Source: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1819/Quick_Guides/BudgetPapers1920
Timestamp: 2019-10-20 11:39:24
Document Index: 770949834

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A Guide to the Commonwealth Budget – Parliament of Australia
Home About Parliament Parliamentary Departments Parliamentary Library Research Publications Research Papers Index Page Research Papers 2018–19 A Guide to the Commonwealth Budget
A Guide to the Commonwealth Budget
PDF version [356KB]
Daniel Weight and Phillip Hawkins
This Quick Guide identifies information and key concepts that are used in the Budget Papers and related materials.
What occurs on Budget night?
What is in the Budget Papers and related materials?
Budget Paper No. 1: Budget Strategy and Outlook
What occurs after Budget night?
Legislation relating to the financial management of the Commonwealth
Other Budget-related reports not released on Budget night
Key concepts used in the Budget Papers
Accrual accounting and cash accounting
Timeframes and terminology
Net operating balance, fiscal balance and underlying cash balance
Parameter variations and policy decisions
Administered and departmental items
General Government Sector, Public Non-financial Corporations sector and Public Financial Corporations sector entities
Consolidated Revenue Fund and appropriations
Annual Appropriation Bills
Retained revenue receipts
Appendix: Details of prior Commonwealth Budgets
The Budget is a series of documents, known as papers, tabled by the Australian Government with the Annual Appropriation Bills. The Budget Papers serve several purposes:
They are a statement to the Parliament, and through the Parliament the broader Australian community, of the current and forecast economic and fiscal position (including both revenues and expenditures) of the Commonwealth.
They outline the policy priorities of the Australian Government, and are used by the Government to announce new policies and the estimated fiscal impact of those policies.
They outline the estimated resourcing of Australian Government departments and agencies, and the costs of the programs they administer.
On Budget night the Treasurer tables the annual Appropriation Bills for the forthcoming year in the House of Representatives, and delivers the second reading speech on Appropriation Bill (No. 1). This speech is also referred to as the Budget Speech. In recent years, the second reading speech on Appropriation Bill (No. 1) has commenced at 7.30 pm.
Since 1994, the Appropriation Bills have typically been tabled on the second Tuesday in May. The Appendix shows the dates of all Commonwealth Budgets since 1901.
Along with the Appropriation Bills, the Government also tables the Budget Papers and related materials. The Budget Papers and related materials are made available on the internet at www.budget.gov.au when the Treasurer commences the second reading speech on Appropriation Bill (No. 1).
Increasingly, detailed tables and budget data are also released on data.gov.au shortly after the Budget Papers are tabled.
The Budget Papers comprise:
the Budget Overview
Budget Paper No. 3: Federal Financial Relations and
Budget Paper No. 4: Agency Resourcing.
Additionally, for each portfolio, the Government produces a Portfolio Budget Statement. The Government may also table one or more Ministerial Statements with the Budget Papers.
The Budget Speech is a copy of the second reading speech for the Appropriation Bill (No. 1). The Treasurer will use the second reading speech to set out the reasons why the annual Appropriation Bills should be passed by the Parliament. Treasurers have used the second reading speech to update the Parliament about the prevailing economic circumstances, and to announce important or major policy decisions that the Government has made.
The Budget Overview provides a summary of what the Government considers to be the main or important aspects of the Budget.
Budget Paper No. 1: Budget Strategy and Outlook provides high-level information about the overall economic outlook, and the Commonwealth’s fiscal position. Specifically, it provides:
information about the international and domestic economic outlook, including numerical forecasts of key economic parameters such as gross domestic product (GDP) growth, employment and unemployment, and the consumer price index (CPI)
a statement of the Government’s fiscal strategy and the fiscal outlook of the Commonwealth
estimates of the revenues and expenditures of the Commonwealth, and their composition
information on the proposed capital investment of the Commonwealth
information on the assets, liabilities—including contingent liabilities, or ‘risks’—and debt held or owed by the Commonwealth and
historical information about the Commonwealth’s fiscal and debt position.
Budget Paper No. 2: Budget Measures contains information about the budget measures—or policies—the Government has decided to pursue. Each budget measure is classified according to what aspect of the Commonwealth’s finances it mostly affects, with:
a revenue measure mostly affecting the revenues of the Commonwealth
an expense measure mostly affecting expenses of the Commonwealth and
a capital measure mostly affecting the capital—or assets—held by the Commonwealth.
The description of each measure will have a costing attached to it.
