Australian federal budget

An Australian federal budget is a document that sets out the estimated revenues and expenditures of the Australian Treasury in the following financial year, proposed conduct of Australian government operations in that period, and its fiscal policy for the forward years.[1] 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 2018 budget brought down in May 2018 relates to the 2018/19 financial year (1 July 2018 – 30 June 2019, FY2019).

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. 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 implications.

Australia follows, to a great extent, the conventions of the Westminster system. For example, the prime minister must have the support of a majority in the House of Representatives, and must in any case be able to ensure the existence of no absolute majority 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)[2] is updated with the latest estimates, and the senior ministers' review, where the Prime Minister, Treasurer, 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".[3]

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

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.[4] Since 1994 the Treasurer has presented the budget on the second Tuesday in May. Exceptions have been made in: (i) 1996 as there was an election and a change of government in March, so the budget was brought down in August; (ii) 2016 when it was held on the first Tuesday in May to allow the government to potentially call a double dissolution election following the presentation of the budget; and (iii) 2019 when a federal election called for May 18 caused the budget to be brought forward to 2 April.

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.[5] 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 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. Additional budget documents and materials are available on the government budget website for 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
Large cyclical changes in cash receipts (in white) and payments (in black) reflect changes in the government's economic objectives.

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 the much higher populated nations of Japan and the United States.[6]

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, 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".[7]

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 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.

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.

See also

International:

Footnotes

  1. ^ Key indicators of economic activity in Australia, such as cost-push inflation and manufacturing and retailing sector productivity, are usually compared with other Organisation for Economic Co-operation and Development member countries.

References

  1. ^ Department of Finance - Budget
  2. ^ CBMS site finance.gov.au
  3. ^ Appropriation Bill (No. 1) 2014-2015
  4. ^ Budget Speech, 10 May 1994, Ralph Willis
  5. ^ Invitation to the 2013-14 lock-up
  6. ^ Saunders, Peter (1987). "Understanding Government Expenditure Trends in OECD Countries and Their Implications for Australia". Australian Quarterly. 59 (1): 34–42. doi:10.2307/20635411.
  7. ^ John Howard; quoted in Terrill, Ross (1987). The Australians. Sydney: Bantam Press. p. 95. ISBN 0-593-01019-1.

External links

2006 Australian federal budget

The 2006 Australian federal budget for the Australian financial year ended 30 June 2007 was presented on 16 May 2006 by Peter Costello, the Treasurer of Australia in the Howard Government.

The budget provided for an underlying cash surplus of $10.8 billion, the Government's ninth surplus. The net government debt was zero in the 2006/07 year, the first time in three decades, from a peak of 18.5% of GDP ($96 billion) in 1995/96.The budget included further personal tax reform including tax cuts worth $36.7 billion over four years. Major improvements to business taxation to encourage take‑up of new technology and to simplify taxes for small business. There was also a plan to dramatically simplify and streamline superannuation. Other key initiatives include $2.3 billion for road and rail infrastructure, including to upgrade key sections of the Hume, Bruce and Pacific highways more quickly, a $1.9 billion boost to funding for mental health services, and families, older Australians and carers were to receive more support.

2008 Australian federal budget

The 2008 Australian federal budget for the Australian financial year ended 30 June 2009 was presented on 13 May 2009 by the Treasurer of Australia, Wayne Swan, the first federal budget presented by Swan, and the first budget of the first Rudd Government.

