Every May the government set out the budget for the next financial year. However, just like any budget, there are a few things you need to remember.
A budget is different to actual results
- A budget is only a revenue estimate
A budget is only an estimate of what money will be received by the government and how it will be used. The government does a lot to estimate how much money will be received (in taxes and revenue from government departments), however this doesn’t mean that the estimated revenue amount will be correct.
- Spending depends on revenue
Any government spending is usually funded by in-coming revenue. If this revenue is not received, government spending initiatives may be cancelled.
Unfortunately, this means that a lot of previous announcements have not eventuated over the last few years as revenue has been lower than expected (such as lowering the company tax rate and the first $1,000 of interest income only being half taxed for individuals).
A budget can change
- The budget depends on the government in power
If or when a new government is elected, the new government will change the budget according to it’s policies.
- A budget is announced every year
Because a new budget is announced every year, if you are unhappy with something, you do have options. For example, if you believe Australia should give more to foreign aid (we currently give 0.35% of our budget), you can write to your local Member of Parliament and vote differently at the next election.
The budget isn’t the law (yet)
- The budget has to be written and voted upon to become law
The government often announces laws to apply from budget night. However, technically there is a law making process. Laws have to be written and voted upon in both houses of parliament before they become law. Laws may be backdated to apply from budget night.