or deny the government's mandate.
Process
The process of putting together the budget begins in November when the Central Budget Management System (CBMS) is updated with the latest estimates, and the senior ministers' review, where the
Prime Minister
A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister i ...
,
Treasurer
A treasurer is the person responsible for running the treasury of an organization. The significant core functions of a corporate treasurer include cash and liquidity management, risk management, and corporate finance.
Government
The treasury ...
, and
Minister for Finance 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 CBMS.
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 as part of the Second Reading of the ''Appropriation Bill (No. 1)'', which "appropriates money out of the Consolidated Revenue Fund for the ordinary annual services of the government".
Charter of Budget Honesty Act
The budget has to be presented within the framework that has been established by th
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
Between 1901 and 1993, the practice was for the budget to be brought down in August, on the first Tuesday night of the Spring session.
Since 1994, the Treasurer has presented the budget on the second Tuesday in May, with the exceptions of 1996 (due to
an election and a change of government in March, the budget was brought down in August), 2016 (it was held on the first Tuesday in May to allow the
government
A government is the system or group of people governing an organized community, generally a state.
In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is ...
to potentially call a
double dissolution election following the presentation of the budget), 2019 (when an election called for 18 May caused the budget to be brought forward to 2 April), 2020 (when it was postponed to October due to the
COVID-19 pandemic
The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...
and 2022 (when an election called for May caused the budget to be brought forward to 29 March).
On budget day, but before the presentation of the budget, the Treasurer spends the day behind locked doors briefing media and interest groups on various aspects of the budget. This is known as the budget lock-up. Because of the market sensitive nature of some of the information which they are being provided, those invited to attend the briefings are not allowed access to the outside world until the budget has been presented in Parliament by the Treasurer, which normally commences at 7.30 pm.
In modern times, the budget has been broadcast live from Parliament House on the
ABC
ABC are the first three letters of the Latin script known as the alphabet.
ABC or abc may also refer to:
Arts, entertainment, and media Broadcasting
* American Broadcasting Company, a commercial U.S. TV broadcaster
** Disney–ABC Television ...
and
Sky News Australia
Sky News Australia is an Australian news channel owned by News Corp Australia. Originally launched on 19 February 1996, it broadcasts rolling news coverage throughout the day, while its prime time lineup is dedicated to opinion-based programs f ...
. 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. Additional budget documents and materials are available on the governmen
budget websitefor other interested parties.
A convention in Australian politics is that the
Leader of the Opposition is given a "right of reply", which they deliver in Parliament two days after the government's budget speech, and which is also broadcast on television.
Budgetary policy developments
![Historical Australian budget data1](https://upload.wikimedia.org/wikipedia/commons/9/96/Historical_Australian_budget_data1.jpg)
In comparison with similar economies, Australia's government spending is relatively low. For the twenty-year period from 1960 to 1980, the growth in spending roughly matched percentages in the much higher populated nations of Japan and the United States.
In the first half of the 1980s, spending increased by approximately 3% of
gross domestic product
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is oft ...
and the
tax rate surpassed that of
Ronald Reagan's administration. However, government accountability was a highly contentious issue in the late 1970s, and
John Howard
John Winston Howard (born 26 July 1939) is an Australian former politician who served as the 25th prime minister of Australia from 1996 to 2007, holding office as leader of the Liberal Party. His eleven-year tenure as prime minister is the ...
maintains that under Fraser "spending went up... at about two per cent per year in real terms... Reagan
idn't dobetter 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
The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, inf ...
medium enterprises came to be seen as inefficient. The economic term "
current account deficit
In economics, a country's current account records the value of exports and imports of both goods and services and international transfers of capital. It is one of the two components of its balance of payments, the other being the capital accou ...
" 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 US. 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 of his tenure.
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 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
A country's gross government debt (also called public debt, or sovereign debt) is the financial liabilities of the government sector. Changes in government debt over time reflect primarily borrowing due to past government deficits. A deficit oc ...
and promote asset trading in the
private sector
The private sector is the part of the economy, sometimes referred to as the citizen sector, which is owned by private groups, usually as a means of establishment for profit or non profit, rather than being owned by the government.
Employment
The ...
.
See also
*
Australian Government Future Fund
The Future Fund is an independently managed sovereign wealth fund established in 2006 to strengthen the Australian Government's long-term financial position by making provision for unfunded superannuation liabilities for politicians and other pu ...
*
Australian government debt
:''Throughout this article, the unqualified term "dollar" and the $ symbol refers to the Australian dollar.''
The Australian government debt is the amount owed by the Australian federal government. The Australian Office of Financial Management, ...
*
Commonwealth Grants Commission
The Commonwealth Grants Commission is an Australian independent statutory body that advises the Australian Government on financial assistance to the states and territories of Australia under section 96 of the Australian Constitution. The Commis ...
*
Fiscal imbalance in Australia
The fiscal imbalance in Australia is the disparity between the revenue generation ability of the three levels of governments in Australia relative to their spending obligations; but in Australia the term is commonly used to refer more specificall ...
*
Taxation in Australia
Income taxes are the most significant form of taxation in Australia, and collected by the federal government through the Australian Taxation Office. Australian GST revenue is collected by the Federal government, and then paid to the states und ...
International:
*
Government budget by country
A government is the system or group of people governing an organized community, generally a state.
In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is a ...
Footnotes
References
*
*
External links
Australia Federal BudgetCharter of Budget Honesty Act (1998)at
ComLaw
The Office of Parliamentary Counsel (OPC) is an Australian Commonwealth government agency established under the ''Parliamentary Counsel Act 1970'' (Cth) within the Commonwealth Attorney-General's portfolio. OPC drafts all government Bills that ...
{{DEFAULTSORT:Australian Federal Budget
Government finances in Australia