It had a particular emphasis on family welfare (expansive tax cuts and a lift in the threshold of the Medicare levy surcharge) and capital investment (national accreditation) funds. Swan described it as "a A$55 billion Working Families Support Package" that "strengthens Australia's economic foundations, and delivers for working families under pressure" from increasingly high interest rates. Total spending was cut, following on from gradual cuts of nearly 2% of GDP over the decade of the Howard government. Changes to taxation prompted then Shadow Treasurer Malcolm Turnbull to claim the increased taxation will contribute to inflation, but Swan argued that the tax will affect only high income-earners, dispelling any "custodian" line of attack. Heavy spending by the states had been inefficient at managing past underinvestment on infrastructure, and "the conduct of expansionary monetary policies will be less complicated" as a result of the new reform agenda to avoid (supply-side) case-mix funding of the health care and vocational training sectors of the economy.A new $3 billion tax increase on alcopop drinks was designed to slow down a projected increase (from the Federal Health Minister, Nicola Roxon, tabling Treasury advice) in alcopop sales by 43 million bottles, curtailing binge drinking. However, the opposition described the increase as merely a revenue raiser, with Shadow Health Minister Joe Hockey arguing that consumers of alcopop will switch to other drinks, such as champagne, and binge drinking will not decrease. In response, the Prime Minister told Federal Parliament that the tax increase had wide support in medical and alcohol support services. Opposition Leader Brendan Nelson counter-offered with a $1.8 billion petrol tax cut, reversing years of policy opposing lowering petrol taxes. The Opposition pledged to block the alcopop tax in the Senate, which it will control until July 2008, and has also pledged to block a move to remove a surcharge tax trap for people who fail to take out health cover, which, it claims, will drive up insurance premiums and steer people away from private healthcare.An increase to the luxury car tax was defeated in the Senate, with Steve Fielding of Family First joining the coalition in blocking the budget legislation. It had been supported by the government, the Australian Greens, and independent Nick Xenophon. It was later passed by all non-coalition Senators after amendments were made.

2009 Australian federal budget

The 2009 Australian federal budget for the Australian financial year ended 30 June 2010 was presented on 12 May 2009 by the Treasurer of Australia, Wayne Swan, the second federal budget presented by Swan, and the second budget of the first Rudd Government. Swan commented that the budget would be tougher than in previous years. "Projected government revenue has fallen by $200 billion since the last budget because of the global economic crisis."There were many allegedly planned leaks which released a number of headline details and bad news in the weeks beforehand.

2010 Australian federal budget

The 2010 Australian federal budget for the Australian financial year ended 30 June 2011 was presented on 11 May 2010 by the Treasurer of Australia, Wayne Swan, the third federal budget presented by Swan, and the third budget of the first Rudd Government.The budget forecast a return to surplus in 2012/13. Projections were based on a successful passing of the Resource Super Profits tax based on a 40% of mining company profits.The budget featured changes to regulation regarding savings from 1 July 2011. Tax will only have to be paid on half of the total interest earned so as to encourage people to save. There were changes to the way millions of Australians do their tax returns by decreasing their reliance on tax agents. Sport in Australia is set to receive a funding boost described as the largest in Australian history. The budget was the first ever to be released under a Creative Commons license.

2011 Australian federal budget

The 2011 Australian federal budget for the Australian financial year ended 30 June 2012 was presented on 10 May 2011 by the Treasurer of Australia, Wayne Swan, the fourth federal budget presented by Swan, and the first budget of the Gillard Government. The budget forecast a $22.6 billion deficit and delivered a $44.4 billion deficit.

2012 Australian federal budget

The 2012 Australian federal budget for the Australian financial year ended 30 June 2013 was presented on 8 May 2012 by the Treasurer of Australia, Wayne Swan, the fifth federal budget presented by Swan, and the second budget of the Gillard Government. The budget was described as a "battlers" budget with benefits geared towards families and low income earners. It forecast a surplus of $1.5 billion in the financial year ended 30 June 2013.

The Gillard Government has emphasised the importance of returning the budget to a surplus so that the Reserve Bank of Australia may be in a better position to cut interest rates and thereby generate positive consumer sentiment. Swan was at pains to emphasise that the Bank would set rates independently. Swan had also stated it important for the confidence of sovereign debt investors following the 2007–2012 global financial crisis.The budget set up funding for a new National Disability Insurance Scheme (NDIS). Measures to improve public dental health care, one of the conditions of support made by the Australian Greens with the Gillard Government were addressed with more than $500 million worth of funding. Carbon pricing and the Minerals Resource Rent Tax were both introduced in July 2012.

2013 Australian federal budget

The 2013 Australian federal budget for the Australian financial year ended 30 June 2014 was presented on 14 May 2013 by the Treasurer of Australia, Wayne Swan, the sixth federal budget presented by Swan. The 2013 budget estimated total revenue of A$387.7 billion and spending of A$398.3 billion, a deficit of A$18 billion, with a return to surplus expected in the 2015 Australian federal budget (FY 2015/16). Some of the measures in the budget had been announced by various Ministers before the budget.

According to Swan the budget was being impacted by both global economic uncertainty and the high Australian dollar. It features significant spending on disability services and a school improvement program based on the Gonski Report. In an unusual step the election year budget contains 10-year forward estimates for the school and disability programs in an attempt to ensure funding is available. To pay for DisabilityCare Australia the Medicare levy was increased from 1.5 to 2% of taxable income from 1 July 2014.

