budget 2013-14

Department of Parliamentary Services Parliament of Australia

Budget 2013-14

Daniel Weight&

Robert Dolamore


Some thoughts on assessing the quality of budgets


Some starting propositionso Budgets are central to the compact between

the community & the Stateo Strong public finances are needed to provide a

good foundation for growtho Budgets should be the catalyst for an informed

debate about the state of public financeso A Budget is more than the bottom line


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


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


A related concept - sustainabilityo Solvency – the ability of the gov’t to pay its financial

obligationso Growth – fiscal policy that sustains economic growtho Stability – the capacity of gov’t to pay current

obligations with existing tax burdenso 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’


What can help us assess quality?o Strategyo Historyo Contexto Assumptionso Allocationo Incentiveso The Futureo Evidence


Strategyo Is the Budget anchored in a credible medium-

term 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?


Historyo 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’?


Contexto 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?


Assumptionso The Budget is underpinned by forecasts of key

economic parameterso 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?


Allocationo Budgeting is an inherently allocative processo 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?


Incentiveso Through the Budget governments can reshape

the incentives we faceo 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?


The futureo What are the long-term implications for the Budget

of:o new spending measures or spending cutso 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?


Evidenceo 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?


Some closing questionso How good has the Budget process been?o Is the material well presented and

transparent?o What has been left for another day?


An overview of theBudget Papers


What affects the fiscal position?o Parameter variations

o On the revenue side, tax and other receipts are affected by underlying economic activityo Corporate profitso Employment

o On the expenditure side, many government expenditures are demand driveno Unemployment benefitso Medicare

o Budget measureso Decision by government to spend or save

o Changing program eligibilityo Changing tax rules


What affects the fiscal position?

Chart 3.1: Change to the underlying cash balance since the 2012-13 Budget


Annual Budget: who is the audience?

o Parliamentarianso Mediao General public and interest groupso Economists and businesso Commonwealth governmento State/Territory Governments


GFS sectoral classificationso General Government Sector (GGS)

o Government departmentso Expenditure programso Statutory authoritieso Courts and tribunals

o Public Non-Financial Corporations (PNFC) entities that are commercial in nature, but which the Government ownso Australia Posto 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 functionso Reserve Bank of Australiao Medibank Private


‘Headline’ budget balanceo Headline cash

o (cash)o Fiscal balance

o (accrual)o Underling cash balance

o (a bit of both cash and accrual)


‘Administered’ versus ‘departmental’

o Departmental o Salarieso Office supplieso Some programs

o Administeredo Social security paymentso Health/education fundingo Revenue

o Note: the efficiency dividend only applies to departmental expenditure


Budget Paperso Appropriation Billso Budget Papers

o Budget Speecho BP 1: Budget Strategy and Outlooko BP 2: Budget Measureso BP 3: Australia’s Federal Financial Relationso BP 4: Agency

o Ministerial Statements and ‘glossies’o Portfolio Budget Statements


Budget Speech Ministerial Statements and ‘glossies’

o Budget Speecho Provides the Government’s narrativeo Highlights

o Ministerial Statements and ‘glossies’oMay contain useful information from across

multiple portfolioso Link measures with overall policy direction


Appropriation Billso Odd numbered Bills may only contain

‘ordinary’ appropriationso Even numbered Bills can also contain other

legislative changeso Additional appropriations

o “Appropriation Bill (No. 5/6) 2012-13”


BP1: Budget Strategy and Outlooko Statements 1-4:

o Economic and fiscal outlooko The ‘narrative’

o Statement 5: Revenueo Statement 6: Expenses and Net Capital Investmento Statement 7: Assets and Liabilitieso Statement 8: Statement of Riskso Statement 9: Budget Financial Statementso Statement 10: Historical Australian Government Data


BP1: Budget Strategy and Outlooko Statement 6: Expenses and Net Capital Investment

o Appendix A: Expenses by function and sub-functiono Appendix C: Additional Agency Statistics

o Table C5: ASL levels

o Statement 8: Statement of Riskso Contingent liabilities

o Quantifiableo Unquantifiable


BP1: Budget Strategy and Outlooko 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 sectorso GGS sector has estimates out to 2016-17o Look in the ‘Notes’o ‘Government securities on issue’


BP 2: Budget Measureso 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


BP 2: Budget Measures

Australian Curriculum, Assessment and Reporting Authority — additional funding

Expense ($m)

2011-12 2012-13 2013-14 2014-15 2015-16

Department of Education, Employment and Workplace Relations - 6.2 5.1 3.0 2.7

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.



Australian Year of the Farmer — contribution

Expense ($m)

2011-12 2012-13 2013-14 2014-15 2015-16

Department of Agriculture, Fisheries and Forestry - - - - -

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.



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

Related expense ($m)

Department of the Treasury - - - 235.7 318.4

Australian Taxation Office - - - 97.2 98.1

Total — Expense - - - 332.9 416.5

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.


