Budget 2013-14
Daniel Weight
&
Robert Dolamore
Parliament of Australia
Department of Parliamentary Services
Some thoughts on assessing the quality
of budgets
Parliament of Australia
Department of Parliamentary Services
Some starting propositions
o Budgets are central to the compact between
the community & the State
o Strong public finances are needed to provide a
good foundation for growth
o Budgets should be the catalyst for an
informed debate about the state of public
finances
o A Budget is more than the bottom line
Parliament of Australia
Department of Parliamentary Services
What do we mean by ‘quality’
o The Budget funds public goods, services &
transfers that improve community wellbeing in
an efficient way
o Having regard for the Government’s priorities
the Budget allocates funding to its most
efficient use
o The Budget is capable of raising the revenue
needed to fund government expenditure and in
a way that is least detrimental to economic
growth and equity
Parliament of Australia
Department of Parliamentary Services
What we mean by ‘quality’ con’t
o The Budget includes hard decisions when
adjustment is needed
o The Budget supports higher and more stable
economic growth
o Decisions in the Budget are sustainable
Parliament of Australia
Department of Parliamentary Services
A related concept - sustainability
o Solvency – the ability of the gov’t to pay its financial
obligations
o Growth – fiscal policy that sustains economic growth
o Stability – the capacity of gov’t to pay current
obligations with existing tax burdens
o Fairness – the capacity of gov’t to pay current
obligations without shifting the cost to future
generations
o Resilience – the capacity to ‘take a hit’
Parliament of Australia
Department of Parliamentary Services
What can help us assess quality?
o Strategy
o History
o Context
o Assumptions
o Allocation
o Incentives
o The Future
o Evidence
Parliament of Australia
Department of Parliamentary Services
Strategy
o Is the Budget anchored in a credible mediumterm fiscal strategy?
o Is the Budget linked to some broader
economic strategy?
o Is the Budget & individual measures
consistent with this strategy?
o How well does the Budget tell this story?
Parliament of Australia
Department of Parliamentary Services
History
o Given the recent past – how realistic is the Budget?
o How have key areas of expenditure and revenue
been growing?
o How does this compare to the projections in the
Budget?
o What has been tried before and what have we
learnt?
o What is genuinely new and what is being
‘re-badged’ or ‘re-packaged’?
Parliament of Australia
Department of Parliamentary Services
Context
o What is the international economic context?
o What is the domestic economic context?
o Are there pressing social & environmental
issues?
o What opportunities & risks fall out of this
assessment?
o How well does the Budget manage these
opportunities and risks?
Parliament of Australia
Department of Parliamentary Services
Assumptions
o The Budget is underpinned by forecasts of key
economic parameters
o How accurate have forecasts in recent Budgets
been?
o How credible are the forecasts in the current
Budget?
o How sensitive are the Budget numbers to
changes in the key parameters?
Parliament of Australia
Department of Parliamentary Services
Allocation
o Budgeting is an inherently allocative process
o To what extent does the Budget change the
allocation of gov’t funding or the revenue
raising burden?
o What are the implications for equity, efficiency
& effectiveness?
o What trade-offs are being made?
Parliament of Australia
Department of Parliamentary Services
Incentives
o Through the Budget governments can reshape
the incentives we face
o How and to what extent does the Budget
re-shape incentives?
o Including - to work, spend, save and invest?
o How is this likely to impact on economic
growth & budget sustainability?
Parliament of Australia
Department of Parliamentary Services
The future
o What are the long-term implications for the
Budget of:
o new spending measures or spending cuts
o new revenue measures or tax cuts?
o Do they make the Budget more ‘pro-cyclical’ or
less?
o What costs are being shifted onto future
generations?
o How well does the Budget address long-term
challenges?
Parliament of Australia
Department of Parliamentary Services
Evidence
o What is the evidence base for the decisions
taken in the Budget?
o To what extent have program evaluations &
reviews informed spending decisions?
o If a measure is more of an ‘informed
experiment’ will it be subject to an
independent evaluation?
Parliament of Australia
Department of Parliamentary Services
Some closing questions
o How good has the Budget process been?
o Is the material well presented and
transparent?
o What has been left for another day?
