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FAQ

Our government: 20. The budget

20.1 What is the Budget?

In general terms a budget is a way of planning how money is going to be collected and spent. In parliamentary terms the Budget is the federal government's annual plan for collecting and spending money for:

  • meeting the normal expenses associated with running Australia
  • funding new projects.

The Budget is a collection of bills introduced by the federal Treasurer on the second Tuesday in May. The bills are called appropriation bills because they are proposals for laws seeking the Parliament's agreement to the government's plan for spending or appropriating public money.

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20.2 Where does the money for the Budget come from?

The federal government collects money to pay for the running of the country from a number of sources including:

  • taxes such as income tax (a part of a person's income) and excise and customs tariffs
  • charges on goods and services such as an aviation fuel levy, a gun buy-back levy or the Medicare levy
  • selling government assets.

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20.3 What is the Budget speech?

The Treasurer's annual Budget speech is the most important economic statement made to the Parliament.

In the Budget speech the Treasurer explains why money is to be spent on some things and not on others. The speech usually does not mention recurring long-term spending by the government or large transfers of money to the states to fund roads, schools and universities.

The Budget speech reveals which issues are of great concern to the government; for example, increasing pensions, buying new defence equipment, making savings through efficiencies and so on.

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20.4 What happens once the Budget bills have been introduced?

Before the federal executive can spend any money, the Budget has to be agreed by the Parliament. The Parliament uses the following process to scrutinise the government's spending program:

  1. Appropriation bills are introduced to the Parliament. The bills contain the detail of the Budget.
  2. Senators, working on estimates committees, question ministers and public servants from government departments about spending details
  3. The bills are debated in Parliament
  4. The bills pass the House of Representatives and the Senate
  5. The Governor-General signs the appropriation bills and they become law.

The opposition often holds a different view to the government on how money should be collected and spent. The Leader of the Opposition makes these views known in Parliament during debate on the appropriation bills, when he or she is given a special opportunity to reply to the Treasurer's budget speech. This speech in reply occurs in the week of the announcement of the Budget.

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20.5 How is the money shared?

Federal budget spending is divided among government departments. Each minister in the government is responsible for a department and the money from the budget pays for the running of those departments and for the services they provide for Australians.

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