The budget was described as big spending but low taxing. It lacked any big surprises or so-called election sweeteners.

2014 Australian federal budget

The 2014 Australian federal budget was the federal budget to fund government services and operations for the 2014/15 financial year. The 2014 budget was the first delivered by the Abbott Government, since the Coalition's victory in the 2013 Australian federal election. Treasurer Joe Hockey presented the budget to the House of Representatives on 13 May 2014.The budget featured significant changes to address a perceived deficit crisis. This included a proposed dramatic downsizing of government bureaucracy, and contained significant changes to welfare, new initiatives for a medical research fund and spending on roads. A budget surplus exceeding 1% of GDP was not expected until 2023.The austere budget faced widespread criticism and was overwhelmingly rejected by the Australian public as reflected in all opinion polls after its release. Opposition to "unfair" budget measures came from the opposition and cross-bench, pensioners, economists, the union movement, students and welfare, community and disability groups with some taking to the streets in protest. The budget included changes which were contrary to pre-election commitments and promises made by the Liberals in opposition. Critics argue that every one of the following pre-election commitments made by Tony Abbott were broken in the first budget: "No cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or SBS." Echos of the "dead and buried" Fightback! policy package from the 1993 election occurred with proposals to defer unemployment benefits for six months for under 30s and the removal of GP bulk billing. Most proposals have since been shelved, dumped or modified.

2015 Australian federal budget

The 2015 Australian federal budget was the federal budget to fund government services and operations for the 2015/16 financial year. The 2015 budget is the second and last submitted by the Abbott Government, since the Coalition's victory in the 2013 Australian federal election. Treasurer Joe Hockey presented the budget to the House of Representatives on 12 May 2015.

The budget featured a $4.4 billion Families Package to reform child care in Australia and a $5.5 billion Jobs and Small Business Package to assist small business. The budget was passed by both the House of Representatives and the Senate and took effect at the start of the 2015/16 financial year, which began on 1 July 2015.

2016 Australian federal budget

The 2016 Australian federal budget was the federal budget to fund government services and operations for the 2016–17 financial year. It was presented to the House of Representatives by Treasurer Scott Morrison on 3 May 2016. It is the third budget to be handed down by the Liberal/National Coalition since their election to government at the 2013 federal election, and the first to be handed down by Morrison and the Turnbull Government. Breaking from convention, the budget was submitted a week earlier than the traditional annual date of the second Tuesday in May, amidst a run-up to the 2016 federal election. Prime Minister Malcolm Turnbull had recalled parliament early, in anticipation of a double dissolution triggering an election for 2 July 2016.

2017 Australian federal budget

The 2017 Australian federal budget was the federal budget to fund government services and operations for the 2017–18 financial year. The budget was presented to the House of Representatives by Treasurer Scott Morrison on 9 May 2017. It is the fourth budget to be handed down by the Liberal/National Coalition since their election to government at the 2013 federal election, and the second to be handed down by Morrison and the Turnbull Government.

2018 Australian federal budget

The 2018 Australian federal budget is the federal budget to fund government services and operations for the 2018–19 financial year. The budget was presented to the House of Representatives by Treasurer Scott Morrison on 8 May 2018. It is the fifth budget to be handed down by the Liberal/National Coalition since their election to government at the 2013 federal election, and the third and final budget to be handed down by Morrison and the Turnbull Government.

Australian Charities and Not-for-profits Commission

The Australian Charities and Not-for-profits Commission (ACNC) is an Australian statutory body and the national regulator of the voluntary sector, including charities and other not for profits. Approximately 56,000 charities and non-profit organisations are registered with ACNC. Charities need to be registered with ACNC to be entitled to tax exempt status as well as certain other exemptions and benefits, such as an ability to give tax deductible receipts. The ACNC also seeks to harmonise state fundraising laws.The ACNC was announced in the 2011 Australian federal budget and has operated from 3 December 2012.

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, which is part of the Treasury Portfolio, is the agency which manages the government debt and does all the borrowing on behalf of the Australian government. Australian government borrowings are subject to limits and regulation by the Loan Council, unless the borrowing is for defence purposes or is a 'temporary' borrowing. Government debt and borrowings (and repayments) have national macroeconomic implications, and are also used as one of the tools available to the national government in the macroeconomic management of the national economy, enabling the government to create or dampen liquidity in financial markets, with flow on effects on the wider economy.