Parliament of Australia
Department of Parliamentary Services
An overview of the
Budget Papers
Parliament of Australia
Department of Parliamentary Services
What affects the fiscal position?
o Parameter variations
o On the revenue side, tax and other receipts are affected by
underlying economic activity
o Corporate profits
o Employment
o On the expenditure side, many government expenditures
are demand driven
o Unemployment benefits
o Medicare
o Budget measures
o Decision by government to spend or save
o Changing program eligibility
o Changing tax rules
Parliament of Australia
Department of Parliamentary Services
What affects the fiscal position?
Chart 3.1: Change to the underlying cash balance since the 2012-13 Budget
Parliament of Australia
Department of Parliamentary Services
Annual Budget: who is the audience?
o Parliamentarians
o Media
o General public and interest groups
o Economists and business
o Commonwealth government
o State/Territory Governments
Parliament of Australia
Department of Parliamentary Services
GFS sectoral classifications
o General Government Sector (GGS)
o
o
o
o
Government departments
Expenditure programs
Statutory authorities
Courts and tribunals
o Public Non-Financial Corporations (PNFC) entities that are commercial in nature,
but which the Government owns
o Australia Post
o NBN Co.
o Together, the GGS and the PNFC sectors are known as the Total Non-Financial
Public Sector
o Public Financial Corporations (PFC) provide various financial functions
o Reserve Bank of Australia
o Medibank Private
Parliament of Australia
Department of Parliamentary Services
‘Headline’ budget balance
o Headline cash
o (cash)
o Fiscal balance
o (accrual)
o Underling cash balance
o (a bit of both cash and accrual)
Parliament of Australia
Department of Parliamentary Services
‘Administered’ versus ‘departmental’
o Departmental
o Salaries
o Office supplies
o Some programs
o Administered
o Social security payments
o Health/education funding
o Revenue
o Note: the efficiency dividend only applies to
departmental expenditure
Parliament of Australia
Department of Parliamentary Services
Budget Papers
o Appropriation Bills
o Budget Papers
o
o
o
o
o
Budget Speech
BP 1: Budget Strategy and Outlook
BP 2: Budget Measures
BP 3: Australia’s Federal Financial Relations
BP 4: Agency
o Ministerial Statements and ‘glossies’
o Portfolio Budget Statements
Parliament of Australia
Department of Parliamentary Services
Budget Speech
Ministerial Statements and ‘glossies’
o Budget Speech
o Provides the Government’s narrative
o Highlights
o Ministerial Statements and ‘glossies’
o May contain useful information from across
multiple portfolios
o Link measures with overall policy direction
Parliament of Australia
Department of Parliamentary Services
Appropriation Bills
o Odd numbered Bills may only contain
‘ordinary’ appropriations
o Even numbered Bills can also contain other
legislative changes
o Additional appropriations
o “Appropriation Bill (No. 5/6) 2012-13”
Parliament of Australia
Department of Parliamentary Services
BP1: Budget Strategy and Outlook
o Statements 1-4:
o Economic and fiscal outlook
o The ‘narrative’
o
o
o
o
o
o
Statement 5: Revenue
Statement 6: Expenses and Net Capital Investment
Statement 7: Assets and Liabilities
Statement 8: Statement of Risks
Statement 9: Budget Financial Statements
Statement 10: Historical Australian Government Data
Parliament of Australia
Department of Parliamentary Services
BP1: Budget Strategy and Outlook
o Statement 6: Expenses and Net Capital Investment
o Appendix A: Expenses by function and sub-function
o Appendix C: Additional Agency Statistics
o Table C5: ASL levels
o Statement 8: Statement of Risks
o Contingent liabilities
o Quantifiable
o Unquantifiable
Parliament of Australia
Department of Parliamentary Services
BP1: Budget Strategy and Outlook
o Statement 9: Budget Financial Statements
o Prepared on fiscal balance (accrual), not underlying cash,
basis
o Operating Statement, Balance Sheet, and Cashflow
Statement for the General Government Sector,
Public Non-Financial Corporations and
Total Non-Financial Public sectors
o GGS sector has estimates out to 2016-17
o Look in the ‘Notes’
o ‘Government securities on issue’
Parliament of Australia
Department of Parliamentary Services
BP 2: Budget Measures
o What is a measure?
