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BUDGET ANALYSIS PROJECTQUEENSLAND STATE, AUSTRALIA
PUBLIC BUDGETING AND RESOURCE MANAGEMENT(SA 6302) MAPPM 2012-13:• CHEN GuanChi “Jerry” 52893803• CHEN Yi “ChenYi” 52870513• HOU RunZe “Ivy” 52774931• LI Dapeng “Zelig” 53952860• LUJAN ANAYA Raul “Alex” 52915639
CITY UNIVERSITY
OF HONG KONG
Introduction: About Queensland
STATE OF AUSTRALIA;
The second LARGEST; The third MOST
POPULATED…
Located NORTHEAST of the country;
Total population: 4’580,700…
IVY & CHENYI
Budget at a Glance
http://www.budget.qld.gov.au/index.php
FOUR PILLAR ECONOMY:
Annual Revenue from Transactions
TAXATION revenue;GRANTS revenue;SALES of goods and
services;INTEREST income;DIVIDEND and INCOME
TAX equivalents, and;
OTHER revenue…
http://www.budget.qld.gov.au/current-budget/at-a-glance/index.php
Annual Expenses from Transactions
EMPLOYEES’ expenses;
SUPPLIES and SERVICES;
SUPERANNUATION expenses;
GRANTS expenses, and;
OTHER expenses…http://www.budget.qld.gov.au/current-budget/at-a-glance/index.php
Financial Aggregates
http://www.budget.qld.gov.au/current-budget/at-a-glance/index.php
About Budget Process
FISCAL YEAR in Australia runs from JULY 1 to JUNE 30, one year to the next one;
WHOLE BUDGETING PROCESS runs from OCTOBER until MAY next year, when Australian Congress approves;
STEPS in budgeting procedure:1. ALL GOVERNMENT must develop and approve budget
STRATEGY based on the State’s fiscal position;
2. ALL GOVERNMENT must develop budgeting PROCESS;
3. ALL GOVERNMENT must UPDATE CBRC on the State’s fiscal position based on forward estimates;
4. AGENCIES must PREPARE and develop their PRIORITIES…
About Budget Process
5. ALL GOVERNMENT must submit their budget priorities;
6. AGENCIES’ portfolio ministers must advocate requests with the CBRC;
7. AGENCIES must prepare allocation decisions and advise outcomes;
8. AGENCIES must update their forward estimates;
9. AGENCIES must prepare, finalize and table all State budget papers;
9. AGENCIES must submit forward estimates to Committee Hearings;
10. ALL GOVERNMENT must consider appropriation bills;
11. AGENCIES must undertake allocation processes…
About Format & Info. Management
Budgeting Period: ANNUAL;Budget classification: Focused mainly on ECONOMIC and
FUNCTIONAL criteria; TWO RELEVANT SECTIONS: Abstract of ECONOMIC (and
fiscal) planning; and REVENUE/ EXPENSE outlook;TWO APPROACHES: Both PROGRAMMING (mainly in
economic planning) and PERFORMANCE (mainly in revenue/ expense outlook) focused formats;
Considers comparisons between LAST YEAR (actual) vs. INCOMING YEARS (incoming estimate and projections), as well as SHIFTING patterns;
Performance information is mostly focused on measuring OUTCOMES…
ALEX
Format: Two Sections/ Approaches
ECONOMIC PLANNING: PROGRAM-FOCUSED,
according to:
1. Fiscal STRATEGIES;
2. Previous year OUTCOME;
3. ANALYSIS of conditions and economic outlook;
4. FORECAST and projections for incoming year;
5. PERFORMANCE summary;
6. Prospects and CHALLENGES...
REVENUE/ EXPENSE:PERFORMANCE-FOCUSED,
according to:
1. COMPARISON in revenue outcomes and estimates;
2. CHANGES in revenue behavior for last 2 years;
3. COMPARISON in efficiency vs. operation expenses;
4. DETAILS of revenue and expense: charts, statements and balance sheets…
Changes in Budget Format?
Format has (substantially) kept UNCHANGED within the last 10 YEARS (since 2001-02);
NOT NECESSARY TO CHANGE substantially the format, for it seems transparent, reliable, understandable;
UNLIKELY the State government would have the need or CAPACITY to change format, since the CURRENT one seems FUNCTIONAL, however it has improved in adding references about programs implemented and continuously monitoring outcomes;
Anyway, the format has gradually IMPROVED in measuring OUTCOMES (including and comparing SUCCESS INDICATORS within the last 5 YEARS)…
Major Funds and Appropriations
Relevant FUNDING concepts which represent most of public expenditure in the State:
1. OPERATING expenses: Health (24.8%) and Education (22%); Transport and Comms. (14%);
2. GRANTS on Welfare (13%): Schools (A$2.28B), community services (A$1.83B) and NGO’s (A$1.80B);
Major APPROPRIATIONS to public dependencies:1. HEALTH : From A$10.55B (2010-11) to A$11.04B (2011-12);
