Supplementary expense table and the Contingency Reserve
Expenses
Table 3.20 shows estimates of Australian Government general government expenses by function and sub‑function for 2009‑10 and the forward years.
Table 3.20: Estimates of Australian Government general government expenses by function and sub‑function
Table 3.20: Australian Government expenses by function and sub‑function (continued)
- Asset sale related expenses are treated as a component of the Contingency Reserve sub‑function.
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 programs in the preparation of the Australian Government budget estimates. The Reserve is used to ensure that the budget estimates are based on the best information available at the time of the Mid‑Year Economic and Fiscal Outlook (MYEFO). It is not a general policy reserve.
The Reserve ensures that aggregate estimates are as close as possible to expected outcomes, but it is not appropriated. Allowances that are included in the Reserve can only be drawn upon once they have been appropriated by Parliament. These allowances are removed from the Reserve and allocated to specific agencies for appropriation and for outcome reporting closer to the time when the associated events eventuate.
The Contingency Reserve makes allowance in 2009‑10 and the forward years for anticipated events, including the following:
- 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. An examination of expenses estimates indicates that the tendency for expenses to be revised upwards, after taking account of policy measures and formal economic parameter variations, has reduced in recent years. Following a review prior to the 2009‑10 Budget, at MYEFO this allowance has been set at 1½ per cent of total general government sector expenses (excluding GST payments to the States) in the third year of the forward estimates period (2012‑13), ¾ per cent in the second year (2011‑12), and ¼ per cent in the first forward year (2010‑11). This involves a reduction of expenses of $759 million in 2010‑11, $793 million in 2011‑12 and $1.5 billion in 2012‑13;
- a provision for underspends in the current financial year reflecting the tendency for budgeted expenses for some agencies or functions not to be met;
- commercial‑in‑confidence and national security‑in‑confidence items that cannot be disclosed separately and programs that are yet to be negotiated with State and Territory governments;
- provisions for events that are reasonably expected to affect the budget estimates‑for example, a provision for the continuation of drought relief in 2009‑10 and 2010‑11;
- decisions made too late for inclusion against individual agency estimates; and
- the effect on the budget and forward estimates of economic parameters revisions received late in the process and hence not able to be allocated to individual agencies or functions.
The Contingency Reserve also makes the provision for future increases in Australia's official development assistance yet to be allocated to specific aid programs. However, in this attachment, those expenses are allocated to the Foreign Affairs function.
The Contingency Reserve also includes provisions for future equity investments in the National Broadband Network. This is subject to the outcome of the implementation plan and subsequent commercial negotiations and, accordingly, is not disclosed.
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