o Revenue measures are defined as those measures that
affect taxation or non-taxation revenues
o Expense measures are defined as those measures that
affect expenses
o Capital measures are defined as those measures that
affect net capital investment, defined as the change in
non-financial assets
o What is not a measure?
o Parameter variations
Parliament of Australia
Department of Parliamentary Services
BP 2: Budget Measures
Australian Curriculum, Assessment and Reporting Authority — additional funding
Expense ($m)
2011-12
2012-13
2013-14
2014-15
2015-16
-
6.2
5.1
3.0
2.7
Department of Education, Employment and Workplace Relations
The Government will provide $17 million over four years from 2012-13 to the Australian Curriculum, Assessment and Reporting Authority
(ACARA) to enable it to deliver the national education reform priorities set by the Standing Council on School Education and Early Childhood.
An increased budget for the period 2012-13 to 2015-16 will allow ACARA to continue work against its three key deliverables: the Australian
Curriculum; the National Assessment Program for Literacy and Numeracy (NAPLAN) which measures students' progress; and the MySchool
website which provides national data collection and reporting of school resourcing and outcomes.
Parliament of Australia
Department of Parliamentary Services
BP 2: Budget Measures
Australian Year of the Farmer — contribution
Expense ($m)
Department of Agriculture, Fisheries and Forestry
2011-12
2012-13
2013-14
2014-15
2015-16
-
-
-
-
-
The Government will provide $1.3 million in 2011-12 for projects that recognise and promote the significant role played by agricultural groups to
mark the Australian Year of the Farmer in 2012.
The cost of this measure will be met from within the existing resourcing of the Department of Agriculture, Fisheries and Forestry.
Parliament of Australia
Department of Parliamentary Services
BP 2: Budget Measures
GST — compliance program — two year extension
Revenue ($m)
2011-12
2012-13
2013-14
2014-15
2015-16
Australian Taxation Office
-
-
-
464.3
521.9
Department of the Treasury
-
-
-
97.2
98.1
Total — Revenue
-
-
-
561.5
620.0
Department of the Treasury
-
-
-
235.7
318.4
Australian Taxation Office
-
-
-
97.2
98.1
Total — Expense
-
-
-
332.9
416.5
Related expense ($m)
The Government will provide $195.3 million to the Australian Taxation Office (ATO) in 2014-15 and 2015-16 to continue a range of activities that
promote voluntary GST compliance and provide a level playing field for Australian businesses. This extends a 2010-11 Budget measure by a
further two years. Arrangements for funding these activities will be settled with the States and Territories in accordance with the GST
Administration Performance Agreement.
Parliament of Australia
Department of Parliamentary Services
BP 3: Australia’s Federal Relations
o Part 2: Payments for Specific Purposes
o National Healthcare SPP
o National Schools SPP
o National Skills and Workforce Development SPP
o National Disability Services SPP
o National Affordable Housing SPP
o Infrastructure and road funding
o Contingent funding
Parliament of Australia
Department of Parliamentary Services
BP 3: Australia’s Federal Relations
Table 2.1: Total payments for specific purposes by category, 2011-12 to 2015-16
$million
NSW
VIC
QLD
WA
SA
TAS
ACT
NT
Total(a)
8,970
6,812
5,623
2,858
2,138
634
446
372
27,852
-
-
-
-
-
-
-
-
-
6,148
4,270
5,173
2,169
2,084
568
263
881
21,590
15,117
11,081
10,796
5,028
4,222
1,202
709
1,253
49,442
National Specific Purpose Payments
5,080
3,961
3,309
1,671
1,215
370
282
218
16,105
National Health Reform funding
4,381
3,322
2,724
1,407
1,028
298
204
153
13,518
National Partnership payments(b)
3,090
2,589
2,361
1,448
893
308
112
523
11,365
12,551
9,872
8,394
4,526
3,136
977