The net government debt is gross government debt less its financial assets, which is often expressed as a percentage of Gross Domestic Product (GDP) or debt-to-GDP ratio.

As of 11 April 2017, the gross Australian government debt was $551.75 billion. The government debt fluctuates from week to week depending on government receipts, general outlays and large-sum outlays. Australian government debt does not take into account government funds held in reserve within statutory authorities such as the Australian Government Future Fund, which at 30 September 2016 was valued at $122.8 billion, and the Reserve Bank of Australia. Nor is the net income of these statutory authorities taken into account. For example, the Future Fund net income in 2014–15 was $15.61 billion, which went directly into the fund's reserves. Also, guarantees offered by the government do not figure in the government debt level. For example, on 12 October 2008, in response to the Economic crisis of 2008, the government offered to guarantee 100% of all bank deposits. This was subsequently reduced to a maximum of $1 million per customer per institution. From 1 February 2012, the guarantee was reduced to $250,000, and is ongoing.

Australia's net international investment liability position (government debt and private debt) was $1,028.5 billion at 31 December 2016, an increase of $5.4 billion (0.5%) on the liability position at 31 December 2016, according to the Australian Bureau of Statistics.Australia's bond credit rating was rated AAA by all three major credit rating agencies as at May 2017. Around two-thirds of Australian government debt is held by non-resident investors – a share that has risen since 2009 and remains historically high.

Department of the Treasury (Australia)

The Department of the Treasury (or The Treasury) is the Australian Government department responsible for economic policy, fiscal policy, market regulation, and the Australian federal budget. The Treasury is one of only two government departments that have existed continuously since Federation in 1901, along with the Attorney-General's Department.

The head of the department is the Secretary to the Treasury, presently Philip Gaetjens, who reports to the Treasurer of Australia, presently the Hon. Josh Frydenberg and the Minister for Revenue and Financial Services, presently the Hon. Kelly O'Dwyer .

Parliamentary Budget Office

The Parliamentary Budget Office (PBO) is an agency of the Australian Parliament whose purpose is to "inform the parliament by providing independent and non-partisan analysis of the budget cycle, fiscal policy and the financial implications of proposals". It was established by the Gillard Government following minority government formation negotiations. Following that commitment, a Joint Parliamentary Committee on the Parliamentary Budget Office was convened, chaired by John Faulkner. The PBO's independence is enshrined in legislation.In 2013 then-Treasurer Wayne Swan introduced legislation requiring the PBO to conduct a post-election audit to cost political parties' electoral commitments.In its first independent report, the PBO noted that the Australian federal budget had an underlying structural deficit, caused in part by Howard Government personal income tax cuts.

Science

Science (from the Latin word scientia, meaning "knowledge") is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe.The earliest roots of science can be traced to Ancient Egypt and Mesopotamia in around 3500 to 3000 BCE. Their contributions to mathematics, astronomy, and medicine entered and shaped Greek natural philosophy of classical antiquity, whereby formal attempts were made to provide explanations of events in the physical world based on natural causes. After the fall of the Western Roman Empire, knowledge of Greek conceptions of the world deteriorated in Western Europe during the early centuries (400 to 1000 CE) of the Middle Ages but was preserved in the Muslim world during the Islamic Golden Age. The recovery and assimilation of Greek works and Islamic inquiries into Western Europe from the 10th to 13th century revived natural philosophy, which was later transformed by the Scientific Revolution that began in the 16th century as new ideas and discoveries departed from previous Greek conceptions and traditions. The scientific method soon played a greater role in knowledge creation and it was not until the 19th century that many of the institutional and professional features of science began to take shape.Modern science is typically divided into three major branches that consist of the natural sciences (e.g., biology, chemistry, and physics), which study nature in the broadest sense; the social sciences (e.g., economics, psychology, and sociology), which study individuals and societies; and the formal sciences (e.g., logic, mathematics, and theoretical computer science), which study abstract concepts. There is disagreement, however, on whether the formal sciences actually constitute a science as they do not rely on empirical evidence. Disciplines that use existing scientific knowledge for practical purposes, such as engineering and medicine, are described as applied sciences.Science is based on research, which is commonly conducted in academic and research institutions as well as in government agencies and companies. The practical impact of scientific research has led to the emergence of science policies that seek to influence the scientific enterprise by prioritizing the development of commercial products, armaments, health care, and environmental protection.

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