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Budget 2013-14. Daniel Weight & Robert Dolamore. Some thoughts on assessing the quality of budgets. Some starting propositions. Budgets are central to the compact between the community & the State Strong public finances are needed to provide a good foundation for growth - PowerPoint PPT Presentation
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Department of Parliamentary Services Parliament of Australia
Budget 2013-14
Daniel Weight&
Robert Dolamore
Department of Parliamentary Services Parliament of Australia
Some thoughts on assessing the quality of budgets
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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’
Department of Parliamentary Services Parliament of Australia
What can help us assess quality?o Strategyo Historyo Contexto Assumptionso Allocationo Incentiveso The Futureo Evidence
Department of Parliamentary Services Parliament of Australia
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?
Department of Parliamentary Services Parliament of Australia
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’?
Department of Parliamentary Services Parliament of Australia
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?
Department of Parliamentary Services Parliament of Australia
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?
Department of Parliamentary Services Parliament of Australia
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?
Department of Parliamentary Services Parliament of Australia
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?
Department of Parliamentary Services Parliament of Australia
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?
Department of Parliamentary Services Parliament of Australia
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?
Department of Parliamentary Services Parliament of Australia
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?
Department of Parliamentary Services Parliament of Australia
An overview of theBudget Papers
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
What affects the fiscal position?
Chart 3.1: Change to the underlying cash balance since the 2012-13 Budget
Department of Parliamentary Services Parliament of Australia
Annual Budget: who is the audience?
o Parliamentarianso Mediao General public and interest groupso Economists and businesso Commonwealth governmento State/Territory Governments
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
‘Headline’ budget balanceo Headline cash
o (cash)o Fiscal balance
o (accrual)o Underling cash balance
o (a bit of both cash and accrual)
Department of Parliamentary Services Parliament of Australia
‘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
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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”
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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’
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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 $17 million over four years from 2012-13 to the Australian Curriculum, Assessment and Reporting Authority (ACARA) to enable it to deliver the national education reform priorities set by the Standing Council on School Education and Early Childhood.
An increased budget for the period 2012-13 to 2015-16 will allow ACARA to continue work against its three key deliverables: the Australian Curriculum; the National Assessment Program for Literacy and Numeracy (NAPLAN) which measures students' progress; and the MySchool website which provides national data collection and reporting of school resourcing and outcomes.
Department of Parliamentary Services Parliament of Australia
BP 2: Budget Measures
Australian Year of the Farmer — contribution
Expense ($m)
2011-12 2012-13 2013-14 2014-15 2015-16
Department of Agriculture, Fisheries and Forestry - - - - -
The Government will provide $1.3 million in 2011-12 for projects that recognise and promote the significant role played by agricultural groups to mark the Australian Year of the Farmer in 2012.
The cost of this measure will be met from within the existing resourcing of the Department of Agriculture, Fisheries and Forestry.
Department of Parliamentary Services Parliament of Australia
BP 2: Budget Measures
GST — compliance program — two year extension
Revenue ($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
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.
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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
2012-13 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
Total payments for specific purposes 12,551 9,872 8,394 4,526 3,136 977 598 894 40,989
2013-14 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
Total payments for specific purposes 13,355 11,136 9,029 4,968 2,993 974 687 670 44,379
Department of Parliamentary Services Parliament of Australia
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.
Department of Parliamentary Services Parliament of Australia
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.
Department of Parliamentary Services Parliament of Australia
BP 3: Australia’s Federal Relationso Part 3: General Revenue Assistance
o GST revenueoUpdated GST relativitiesoParameters
o Other payments
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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
Appropriation Bill No. 1
Appropriation Bill No. 2
Agency/CAC receipts (a)
Special Appropriation
Special Accounts
(b)
Appropriation Bill No. 1
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
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
Portfolio Budget StatementsTable 1.1: FaHCSIA Resource Statement – Budget Estimates for 2012-13 as at Budget May 2012
Department of Parliamentary Services Parliament of Australia
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
Department of Parliamentary Services Parliament of Australia
Questions?