598
894
40,989
National Specific Purpose Payments
5,348
4,240
3,585
1,817
1,264
383
300
224
17,160
National Health Reform funding
4,608
3,584
2,929
1,522
1,041
319
234
146
14,383
National Partnership payments(b)
3,399
3,312
2,515
1,629
688
272
154
301
12,836
13,355
11,136
9,029
4,968
2,993
974
687
670
44,379
2011-12
National Specific Purpose Payments
National Health Reform funding
National Partnership payments(b)
Total payments for specific purposes
2012-13
Total payments for specific purposes
2013-14
Total payments for specific purposes
Parliament of Australia
Department of Parliamentary Services
BP 3: Australia’s Federal Relations
Facilitation and reward funding component
$million
NSW
VIC
QLD
WA
SA
TAS
ACT
NT
Total
2011-12
32.5
18.7
20.1
11.6
10.4
1.7
2.9
0.9
98.8
2012-13
16.0
12.4
10.3
5.2
3.6
1.1
0.8
0.5
50.0
2013-14
15.9
12.4
10.4
5.3
3.5
1.1
0.8
0.6
50.0
2014-15
15.9
12.4
10.4
5.3
3.5
1.1
0.8
0.6
50.0
2015-16
15.9
12.4
10.4
5.3
3.5
1.1
0.8
0.6
50.0
The Commonwealth is providing funding to introduce a four hour national emergency access target. Under the target, 90 per cent of all patients
presenting to a public hospital emergency department will leave the emergency department for admission to hospital or referral to another
hospital for treatment or will be discharged within four hours. From its commencement on 1 January 2012, the target applies to all five triage
categories and is to be achieved through stepped improvements by 2015.
Parliament of Australia
Department of Parliamentary Services
BP 3: Australia’s Federal Relations
Natural Disaster Relief and Recovery Arrangements (NDRRA)
NDRRA accrual estimates
$million
NSW
VIC
QLD
WA
SA
TAS
ACT
NT
Total
2011-12
46.8
46.6
703.9
12.0
0.1
0.3
-
2.2
811.9
2012-13
11.0
2.0
93.7
5.8
..
0.2
-
0.7
113.4
2013-14
6.8
0.9
96.3
1.0
-
-
-
-
105.1
2014-15
1.3
0.1
39.0
-
-
-
-
-
40.5
2015-16
-
-
-
-
-
-
-
-
-
The Commonwealth is providing funding under the NDRRA to assist the States with relief and recovery assistance following eligible natural
disasters. This includes payments to the States in response to recent and past natural disasters including the November 2010 to February 2011
floods and Tropical Cyclone Yasi.
Parliament of Australia
Department of Parliamentary Services
BP 3: Australia’s Federal Relations
o Part 3: General Revenue Assistance
o GST revenue
o Updated GST relativities
o Parameters
o Other payments
Parliament of Australia
Department of Parliamentary Services
BP 3: Australia’s Federal Relations
o Appendix C: Total Payments to the States by
GFS function
Table C.1: Total payments to the States by GFS function
$'000
NSW
VIC
QLD
WA
SA
TAS
ACT
NT
Total(a)
2011-12
General public services
64,213
49,554
41,010
20,683
14,725
4,533
3,220
2,062
200,000
Public order and safety
63,945
45,604
41,068
63,418
15,484
5,836
4,355
40,877
280,587
Education
4,947,828
3,692,092
3,137,831
1,625,614
1,171,196
362,698
255,004
282,113
15,474,376
Health
4,810,561
3,798,219
3,025,703
1,702,791
1,227,035
353,703
231,021
251,174
15,400,207
Social security and welfare
1,075,924
706,446
743,211
294,596
336,924
99,319
43,008
56,449
3,355,877
527,923
438,337
522,153
377,916
203,612
80,231
84,501
437,304
2,701,977
Recreation and culture
50,000
20,000
-
3,600
30,000
-
5,100
-
108,700
Fuel and energy
10,857
5,140
5,495
11,681
3,366
1,124
812
4,658
43,133
Housing and community amenities
Parliament of Australia
Department of Parliamentary Services
BP 4: Agency Resourcing
o Introduction
o Explanation of Appropriations
o Special Appropriations
o Also known as ‘standing appropriations’
o Special Accounts
o Money hypothecated to particular outcomes / programs
Parliament of Australia
Department of Parliamentary Services
BP 4: Agency Resourcing
o Special Appropriations