A costing is an estimate of the impact of the proposed policy on the fiscal position, or ‘budget balance’, of the Commonwealth over the forward estimates period.
a positive costing reflects an increase in revenue from the policy measure (a positive impact on the Budget balance) and
a negative costing reflects a decrease in revenue from the policy measure (a negative impact on the Budget balance).
a positive costing reflects an increase in expenditure from the policy measure (a negative impact on the Budget balance) and
a negative number reflects a decrease in expenditure from the policy measure (a positive impact on the Budget balance).
a positive number reflects an increase in the assets of the Commonwealth and
a negative number reflects a decrease in the assets of the Commonwealth.
Some policy measures cannot be accurately costed by the government, or may not have any financial implications. The Budget papers, therefore, may also identify some measures’ costing as:
a nil effect, denoted by ‘–’
a small effect that is close to zero, denoted by ‘...’ or
an uncertain or unquantifiable effect, denoted by ‘*’.
Costings are generally only presented for the four year forward estimates period.
Budget Paper No. 3: Federal Financial Relations contains information about grants of financial assistance made by the Commonwealth to the states and territories. There are two categories of financial assistance that the Commonwealth may make:
Specific purpose payments are monies provided by the Commonwealth on the condition that the states and territories spend those monies on specified purposes such as health, education, or roads, or use them to fund local governments. These are sometimes called ‘tied grants’.
General revenue assistance is money provided by the Commonwealth to the states or territories without any conditions on how it may be spent. Assistance of this type is sometimes called ‘untied grants’.
A supplement to Budget Paper No. 3 that is only available online sets out where any conditions that attach to grants of financial assistance to the states and territories may be found or obtained, and how monies provided to the states and territories are to be appropriated by the Parliament.
Budget Paper No. 4: Agency Resourcing deals with the various types of appropriations that are used by the Government to fund entities and activities. Budget Paper No. 4: Agency Resourcing shows:
for each entity, and for each outcome of each entity, the amounts and types of appropriation that are expected to be utilised in the forthcoming year
for each piece of legislation that provides for a special appropriation, the amount of money expected to be drawn against that appropriation in the forthcoming year and
for each special account, the expected transactions on that special account, and the expected balance of that special account at the beginning and end of the forthcoming year.
A Portfolio Budget Statement is a statement that is tabled by the relevant portfolio minister in support of the appropriation for that portfolio proposed in the Budget Papers. Portfolio Budget Statements are made available on departments’ websites at the same time as the Budget Papers are released.
A Portfolio Budget Statement provides more detail on the proposed activities and expenditures of each entity in the portfolio for the Budget year and the forward estimate years. A Portfolio Budget Statement contains an overview of the portfolio, with separate sections for each Commonwealth entity within that portfolio.
For each Commonwealth entity, a Portfolio Budget Statement will include:
a statement that shows the financial resources proposed to be made available to that entity from all sources
a reconciliation showing the expected impact of the Government’s announced measures on that entity
the outcomes that the Government intends that entity to pursue
a description of the programs that will contribute to each of the entity’s outcomes, an estimate of the expenses expected to be incurred in delivering each program, and performance indicators against which the Government intends the performance of each program to be measured and
the budgeted financial statements of that entity.
The Government may also table one or more Ministerial Statements. Typically, Ministerial Statements released with the Budget group together information related to one theme or issue.
On the Thursday immediately following Budget night, a second reading speech on annual Appropriation Bill (No. 1) is delivered by the Leader of the Opposition. The speech is often referred to as the Leader of the Opposition’s Budget reply speech.
The details of the expenditure proposed in the Budget are referred by the House of Representatives to the Senate for consideration by the Senate. This enables the Senate to commence its scrutiny of the Budget through the Senate Estimates process, despite the Senate having not yet received the annual Appropriation Bills from the House of Representatives.
The Charter of Budget Honesty is a set of rules that establish how the Commonwealth is to manage and report on its fiscal performance. It is a schedule to the Charter of Budget Honesty Act 1998.
The Public Governance, Performance and Accountability Act 2013 is the main Act that provides for the financial management of the Commonwealth. The Act allows certain matters to be dealt with via delegated legislation, known as Rules.
Additional reports must be publicly released and tabled in Parliament from time to time.
Under the Charter of Budget Honesty, the Treasurer must release the Mid-Year Economic and Fiscal Outlook report within six months of the Budget, or by the end of January in a given year, whichever is later. The Mid-Year Economic and Fiscal Outlook report must update any information that has changed since the Budget.
Under the Charter of Budget Honesty, the Treasurer must produce a Final Budget Outcome within three months of the end of each financial year. The Final Budget Outcome must contain the fiscal outcomes for the Commonwealth for the relevant year.
Under the Charter of Budget Honesty, every five years the Treasurer must release and table in Parliament an Intergenerational Report. The Intergenerational Report must assess the sustainability of current Government policies over the next 40 years.