2. EDUCATION: From A$7.58B (2010-11) to A$8.12B (2011-12);
3. TRANSPORT: From A$4.05B (2010-11) to A$4.50B (2011-12);
4. COMMUNITY: From A$3.98B (2010-11) to A$4.48B (2011-12).
Forecasts and Info. Handling
Revenue FORECASTING carried out by STATE TREASURY OFFICE, in charge of gathering data, study the public finances and publish the yearly reports regarding the actual performance of finances balance, on the official website of State government;
FORECASTS for INCOMING YEAR (fiscal) are included in BOTH economic planning, and revenue/ expense outlook SECTIONS;
FURTHER forecasts (PROJECTIONS) are also considered: extensive to UP TO THREE YEARS in advance;
Forecasts used to CALCULATE: operating balance and cash flow, revenue collections and liabilities, public debt, foreign trade, wage prices, GDP growth; departmental efficiency…
Format Strengths and Weaknesses
As communication tool, document seems TRANSPARENT and DESCRIPTIVE: regarding performance in public finances; challenges and conditions the government has to face; as well for outcomes achieved yearly;
Document content is EXTENSIVE, in fact TOO LONG;On the other hand, the PRACTICAL EFFECTIVENESS of the
format can be questioned, considering the budget seems to be TOO OPTIMISTIC (very much focused on positive outcomes and expectations) but doing little reference to shortcomings and downgrades;
NEEDS to be more CLEAR on justifications and specific measures to be taken in relation to planned PROGRAMS…
Effective Control/ Evaluation?
“MOODY’S DOWNGRADE JUSTIFIES CUTS…” (26/11/12)http://finance.ninemsn.com.au/newsbusiness/aap/8570470/moodys-downgrades-qld-outlook
Downgrade from Aa1: STABLE to Aa1: NEGATIVE;Rise in INFRASTRUCTURE costs;Rise in PUBLIC DEBT;Lack of EXPENDITURE DISCIPLINE (uncertainty in tightness
for appropriations and discresion control);Economic RECOVERY PACKAGES proposed after 2011
floods (size of France and Germany, 75% of State’s area as disaster area) seemed too optimistic;
Public finance must RETURN TO SURPLUS BY 2014-15 (deteriorating financial performance since 2007-08)…
Total Expenditure 2010-11 (A$ Billion)
Annual Leave Central Scheme; Total Expenditure
2010-2011(Billion);
1.27; 29%
Superannuation Benefit payments; Total Expenditure
2010-2011(Billion);
1.14; 26%
Borrowing costs; Total Expenditure
2010-2011(Billion);
0.93; 21%
Long service leave reim-
bursements; To-tal Expenditure
2010-2011(Billion);
0.315; 7%
Grants & sub-sidies; Total Expenditure
2010-2011(Billion);
0.221; 5%
All other ex-penses; Total Expenditure
2010-2011(Billion);
0.185; 4%
Supplies & services; Total Expenditure 2010-
2011(Billion); 0.159; 4%
Benefit payments; Total Ex-penditure 2010-2011(Billion);
0.124; 3%
Annual Leave Central Scheme
Superannuation Bene-fit payments
Borrowing costs
Long service leave re-imbursements
Grants & subsidies
All other expenses
Supplies & services
Benefit payments
ZELIG
Total Expenditure 2011-12 (A$ Billion)
Annual Leave Central; Total Expenditure
2011-2012(Billion);
1.43; 22%Superannuation
Benefit Payments; Total Expenditure
2011-2012(Billion);
2.12; 33%
Borrowing costs; Total Expenditure
2011-2012(Billion);
1.43; 22%
Long service leave reim-
bursements; To-tal Expenditure
2011-2012(Billion); 0.4;
6%
Grants & Subsi-dies; Total Ex-
penditure 2011-2012(Billion);
0.39; 6%
All other ex-penses; Total Expenditure
2011-2012(Billion); 0.2;
3%
Supplies & services; Total Expenditure 2011-
2012(Billion); 0.16; 3%
Benefit payments ; Total Expenditure 2011-
2012(Billion); 0.24; 4%
Annual Leave Central
Superannuation Benefit Payments
Borrowing costs
Long service leave re-imbursements
Grants & Subsidies
All other expenses
Supplies & services
Benefit payments
Expenses Comparison: Two Years
2010-2011; Ex-pense; 4,363,451
2011-2012; Ex-pense; 6,368,034
2010-20112011-2012
Expenses Comparison: By Detail
Expenditure Trend
2007-2008
Total Revenue 2011-12 (A$ Billion)
Commonwealth grants; Total
Revenue; 19587340; 51%
Taxes,fees,fines&levies; Total Rev-enue; 9358255;
24%
Royalties,property income&other terri-torial revenue; Total Revenue; 2977567;
8%
Interest; Total Revenue; 33781;
0%
Administered item revenue; Total
Revenue; 6363548; 17%
Other revenue; Total Revenue; 132462; 0%
Commonwealth grants
Taxes,fees,fines&levies
Royalties,property in-come&other territorial revenue
Interest
Administered item revenue
Other revenue
Total Revenue: By Detail
Revenue Trend
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
Revenue Trend
Duties
Payroll tax
Land tax
Other tax
Fuel subsidy
First home owner grant
Queensland huilding boost
Royalties
Conclusion: SWOT Analysis
JERRY
OPPORTUNITIES
STRENGTHS
WEAKNESSES
THREATS
Conclusion: Final Recommendations
Make an effort and implement measures enough to ADOPT A SURPLUS POLICY:
Creating MORE JOBS by altering the style of economic INCREASE;
MOVE part of RESOURCE-consuming and ENVIRONMENT-affecting INDUSTRIES to other developing countries for cheaper natural resources and labor resources;
Keeping cutting down governmental expenditure by TIGHTENING APPROPRIATIONS and restricting discresion CONTROL;
Explore NEW FORMATS for budgeting, try to be a bit of LESS OPTIMISTIC…
THANK YOU FOR YOUR ATTENTION!
CITY U MAPPM 2012/ 13