Budget

The Budget is the Australian Government’s annual statement of how it plans to collect and spend money. This fact sheet explores the function and operation of the Budget.

Money collected by the Australian Government is used to pay for the running of the country, including funding things like Australia’s defence force, national parks and broadband network. The plan for collecting and spending this money is outlined in the Budget. According to section 83 of the Australian Constitution, this money can only be spent with the agreement of the Parliament.

Budget documents

The Budget is a collection of financial documents. The main documents detail:

  • the government’s assessment of the national economy
  • the government’s priorities and policies for the coming year
  • how the government intends to raise money
  • how much money is expected to be raised
  • how the government intends to spend this money
  • the allocation of money to government departments.

The Budget documents are prepared and presented to the Parliament by the Treasurer and the Treasury Department. They begin the process early each year. The Treasurer works with other ministers to develop budgets for each government department. The Cabinet must approve the Budget before it is introduced into the Parliament.

Budget bills

The Budget is introduced into the Parliament as a collection of bills—proposed laws—called ‘appropriation bills’. These bills aim to appropriate—collect and spend—public money.

The government collects money from several sources, including:

  • taxes on incomes (wages), excise (on goods made and sold within the country) and customs duties (on imported or exported goods)
  • charges (such as the NDIS levy and the Medicare levy)
  • company profits
  • selling government assets.

The Budget speech

The Treasurer makes a speech to the House of Representatives in May each year, in which the Budget is presented to the Parliament. This speech is seen as the most important economic statement made by the government. It sets out issues that the government wants to address, such as increasing the funding for particular services, announcing plans for new projects or making savings through the more efficient use of money.

Examination of the Budget

Members of parliament examine and debate the Budget bills in the same way as other bills. The Senate also scrutinises—closely examines—the Budget in estimates committees. Ministers and senior public servants appear before these committees to explain how government departments and authorities have collected and spent public money. This usually happens 3 times a year.

History

The first Act of Parliament passed by the Australian Parliament was the Consolidated Revenue Act 1901. This provided money for the first Australian Government to spend. The bill was passed in the early days of the first Parliament and received Royal Assent from the Governor-General on 25 June 1901.

Federal Budget process

The steps of the Australian federal budget, from preparation by the Treasurer to examination by Senate estimates committees.

Parliamentary Education Office (peo.gov.au)

Description

This diagram illustrates the development and operation of the Budget. Budget documents are prepared by the Treasurer and introduced through a speech to the House of Representatives. Members of parliament examine the Budget bills. The Senate examines the use of the Budget throughout the year in Senate estimates committees.