Under the Charter of Budget Honesty, within 10 days of the calling of a general election, the Secretaries of the Department of Finance and the Treasury must release a Pre-Election Economic and Fiscal Outlook report. The report must update any information that has changed from the last budget update.
Under the Parliamentary Service Act 1999, within 30 days of the end of the caretaker period for a general election, the Parliamentary Budget Officer must release a Post-election Report that sets out the Parliamentary Budget Officer’s estimates of the costings of the election commitments made by political parties during the preceding election campaign.
In order to understand the Budget Papers, it is useful to explain some concepts used within them.
The Budget Papers present figures on both an accrual and cash accounting basis.
Accrual accounting is a method of accounting that records income when it is earned and costs when they are incurred, regardless of when any cash is received or paid. Under accrual accounting, the Commonwealth’s recognised costs are referred to as expenses or expenditures and its income (including from taxes) is referred to as revenue.
Cash accounting is a method of accounting that records receipts and payments of cash when they occur. Under cash accounting, the costs paid out by the Commonwealth are referred to as payments and its income received is referred to as receipts.
Example: The decline in value of an asset as it wears out—known as depreciation—is recognised as an expense for an entity as it occurs, even though no cash payment is required at that time.
Example: A department purchasing a service from a supplier may be invoiced for those services, but have 30 days to pay for them. The purchase would be recognised on an accrual basis when the supply is invoiced, and be recognised on a cash basis when the invoice is actually paid.
Costings of Budget measures are presented on an accrual accounting basis.
The Budget is predominantly a forward looking document.
Information contained in the Budget Papers is generally presented for a five year period, namely:
the Budget year and
the three financial years following the Budget year (the forward estimates period).
Particularly for economic information, the Budget Papers will also contain forecasts or projections for at least the three years of the forward estimates period.
There are subtle differences between forecasts and projections:
A forecast indicates that the Government expects an economic parameter to occur.
A projection indicates that the Government has based its planning on an assumption of an economic parameter occurring, but has not formed a view about whether that parameter will occur.
Projections are sometimes called planning assumptions.
The Net operating balance (NOB) is an accrual accounting measure of the difference between the revenues and the expenses of the Commonwealth. It excludes investments in capital made by the Commonwealth and as such can be considered an estimate of the ability of the Government to meet the recurrent expenditures of Government with its revenues in any one year.
The Fiscal balance is equal to the NOB adjusted for net capital investments made by the Commonwealth. It can be considered an indicator of the Government’s total borrowing requirements.
The underlying cash balance is a cash accounting measure of the balance between the receipts and payments of the Commonwealth, including payments associated with capital expenditures. It is the Government’s preferred measure of showing the surplus or deficit of the Commonwealth in any one year.
In places in the Budget Papers, a distinction is made between changes to the Commonwealth’s finances that occur because of parameter variations, and changes that occur because of policy decisions.
An outcome is the purpose for which monies are appropriated to a Commonwealth entity.
A program is an activity that is undertaken by a Commonwealth entity to achieve an outcome. For each outcome, there may be one or more programs.
An administered item is an item that a Commonwealth entity administers on behalf of the Commonwealth as a whole. An administered item may be expenditure, revenue, or an asset.
A Commonwealth entity does not have discretion about what it can do with an administered item, and must use that item in the way the Government directs. Administered items mostly relate to outcomes and programs that are managed by an entity.
Departmental items are expenditures, revenues, or assets over which a Commonwealth entity has discretion about how they may be used. Departmental items are mostly used for the running of entities, such as for paying and accommodating staff.
Commonwealth entities are classified according to their activities and objectives into one of three sectors.
Example: If the Government established a corporation that had the purpose of providing loans for a certain purpose on commercial terms and the Government expected that entity to make a profit.
The corporation would be classified as a Public Financial Corporation (PFC) in the Budget. An existing example of a PFC is the Export Finance and Insurance Corporation.
Most material in the Budget Papers relates to the activities of entities in the general government sector only.
The Consolidated Revenue Fund is established by section 81 of the Constitution. All monies received by the Commonwealth must be paid into the Consolidated Revenue Fund. It is a constitutional requirement that, before the Government may spend any monies, an Act of the Parliament providing for an appropriation must authorise the release of the monies from the Consolidated Revenue Fund.
A Bill that proposes an appropriation may take two general forms, namely:
an annual Appropriation Bill or
a Bill that proposes a special appropriation.
An annual Appropriation Bill will typically propose the appropriation of a finite amount of money, but that money will be provided to a broad range of entities and outcomes. The finite nature of such appropriations means that the Executive Government must return to the Parliament periodically and request the Parliament appropriate further monies for those entities and outcomes.
