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Australian Government Coat of Arms

Budget | 2015-16

Budget 2015-16
Australian Government Coat of Arms, Budget 2015-16

Part 3: Fiscal Strategy and Outlook (continued)

Attachment C: Supplementary expenses table and the Contingency Reserve

Expenses

Table 3.24 shows estimates of Australian Government general government expenses by function and sub‑function for 2015‑16 and the forward years.

  Estimates   Projections
2015-16 2016-17 2017-18 2018-19
Budget
$m
MYEFO
$m
Change on Budget
%
Budget
$m
MYEFO
$m
Change on Budget
%
Budget
$m
MYEFO
$m
Change on Budget
%
Budget
$m
MYEFO
$m
Change on Budget
%
General public services      
Legislative and executive affairs 1,058 1,061 0 1,234 1,243 1 1,054 1,063 1 1,069 1,077 1
Financial and fiscal affairs 7,934 7,028 -11 8,532 7,493 -12 8,430 7,313 -13 8,533 7,401 -13
Foreign affairs and economic aid 5,422 5,430 0 5,663 5,636 0 5,573 5,427 -3 5,740 5,760 0
General research 2,716 2,785 3 2,674 2,741 3 2,534 2,804 11 2,627 2,899 10
General services 913 961 5 877 926 6 888 929 5 906 950 5
Government superannuation benefits 4,119 5,372 30 3,956 3,967 0 3,745 3,818 2 3,667 3,770 3
Defence 26,348 26,559 1 26,106 26,312 1 27,631 27,640 0 28,783 28,627 -1
Public order and safety 4,885 4,958 1 4,851 4,844 0 4,735 4,718 0 4,806 4,738 -1
Education 31,854 32,478 2 33,133 33,166 0 34,055 33,813 -1 35,115 34,921 -1
Health 69,381 68,686 -1 71,634 70,375 -2 74,076 72,318 -2 76,987 75,195 -2
Social security and welfare 154,000 152,782 -1 159,654 158,721 -1 170,719 168,251 -1 186,869 182,548 -2
Housing and community amenities 5,329 5,434 2 5,242 5,233 0 5,041 5,091 1 4,553 4,641 2
Recreation and culture 3,530 3,440 -3 3,350 3,257 -3 3,294 3,210 -3 3,287 3,173 -3
Fuel and energy 6,706 6,773 1 6,705 6,707 0 6,895 6,932 1 7,237 7,192 -1
Agriculture, fisheries and forestry 3,063 3,119 2 2,930 3,018 3 2,780 2,828 2 2,408 2,484 3
Mining, manufacturing and construction 3,142 3,619 15 3,129 3,683 18 3,082 3,777 23 3,092 3,923 27
Transport and communication 8,575 8,882 4 11,198 11,917 6 9,304 9,102 -2 6,315 6,558 4
Other economic affairs      
Tourism and area promotion 177 180 2 176 182 3 175 182 4 166 173 4
Labour and employment affairs 3,963 3,868 -2 4,296 4,200 -2 4,326 4,158 -4 4,358 4,194 -4
Immigration 3,622 4,020 11 2,451 3,441 40 2,356 2,537 8 2,416 2,473 2
Other economic affairs nec 2,030 2,063 2 1,994 2,020 1   1,992 2,019 1 2,010 2,056 2
Other purposes                          
Public debt interest 15,561 15,680 1 16,455 17,075 4   16,846 17,720 5 17,364 18,719 8
Nominal superannuation interest 9,869 9,231 -6 10,259 10,261 0   10,648 10,650 0 11,034 11,036 0
General purpose inter-government transactions 60,038 59,239 -1 63,949 63,777 0   67,534 66,776 -1 71,232 69,744 -2
Natural disaster relief 33 40 21 5 8 60   -1 3 400 -1 0 100
Contingency reserve 201 -1,456 -824 2,201 1,002 -54   4,104 2,811 -32 8,854 7,117 -20
Total expenses 434,469 432,234 -1 452,654 451,206 0   471,816 465,892 -1 499,428 491,370 -2

Contingency Reserve

The Contingency Reserve (other purposes function) is an allowance, included in aggregate expenses, principally to reflect anticipated events that cannot be assigned to individual programmes in the preparation of the Australian Government budget estimates. The Contingency Reserve is used to ensure that the estimates are based on the best information available at the time of the MYEFO. It is not a general policy reserve.

While the Contingency Reserve is designed to ensure that aggregate estimates are as close as possible to expected outcomes, it is not appropriated. Allowances that are included in the Contingency Reserve can only be drawn upon once they have been appropriated by Parliament. These allowances are allocated to specific entities for appropriation closer to the time when the associated events eventuate.

The Contingency Reserve contains an allowance for the tendency for estimates of expenses for existing Government policy to be revised upwards in the forward years, known as the conservative bias allowance (CBA). The rising profile of expenses in the contingency reserve sub‑function over the forward estimates is largely due to the CBA. Since the 2015‑16 Budget, the allowance has been drawn down to:

  • ¼ of a percentage point of total general government sector expenses (excluding GST payments to the States) in the first forward year (2016‑17);
  • ¾ of a percentage point of expenses in the second forward year (2017‑18); and
  • a 1½ percentage point provision in the third forward year (2018‑19).

The drawdown of the allowance reduced expenses by $973 million in 2016‑17, $1.0 billion in 2017‑18 and $2.2 billion in 2018‑19. The drawdown of the allowance is consistent with long standing practice and does not represent a saving or offset to Government spending measures.

In general, the Contingency Reserve can also include:

  • a provision for underspends in the current financial year reflecting the tendency for budgeted expenses for some entities or functions not to be met;
  • commercial‑in‑confidence and national security‑in‑confidence items that cannot be disclosed separately and programmes that are yet to be renegotiated with State and Territory governments;
  • the effect, on the budget and forward estimates, of economic parameter revisions received late in the process and hence not able to be allocated to individual entities or functions;
  • decisions taken but not yet announced by the Government, and decisions made too late for inclusion against individual entity estimates; and
  • provisions for other specific events and pressures that are reasonably expected to affect the budget estimates.