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Australian Government Coat of Arms

Budget | 2014-15

Budget 2014-15
Australian Government Coat of Arms, Budget 2014-15

Part 3: Fiscal Strategy and Outlook (continued)

Attachment D: Supplementary expenses table and the Contingency Reserve

Expenses

Table 3.22 shows estimates of Australian Government general government expenses by function and sub‑function for 2014‑15 and the forward years.

Table 3.22: Estimates of Australian Government general government sector expenses by function and sub‑function
  Estimates       Projections    
  2014‑15   2015‑16     2016‑17   2017‑18  
  Budget MYEFO Change on Budget Budget MYEFO Change on Budget   Budget MYEFO Change on Budget Budget MYEFO Change on Budget
  $m $m % $m $m %   $m $m % $m $m %
General public services                          
Legislative and executive affairs 1,191 1,191 0 1,015 1,009 -1   1,222 1,217 0 1,045 1,037 -1
Financial and fiscal affairs 8,513 8,328 -2 8,585 8,427 -2   8,797 8,582 -2 8,799 8,556 -3
Foreign affairs and economic aid 6,299 6,311 0 6,125 5,177 -15   6,704 5,409 -19 6,733 5,442 -19
General research 2,651 2,875 8 2,554 2,730 7   2,343 2,487 6 2,387 2,533 6
General services 821 864 5 757 765 1   773 779 1 797 802 1
Government superannuation benefits 3,709 6,179 67 3,715 3,717 0   3,516 3,522 0 3,290 3,288 0
Defence 24,197 24,994 3 25,249 25,486 1   25,719 26,010 1 27,632 27,489 -1
Public order and safety 4,389 4,539 3 4,098 4,394 7   4,054 4,421 9 4,051 4,394 8
Education 29,553 31,200 6 30,206 31,768 5   31,843 32,974 4 32,788 33,982 4
Health 66,892 67,052 0 68,203 68,797 1   71,797 71,456 0 74,856 74,204 -1
Social security and welfare 145,773 149,913 3 149,269 153,361 3   158,370 160,878 2 169,585 171,635 1
Housing and community amenities 4,835 4,984 3 4,902 4,922 0   5,026 5,016 0 5,105 5,119 0
Recreation and culture 3,512 3,601 3 3,360 3,360 0   3,385 3,346 -1 3,343 3,296 -1
Fuel and energy 7,058 7,125 1 7,172 7,211 1   7,439 7,455 0 7,836 7,875 0
Agriculture, fisheries and forestry 2,752 2,828 3 2,868 2,975 4   2,642 2,828 7 2,565 2,693 5
Mining, manufacturing and construction 2,740 2,781 1 2,580 2,613 1   2,595 2,670 3 2,504 2,597 4
Transport and communication 7,286 7,292 0 9,697 9,715 0   10,949 10,958 0 7,469 7,454 0
Other economic affairs                          
Tourism and area promotion 186 184 -1 177 176 -1   171 170 -1 168 167 -1
Labour and employment affairs 3,904 3,968 2 4,224 3,953 -6   4,361 4,150 -5 4,433 4,143 -7
Immigration 4,172 4,192 0 3,663 3,447 -6   2,862 2,987 4 2,621 2,769 6
Other economic affairs nec 2,408 2,200 -9 2,302 2,145 -7   2,253 2,117 -6 2,263 2,137 -6
Other purposes                          
Public debt interest 14,708 14,733 0 16,134 16,016 -1   17,157 16,944 -1 17,876 17,440 -2
Nominal superannuation interest 9,275 8,989 -3 9,630 9,630 0   9,979 9,979 0 10,333 10,333 0
General purpose inter-government transactions 57,148 57,157 0 60,452 60,580 0   63,884 63,775 0 67,295 67,059 0
Natural disaster relief 98 83 -15 18 50 178   0 2 2 0 0 0
Contingency reserve 773 -665 -186 4,161 4,057 -2   5,963 5,963 0 9,675 8,867 -8
Total expenses 414,845 422,898 2 431,118 436,484 1   453,806 456,097 1 475,447 475,310 0

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 Contingency Reserve is used to ensure that the 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.

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 agencies for appropriation closer to the time when the associated events eventuate.

The Contingency Reserve contains a provision for underspends in the current financial year reflecting the tendency for budgeted expenses for some agencies or functions not to be met, and 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. Since the 2014‑15 Budget, the allowance has been drawn down to:

  • ¼ of a per cent of total general government sector expenses (excluding GST payments to the States) in the first forward year (2015‑16);
  • ¾ of a per cent of expenses in the second forward year (2016‑17);
  • 1 ½ per cent of expenses in the third forward year (2017‑18); and
  • The drawdown of the allowance reduced expenses by $921 million in 2015‑16, $965 million in 2016‑17 and $2.0 billion in 2017‑18.

The drawdown of the conservative bias allowance during the MYEFO estimates update is consistent with long standing practice and does not represent a saving or offset to Government spending measures.

In general, the Contingency Reserve can include:

  • commercial‑in‑confidence and national security‑in‑confidence items that cannot be disclosed separately, and programmes that are yet to be negotiated with State and Territory governments, for instance provisioning for estimates for national partnerships beyond expiry;
  • the effect on the budget and forward estimates of economic parameter revisions received late in the process which were unable to be allocated to individual agencies or functions;
  • decisions taken but not yet announced by the Government, and decisions made too late for inclusion against individual agency estimates; and
  • provision for other specific events and pressures that are reasonably expected to affect the budget estimates.

The Contingency Reserve and revenue estimates in MYEFO continue to include provisioning for the Paid Parental Leave scheme, the Paid Parental Leave Levy and a company tax rate reduction.