If, in a given year, the Government does not intend to table and pass through the Parliament a full Budget before the start of the financial year, the Government may introduce Supply Bills that propose to appropriate a small amount of money to ensure the continued operation of the Government until a full Budget can be prepared.
A Bill may also propose to appropriate an unlimited amount of money, but only make it available for a specific purpose or in specific circumstances. Such an appropriation is known as a special appropriation. Almost all of the Commonwealth’s substantial expenditure programs are now provided for by special appropriations; with monies being automatically released from the Consolidated Revenue Fund where the criteria applying to that appropriation are met.
Example: The Paid Parental Leave Act 2010 provides the circumstances under which a person is entitled to parental leave pay. To change the amount that is paid under that Act, an amendment to that Act is needed to change the eligibility criteria for parental leave pay.
Section 74 of the Public Governance, Performance and Accountability Act 2013 provides a mechanism where certain amounts received by entities may be retained by those entities.
The categories of revenues mostly relate to amounts likely to be received by an entity to defray the cost of providing a good or service. Examples may include application or processing fees.
A special account is an amount of money that that is held in the Consolidated Revenue Fund and is earmarked for a specific purpose, and which may only be released when the criteria for release are satisfied.
1901 8 October 1901 George Turner Protectionist Party
1902 23 September 1902 George Turner Protectionist Party
1903 28 July 1903 George Turner Protectionist Party
1904 18 October 1904 George Turner Protectionist Party
1905 22 August 1905 John Forrest Protectionist Party
1906 31 July 1906 John Forrest Protectionist Party
1907 8 August 1907 William Lyne Protectionist Party
1908 14 October 1908 William Lyne Protectionist Party
1909 12 August 1909 John Forrest Commonwealth Liberal Party
1910 7 September 1910 Andrew Fisher Australian Labor Party
1911 26 October 1911 Andrew Fisher Australian Labor Party
1912 1 August 1912 Andrew Fisher Australian Labor Party
1913 2 October 1913 John Forrest Commonwealth Liberal Party
1914 3 December 1914 Andrew Fisher Australian Labor Party
1915 No budget No budget No budget
1916 9 May 1916 William Higgs Australian Labor Party
1917 8 August 1917 John Forrest Nationalist Party
1918 25 September 1918 William Watt Nationalist Party
1919 8 October 1919 Alexander Poynton* Nationalist Party
1920 16 September 1920 Joseph Cook Nationalist Party
1921 29 September 1921 Joseph Cook Nationalist Party
1922 17 August 1922 Stanley Bruce Nationalist Party
1923 26 July 1923 Earle Page Nationalist—Australian Country Party
1924 31 July 1924 Earle Page Nationalist—Australian Country Party
1925 13 August 1925 Earle Page Nationalist—Australian Country Party
1926 8 July 1926 Earle Page Nationalist—Australian Country Party
1927 28 September 1927 Earle Page Nationalist—Australian Country Party
1928 30 August 1928 Earle Page Nationalist—Australian Country Party
1929 22 August 1929 Earle Page Nationalist—Australian Country Party
1930 9 July 1930 James Scullin Australian Labor Party
1931 10 Jul 1931 Edward Theodore Australian Labor Party
1932 1 September 1932 Joseph Lyons United Australia Party
1933 4 October 1933 Joseph Lyons United Australia Party
1934 24 July 1934 Joseph Lyons United Australia Party
1935 23 Sep 1935 Richard Casey United Australia Party
1936 10 September 1936 Richard Casey United Australia Party
1937 24 July 1937 Joe Lyons United Australia Party
1938 21 September 1938 Richard Casey United Australia Party
1939 8 September 1939 Robert Menzies United Australia Party
1940 21 November 1940 Arthur Fadden National Party of Australia (Country Party)
1941 25 September 1941 Arthur Fadden National Party of Australia (Country Party)
1942 2 September 1942 Ben Chifley Australian Labor Party
1943 29 September 1943 Ben Chifley Australian Labor Party
1944 7 September 1944 Ben Chifley Australian Labor Party
1945 7 September 1945 Ben Chifley Australian Labor Party
1946 14 November 1946 Ben Chifley Australian Labor Party
