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Last updated: July 2006
Financial management and budget frameworks
Australian Government Budget
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The Australian Government Budget provides a complete picture of Australia’s planned financial performance, setting out the framework for the conduct of the Government’s fiscal policy for the financial year ahead.
Agency heads must ensure their agencies comply with Budget requirements published regularly by the Department of Finance and Deregulation including:
- provision of information, including costing information, on new policy proposals for inclusion in the portfolio Minister’s portfolio budget submission
- preparation of estimates for the Budget and, later in the year, for the publication of the Mid-Year Economic and Fiscal Outlook report (MYEFO). The estimates must be prepared in the form specified, and be provided as required by the Finance Department's chief executive ( Financial Management and Accountability Orders 2005, Suborders 2.4.1 and 2.4.2)
- preparation of budget documentation, including Portfolio Budget Statements (PBS) and Portfolio Additional Estimates Statements (PAES), according to the guidance for the preparation of PBS issued by the Department of Finance and Deregulation to assist agencies; and
- input into the Statement of Risks and Government Finance Statistics (GFS) functional commentary to be reported in both the Budget papers and the MYEFO report.
Charter of Budget Honesty and Pre-election Economic and Fiscal Outlook
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The Charter of Budget Honesty Act 1998 (the Charter) sets out principles and requirements that guide the government’s management of fiscal policy, including making transparent the government’s fiscal position. The purpose of the Charter is to provide a legal basis for the way the Government conducts and reports fiscal policy.
The overall purpose of the Charter is to facilitate:
- sound fiscal management of the Australian economy
- the public being kept better informed about public finances
- transparency in fiscal policy.
The Charter commits the Government to:
- set out its medium-term fiscal strategy in each budget, along with its shorter-term fiscal objectives and targets
- an annual government reporting cycle of general government sector estimates, including economic assumptions underlying budget estimates
- producing a budget and mid-year fiscal outlook for the budget and three forward years, a Final Budget Outcome and five-yearly Intergenerational reports
- report against specified external reporting standards, including content format in outlook reports and reporting timeframes
- processes for fiscal reporting in the lead up to a federal election
- processes for costing election campaign promises of major political parties.
Of particular relevance to agency heads is the requirement the Charter places on the secretaries to the Treasury and the Department of Finance and Deregulation to release a Pre-election and Fiscal Outlook (PEFO) report. The PEFO report provides updated information on the economic and fiscal outlook in the caretaker period, and must be released within ten days of the issue of the writ for a general election.
Like other outlook reports, the information in the PEFO report is to take into account, to the fullest extent possible, all Government decisions, and all other circumstances, that may have a material effect on the fiscal and economic outlook.
To assist in the preparation of the PEFO, and other outlook reports, the Secretary of the Treasury or the Secretary of the Department of Finance and Deregulation may request a Commonwealth body to provide information. Under the terms of the Charter, a Commonwealth body is to comply with a request in time to allow the information to be taken into account in the preparation of the report, unless it is not practicable to do so or if doing so would contravene another law of the Commonwealth.
Final Budget Outcome
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The Charter of Budget Honesty Act 1998 requires the Treasurer to release publicly and table a Final Budget Outcome report for each year no later than three months after the end of the financial year. The report contains fiscal outcomes for the general government sector, public financial corporations and public non-financial corporations including information on actual revenue, expenses, net capital investment, Federal/State financial relations and other information for the financial year. The information provided by agencies in their annual financial statements enables the Government to compile the Financial Budget Outcome report.