INDUSTRY, INNOVATION, SCIENCE, RESEARCH AND TERTIARY EDUCATION PORTFOLIO
Department of Industry, Innovation, Science, Research and Tertiary Education
Automotive Transformation Scheme Act 2009
301,066
300,000
5,999,091
10,380,851
Indigenous Education (Targeted Assistance) Act 2000
-
41,343
Skilling Australia's Workforce Act 2005
-
-
1,451,079
2,884,000
164,000
-
25,271
25,517
7,940,507
13,631,711
Higher Education Support Act 2003
Social Security (Administration) Act 1999
Steel Transformation Plan Act 2011
Textile, Clothing and Footwear Strategic Investment Program Act 1999
Total: Department of Industry, Innovation, Science, Research and Tertiary Education
Parliament of Australia
Department of Parliamentary Services
BP 4: Agency Resourcing
o Agency Resourcing
FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Agency Resourcing—2012-2013
Estimated Actual—2011-2012
Departmental
Administered
Appropriation Bill
No. 2
Entity/Outcome/
Non-operating
Appropriation Appropriation Agency/CAC
Bill No. 1
Bill No. 2
Special
receipts (a) Appropriation
Special Appropriation
Accounts
SPPs Other (c)
Bill No. 1
Special
Total
Appropriation
(b)
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Department of Families, Housing, Community Services and Indigenous Affairs
Outcome 1
Outcome 2
Outcome 3
83,209
-
7,177
-
-
157,094
-
-
22,228,706 22,476,186
90,606
-
7,177
-
250
215,414
-
-
22,229,006 22,542,453
29,065
-
-
-
-
220,048
35,000
-
-
284,113
31,046
-
-
-
-
166,345
30,000
-
-
227,391
-
172
-
-
197,778
-
-
303,015
560,252
-
-
180,340
-
-
98,858
339,706
Parliament 59,287
of Australia
Department
of Parliamentary
Services
60,336
172
Portfolio Budget Statements
o Outcomes
o Government outcomes are the intended results,
impacts or consequences of actions by the
Government on the Australian community.
Commonwealth programs are the primary vehicle
by which government agencies achieve the
intended results of their outcome statements.
o An agency may have one or more outcomes
Parliament of Australia
Department of Parliamentary Services
Portfolio Budget Statements
o Programs
o The mechanisms used to achieve outcomes
o An outcome may have one or more programs
o Expenditure by program over the forward
estimates
o Note KPIs
Parliament of Australia
Department of Parliamentary Services
Portfolio Budget Statements
Table 1.1: FaHCSIA Resource Statement – Budget Estimates for 2012-13 as at Budget May 2012
Parliament of Australia
Department of Parliamentary Services
Portfolio Budget Statements
Table 2.1.2: Budgeted Expenses for Family Tax Benefit
Annual administered expenses:
Schoolkids Bonus - Communication
Campaign
Helping Households - Communication
Campaign
Special Appropriations:
A New Tax System (Family
Assistance)(Administration)
Act 1999
Family Tax Benefit Part A
Family Tax Benefit Part B
Schoolkids Bonus
2012–13
Budget
$'000
2013–14
Forw ard
year 1
$'000
2014–15
Forw ard
year 2
$'000
2015–16
Forw ard
year 3
$'000
-
8,500
3,500
-
-
4,591
4,296
-
-
-
13,970,791 14,081,376 14,939,641 15,312,742 15,672,742
4,603,794 4,541,340 4,721,569 4,871,853 4,984,592
1,324,135 1,254,478 1,213,774 1,249,067 1,284,123
Program support
Expenses not requiring appropriation in
the Budget year 1
Total program expenses
2011–12
Revised
budget
$'000
10,873
12,879
12,257
11,183
11,732
980
1,149
1,063
978
1,100
19,915,164 19,904,018 20,891,804 21,445,823 21,954,289
Note: Departmental appropriation splits and totals, by outcome and program, are indicative
estimates and may change in the course of the Budget year as government priorities change.
1 '
Expenses not requiring appropriation in the Budget year' is made up of Depreciation, Amortisation
and Makegood Expenses.
Parliament of Australia
Department of Parliamentary Services
Questions?
Parliament of Australia
Department of Parliamentary Services