The Budget is the federal government’s annual statement of how it plans to collect and spend money. Section 81 of the Australian Constitution states that all money collected by the government must be paid into a consolidated revenue fund. According to section 83 of the Constitution, this money can only be spent with the agreement of the Parliament.
The government uses this money to pay for running the country, including funding things like Australia’s defence force, national parks, pension payments, telephone networks and interstate railways.
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 spending policies for each government department. The Cabinet (Prime Minister and ministers) must approve the Budget before it is introduced into the Parliament.
The Budget is introduced into the Parliament as a collection of bills (proposed laws) called appropriation bills. These bills aim to appropriate, or 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 Queensland flood 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 funding for particular services, announcing plans for new projects or making savings through 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 (see Making a Law). 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 three times a year (see Senate Estimates).
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.