BP 3: Australia’s Federal Relationso Part 2: Payments for Specific Purposes

o National Healthcare SPPo National Schools SPPo National Skills and Workforce Development SPPo National Disability Services SPPo National Affordable Housing SPPo Infrastructure and road fundingo Contingent funding


BP 3: Australia’s Federal RelationsTable 2.1: Total payments for specific purposes by category, 2011-12 to 2015-16

$million NSW VI C QLD WA SA TAS ACT NT Total(a)

2011-12 National Specific Purpose Payments 8,970 6,812 5,623 2,858 2,138 634 446 372 27,852

National Health Reform funding - - - - - - - - -

National Partnership payments(b) 6,148 4,270 5,173 2,169 2,084 568 263 881 21,590

Total payments for specific purposes 15,117 11,081 10,796 5,028 4,222 1,202 709 1,253 49,442


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

Total payments for specific purposes 12,551 9,872 8,394 4,526 3,136 977 598 894 40,989


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

Total payments for specific purposes 13,355 11,136 9,029 4,968 2,993 974 687 670 44,379


BP 3: Australia’s Federal Relations

Facilitation and reward funding component

$million NSW VI C 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 cen t of all patients presenting to a public hospital emergency department will leave the emergency department for admission to hospita l or referral to another hospital for treatment or will be discharged within four hours. From its commencement on 1 J anuary 2012, the target applies t o all five triage categories and is to be achieved through stepped improvements by 2015.


BP 3: Australia’s Federal Relations

Natural Disaster Relief and Recovery Arrangements (NDRRA)

NDRRA accrual estimates

$million NSW VI C 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 elig ible 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.


BP 3: Australia’s Federal Relationso Part 3: General Revenue Assistance

o GST revenueoUpdated GST relativitiesoParameters

o Other payments


BP 3: Australia’s Federal Relationso Appendix C: Total Payments to the States by

GFS functionTable C.1: Total payments to the States by GFS function $'000 NSW VI C 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 Housing and community amenities 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


BP 4: Agency Resourcingo Introduction

o Explanation of Appropriationso Special Appropriations

o Also known as ‘standing appropriations’

o Special Accountso Money hypothecated to particular outcomes / programs


BP 4: Agency Resourcingo Special Appropriations

INDUSTRY, INNOVATION, SCIENCE, RESEARCH AND TERTI ARY EDUCATION PORTFOLIO

Department of I ndustry, I nnovation, Science, Research and Tertiary Education

Automotive Transformation Scheme Act 2009 301,066 300,000

Higher Education Support Act 2003 5,999,091 10,380,851

Indigenous Education (Targeted Assistance) Act 2000 - 41,343

Skilling Australia's Workforce Act 2005 - -

Social Security (Administration) Act 1999 1,451,079 2,884,000

Steel Transformation Plan Act 2011 164,000 -

Textile, Clothing and Footwear Strategic Investment Program Act 1999 25,271 25,517

Total: Department of I ndustry, Innovation, Science, Research and Tertiary Education 7,940,507 13,631,711


BP 4: Agency Resourcingo Agency Resourcing

FAMI LI ES, HOUSI NG, COMMUNI TY SERVI CES AND I NDI GENOUS AFFAI RS

Agency Resourcing—2012-2013 Estimated Actual—2011-2012

Departmental Administered

Appropriation Bill No. 2

Entity/Outcome/ Non-operating



Agency/CAC receipts (a)

Special Appropriation

Special Accounts

(b)


SPPs Other (c) Special Appropriation

Total

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Department of Families, Housing, Community Services and I ndigenous Affairs

Outcome 1 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

Outcome 2 29,065 - - - - 220,048 35,000 - - 284,113

31,046 - - - - 166,345 30,000 - - 227,391

Outcome 3 59,287 - 172 - - 197,778 - - 303,015 560,252

60,336 - 172 - - 180,340 - - 98,858 339,706

Outcome 4 25,350 - 1,814 - - 8,849 - - 37,011,985 37,047,998

26,372 - 1,814 - - 2,600 - - 35,071,921 35,102,707


Portfolio Budget Statementso 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


Portfolio Budget Statementso Programs

o The mechanisms used to achieve outcomeso An outcome may have one or more programs

o Expenditure by program over the forward estimates

o Note KPIs


Portfolio Budget StatementsTable 1.1: FaHCSIA Resource Statement – Budget Estimates for 2012-13 as at Budget May 2012


Portfolio Budget Statements

Table 2.1.2: Budgeted Expenses for Family Tax Benefit

Annual administered expenses:Schoolkids Bonus - Communication Campaign - 8,500 3,500 - -Helping Households - Communication Campaign 4,591 4,296 - - -

Special Appropriations:A New Tax System (Family Assistance)(Administration)Act 1999

Family Tax Benefit Part A 13,970,791 14,081,376 14,939,641 15,312,742 15,672,742Family Tax Benefit Part B 4,603,794 4,541,340 4,721,569 4,871,853 4,984,592Schoolkids Bonus 1,324,135 1,254,478 1,213,774 1,249,067 1,284,123

Program support 10,873 12,879 12,257 11,183 11,732Expenses not requiring appropriation in

the Budget year 1 980 1,149 1,063 978 1,100

Total program expenses 19,915,164 19,904,018 20,891,804 21,445,823 21,954,289Note: Departmental appropriation splits and totals, by outcome and program, are indicativeestimates 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.

2011–12Revisedbudget

$'000

2012–13Budget

$'000

2013–14Forw ard

year 1$'000

2014–15Forw ard

year 2$'000

2015–16Forw ard

year 3$'000


Questions?

budget 2013-14

Documents

current budget

neededthe budget

assumptionsthe budget

budget numbers

quality contthe budget

efficient usethe budget

services transfers

economic growthstability