What is the Budget?

How the federal government raises and spends money

Parliamentary Education Office (peo.gov.au)

How the federal government raises and spends money

Parliamentary Education Office (peo.gov.au)

Description

The federal government raises money through taxing incomes, spending and businesses. The money is spent on federal matters such as: Medicare, defence, immigration and foreign policy.

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The Budget is the Australian Government’s plan for collecting and spending money. This money is mainly collected through taxes and is used to pay for federal government services and responsibilities, such as welfare and the defence force.

The Budget is made up of a collection of financial documents. The main documents explain:

• the government’s assessment of the national economy
• the government’s priorities for the coming year
• how much money the government plans to collect and where it will come from
• how the government plans to spend this money.

Where money comes from and how it is spent

• taxes on incomes – people’s wages
• taxes on business profits
• taxes on the sale of items (GST – Goods and Services Tax)
• excise and duties – fees on the sale of some items
• charges such as the Medicare levy
• public – government owned – company profits
• selling government assets.

 The government spends money on several areas, including:

• welfare – payments to Australians
• Medicare and aged care
• payments to states, territories and local governments
• universities
• the Australian defence force.

Presenting the Budget to Parliament

Section 83 of the Australian Constitution says the Australian Parliament must approve government spending.

The Budget is a collection of bills – proposed laws – called appropriation bills. Like other bills, the Budget must be passed by both the Senate and the House of Representatives. Once approved, they allow the government to appropriate – collect and spend – public money. 

The Budget documents are prepared by the Treasurer with the Treasury Department. Work begins early each year with the Treasurer working with other ministers to develop budgets for each government department. Cabinet – the Prime Minister and other senior ministers – approve the Budget before it is introduced into Parliament.

The Treasurer gives their Budget speech to the House of Representatives at least once a year, usually in May. This speech is seen as the government’s most important economic statement. It sets out the government’s plans such as increasing expenditure – funding – for particular services, announcing new projects, changes to how money is collected and savings made.

The opposition is given the opportunity to read the Budget and respond a few days later with a speech in Parliament called the Budget reply speech.

Examination of the Budget

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

The Parliamentary Budget Office also provides a way for members of parliament and the public to examine how the government spends money. It prepares a report after each federal election that shows the financial impact of the major parties’ election promises.

Federal Budget process

Parliamentary Education Office (peo.gov.au)

Federal Budget process

Parliamentary Education Office (peo.gov.au)

Description

This diagram illustrates the development and operation of the Budget:

1. Budget documents are prepared by the Treasurer and Treasury department.
2. The Treasurer makes a speech to the House of Representatives to introduce the budget bills. 
3. Members of parliament examine and debate the Budget bills.
4. The Senate closely examines the use of the Budget throughout the year in Senate estimates committees.

Copyright information

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

You are free to share – copy and redistribute the material in any medium or format.

The licensor cannot revoke these freedoms as long as you follow the license terms.

Attribution – You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.

Non-commercial – You may not use the material for commercial purposes.

No derivatives – If you remix, transform, or build upon the material, you may not distribute the modified material.

No additional restrictions – You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.

Waiver – any of the above conditions can be waived if you get permission from the copyright holder.