Government budgeting and the quest for value-for-money outcomes in Australia

Abstract

Government executive budgeting in Australia is fundamentally premised on parliamentaryscrutiny and endorsement. This provides not only the formal legality for all public finance but also provides a degree of transparency, information-sharing and the possibility of investigation. Governments legally require authorisation from the legislature for imposing taxation or raising other revenues and for spending from its consolidated revenue fund. Four key empowering clauses in the Australian Constitution apply to government financing: section 51 (currency, taxes, borrowing, spending and property acquisition); section 56 (the financial initiative of the executive); section 83 (monies only legally drawn from the treasury if appropriated lawfully); and section 90 (the Commonwealth's exclusive power to impose customs and duties). Other sections specify how money bills must be handled, but these four important sections constitute the Commonwealth's principal financial powers. While the subnational jurisdictions follow similar budgetary procedures, they have no such constitutional stipulations. Each year in May, annual budget statements including any new policy proposals announced in separate documentationare presented to parliament for approval. These documents remain the executive's intended budget, and are not initiated or 'owned' by the legislature; but the bicameral parliament is formally required to appropriate all expenditures and authorise any changes to revenues to ensure their legality. Parliament is not required to 'pass' the budget documents (merely noting these various documents which are formally 'tabled' and therefore become public documents) but instead authorises a small number of very skeletal appropriation bills giving legal effect to expenditures, and then deliberates any other subsequent revenue and expenditure measures separately. Other than receiving these appropriation bills initiated in the lower house and legally passing them through both houses (or rejecting aspects of them), the Constitution is silent on any other roles for parliament (or the executive) in presenting budgets. However, the Constitution does insist that the bill covering the 'ordinary annual services of the government' shall deal only with those items (effectively the base budget for the Commonwealth), and this has meant that since 1965 a separate appropriation bill (Bill No 2) has been reserved for other items of new spending, capital injections or transfers to the states. Since the late 1990s the parliament has received a third appropriation bill containing the budgets of the legislature itself and a few independent officers of the parliament (eg, Auditor-General, Parliamentary Budget Officer). Additional appropriations for entitlements (special appropriations) and for additional estimates can be passed at other times or later in the budget year.