- Australian federal budget
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.
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 Minister, 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.
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
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 ABC 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.
Budgetary policy developments
In comparison with similar economies,[nb 1] 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.[when?]
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.
- Australian Government Future Fund
- Australian national debt
- Commonwealth Grants Commission
- Taxation in Australia
- Fiscal imbalance in Australia
- Government budget by country
- ^ 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.
- "Australian Government Budget - Overview". Department of Finance and Administration. Archived from the original on 11 April 2005. http://web.archive.org/web/20050411202142/http://www.finance.gov.au/budgetgroup/Commonwealth_Budget_-_Overview/commonwealth_budget_-_overview.html. Retrieved 12 May 2005.
- "Financial management and budget frameworks". Foundations of Governance. http://www.apsc.gov.au/foundations/financialbudget.htm. Retrieved 12 May 2005. [dead link]
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