1947 19 September 1947 Ben Chifley Australian Labor Party
1948 8 September 1948 Ben Chifley Australian Labor Party
1949 7 September 1949 Ben Chifley Australian Labor Party
1950 12 October 1950 Arthur Fadden National Party of Australia (Country Party)
1951 26 September 1951 Arthur Fadden National Party of Australia (Country Party)
1952 6 August 1952 Arthur Fadden National Party of Australia (Country Party)
1953 9 September 1953 Arthur Fadden National Party of Australia (Country Party)
1954 18 May 1954 Arthur Fadden National Party of Australia (Country Party)
1955 24 August 1955 Arthur Fadden National Party of Australia (Country Party)
1956 30 August 1956 Arthur Fadden National Party of Australia (Country Party)
1957 3 September 1957 Arthur Fadden National Party of Australia (Country Party)
1958 5 August 1958 Arthur Fadden National Party of Australia (Country Party)
1959 11 August 1959 Harold Holt Liberal Party Of Australia
1960 16 August 1960 Harold Holt Liberal Party Of Australia
1961 15 August 1961 Harold Holt Liberal Party Of Australia
1962 7 August 1962 Harold Holt Liberal Party Of Australia
1963 13 August 1963 Harold Holt Liberal Party Of Australia
1964 11 August 1964 Harold Holt Liberal Party Of Australia
1965 17 August 1965 Harold Holt Liberal Party Of Australia
1966 16 August 1966 William McMahon Liberal Party Of Australia
1967 15 August 1967 William McMahon Liberal Party Of Australia
1968 13 August 1968 William McMahon Liberal Party Of Australia
1969 12 August 1969 William McMahon Liberal Party Of Australia
1970 18 August 1970 Les Bury Liberal Party Of Australia
1971 17 August 1971 Billie Snedden Liberal Party Of Australia
1972 15 August 1972 Billie Snedden Liberal Party Of Australia
1973 21 August 1973 Frank Crean Australian Labor Party
1974 17 September 1974 Frank Crean Australian Labor Party
1975 19 August 1975 Bill Hayden Australian Labor Party
1976 17 August 1976 Phillip Lynch Liberal Party Of Australia
1977 16 August 1977 Phillip Lynch Liberal Party Of Australia
1978 15 August 1978 John Howard Liberal Party Of Australia
1979 21 August 1979 John Howard Liberal Party Of Australia
1980 19 August 1980 John Howard Liberal Party Of Australia
1981 18 August 1981 John Howard Liberal Party Of Australia
1982 17 August 1982 John Howard Liberal Party Of Australia
1983 23 August 1983 Paul Keating Australian Labor Party
1984 21 August 1984 Paul Keating Australian Labor Party
1985 20 August 1985 Paul Keating Australian Labor Party
1986 19 August 1986 Paul Keating Australian Labor Party
1987 15 September 1987 Paul Keating Australian Labor Party
1988 23 August 1988 Paul Keating Australian Labor Party
1989 15 August 1989 Paul Keating Australian Labor Party
1990 21 August 1990 Paul Keating Australian Labor Party
1991 20 August 1991 John Kerin Australian Labor Party
1992 18 August 1992 John Dawkins Australian Labor Party
1993 17 August 1993 John Dawkins Australian Labor Party
1994 10 May 1994 Ralph Willis Australian Labor Party
1995 9 May 1995 Ralph Willis Australian Labor Party
1996 20 August 1996 Peter Costello Liberal Party Of Australia
1997 13 May 1997 Peter Costello Liberal Party Of Australia
1998 12 May 1998 Peter Costello Liberal Party Of Australia
1999 11 May 1999 Peter Costello Liberal Party Of Australia
2000 9 May 2000 Peter Costello Liberal Party Of Australia
2001 22 May 2001 Peter Costello Liberal Party Of Australia
2002 14 May 2002 Peter Costello Liberal Party Of Australia
2003 13 May 2003 Peter Costello Liberal Party Of Australia
2004 11 May 2004 Peter Costello Liberal Party Of Australia
2005 10 May 2005 Peter Costello Liberal Party Of Australia
2006 9 May 2006 Peter Costello Liberal Party Of Australia
2007 8 May 2007 Peter Costello Liberal Party Of Australia
2008 13 May 2008 Wayne Swan Australian Labor Party
2009 12 May 2009 Wayne Swan Australian Labor Party
2010 11 May 2010 Wayne Swan Australian Labor Party
2011 10 May 2011 Wayne Swan Australian Labor Party
2012 8 May 2012 Wayne Swan Australian Labor Party
2013 14 May 2013 Wayne Swan Australian Labor Party
2014 13 May 2014 Joe Hockey Liberal Party Of Australia
2015 12 May 2015 Joe Hockey Liberal Party Of Australia
2016 3 May 2016 Scott Morrison Liberal Party Of Australia
2017 9 May 2017 Scott Morrison Liberal Party Of Australia
2018 2 April 2018 Scott Morrison Liberal Party Of Australia
* Acting Treasurer.