Federal Treasurer Scott Morrison will deliver his first Budget under the leadership of Prime Minister Malcolm Turnbull.
Tuesday 3 May 2016, which is a week ahead of the usual tradition. According to that convention, the Budget would have been presented to the House of Representatives on the second Tuesday in May. But this year it was brought forward because Prime Minister, Malcolm Turnbull called back both houses of parliament in an attempt to pass a piece of legislation. However, if the Senate rejects that legislation it could trigger a double dissolution election in July.
Why does it matter to you?
This is when the Australian Government outlines how it plans to spend your tax money, among other things.
The Budget serves as a plan for the country’s finances in the medium term. It covers both earning and spending estimates for the current financial year (FY15/16), the coming year (FY16/17) and the three years after that.
Like almost any other budget, the Federal Budget shows ‘incomings’, or the revenue the government expects to raise and how it hopes to raise it.
It also reports on what has been spent in the past year and shows planned expenditure.
It reveals how the Australian Government intends to deliver on its priorities and commitments. That is, how it plans to pay for key programs and where it plans to make any cuts.
What does it all mean?
All of this adds up to a Federal Budget which is either:
- In balance, where the amount spent is equal to earnings for the financial year;
- In surplus, where earnings are greater than spending for the financial year
- In deficit, where spending is greater than earnings for the financial year.
The Federal Budget is the Australian Government’s most important tool of economic policy and the decisions made impact everyone.
Depending on priorities and the state of the economy, individuals can either end up receiving more as a consequence of government spending programs and tax policies, or conversely, being required to contribute more.
A surplus could mean more money available for government and community services or paying down any national debt. A deficit could mean tightening the belt for individuals, families and businesses in order to reduce spending and balance the books.
‘Contributing more’ can happen either in the form of something like a compulsory levy or by changes to tax rules to boost the revenue side of the equation.
What happens on Federal Budget night?
The government presents the Budget papers and other related documents. This is summarised by the Treasurer in his speech, which starts at 7:30pm and usually runs for about half an hour.
Ultimately, it is the Australian Parliament that controls government finances and has to authorise both any changes to taxation legislation and any spending of money by passing an appropriation bill.
This means before they become law, the appropriation bills must be passed by both the House of Representatives, which is controlled by the government, and the Senate, where proposed expenditures are subjected to examination within Senate estimates hearings.
It’s important to understand that this is why any proposed cuts or changes the Treasurer presents on Budget night may not necessarily become law.