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Public Budget Analysis Project: Queensland, Australia

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Public Budget Analysis Project: Queensland, Australia

  1. 1. BUDGET ANALYSIS PROJECT QUEENSLAND STATE, AUSTRALIA
  2. 2. Introduction: About Queensland  STATE OF AUSTRALIA;  The second LARGEST;  The third MOST POPULATED…  Located NORTHEAST of the country;  Total population: 4’580,700… IVY & CHENYI
  3. 3. Budget at a Glance http://www.budget.qld.gov.au/index.php  FOUR PILLAR ECONOMY:
  4. 4. Annual Revenue from Transactions TAXATION revenue; GRANTS revenue; SALES of goods and services; INTEREST income; DIVIDEND and INCOME TAX equivalents, and; OTHER revenue… http://www.budget.qld.gov.au/current-budget/at-a-glance/index.php
  5. 5. Annual Expenses from Transactions EMPLOYEES’ expenses; SUPPLIES and SERVICES; SUPERANNUATION expenses; GRANTS expenses, and; OTHER expenses… http://www.budget.qld.gov.au/current-budget/at-a-glance/index.php
  6. 6. Financial Aggregates http://www.budget.qld.gov.au/current-budget/at-a-glance/index.php
  7. 7. About Budget Process FISCAL YEAR in Australia runs from JULY 1 to JUNE 30, one year to the next one; WHOLE BUDGETING PROCESS runs from OCTOBER until MAY next year, when Australian Congress approves; STEPS in budgeting procedure: 1. ALL GOVERNMENT must develop and approve budget STRATEGY based on the State’s fiscal position; 2. ALL GOVERNMENT must develop budgeting PROCESS; 3. ALL GOVERNMENT must UPDATE CBRC on the State’s fiscal position based on forward estimates; 4. AGENCIES must PREPARE and develop their PRIORITIES…
  8. 8. About Budget Process 5. ALL GOVERNMENT must submit their budget priorities; 6. AGENCIES’ portfolio ministers must advocate requests with the CBRC; 7. AGENCIES must prepare allocation decisions and advise outcomes; 8. AGENCIES must update their forward estimates; 9. AGENCIES must prepare, finalize and table all State budget papers; 9. AGENCIES must submit forward estimates to Committee Hearings; 10. ALL GOVERNMENT must consider appropriation bills; 11. AGENCIES must undertake allocation processes…
  9. 9. About Format & Info. Management Budgeting Period: ANNUAL; Budget classification: Focused mainly on ECONOMIC and FUNCTIONAL criteria; TWO RELEVANT SECTIONS: Abstract of ECONOMIC (and fiscal) planning; and REVENUE/ EXPENSE outlook; TWO APPROACHES: Both PROGRAMMING (mainly in economic planning) and PERFORMANCE (mainly in revenue/ expense outlook) focused formats; Considers comparisons between LAST YEAR (actual) vs. INCOMING YEARS (incoming estimate and projections), as well as SHIFTING patterns; Performance information is mostly focused on measuring OUTCOMES… ALEX
  10. 10. Format: Two Sections/ Approaches ECONOMIC PLANNING: PROGRAM- FOCUSED, according to: 1. Fiscal STRATEGIES; 2. Previous year OUTCOME; 3. ANALYSIS of conditions and economic outlook; 4. FORECAST and projections for incoming year; 5. PERFORMANCE summary; 6. Prospects and CHALLENGES... REVENUE/ EXPENSE: PERFORMANCE- FOCUSED, according to: 1. COMPARISON in revenue outcomes and estimates; 2. CHANGES in revenue behavior for last 2 years; 3. COMPARISON in efficiency vs. operation expenses; 4. DETAILS of revenue and expense: charts, statements and balance sheets…
  11. 11. Changes in Budget Format? Format has (substantially) kept UNCHANGED within the last 10 YEARS (since 2001-02); NOT NECESSARY TO CHANGE substantially the format, for it seems transparent, reliable, understandable; UNLIKELY the State government would have the need or CAPACITY to change format, since the CURRENT one seems FUNCTIONAL, however it has improved in adding references about programs implemented and continuously monitoring outcomes; Anyway, the format has gradually IMPROVED in measuring OUTCOMES (including and comparing SUCCESS INDICATORS within the last 5 YEARS)…
  12. 12. Major Funds and Appropriations Relevant FUNDING concepts which represent most of public expenditure in the State: 1. OPERATING expenses: Health (24.8%) and Education (22%); Transport and Comms. (14%); 2. GRANTS on Welfare (13%): Schools (A$2.28B), community services (A$1.83B) and NGO’s (A$1.80B); Major APPROPRIATIONS to public dependencies: 1. HEALTH : From A$10.55B (2010-11) to A$11.04B (2011-12); 2. EDUCATION: From A$7.58B (2010-11) to A$8.12B (2011-12); 3. TRANSPORT: From A$4.05B (2010-11) to A$4.50B (2011-12); 4. COMMUNITY: From A$3.98B (2010-11) to A$4.48B (2011-12).
  13. 13. Forecasts and Info. Handling Revenue FORECASTING carried out by STATE TREASURY OFFICE, in charge of gathering data, study the public finances and publish the yearly reports regarding the actual performance of finances balance, on the official website of State government; FORECASTS for INCOMING YEAR (fiscal) are included in BOTH economic planning, and revenue/ expense outlook SECTIONS; FURTHER forecasts (PROJECTIONS) are also considered: extensive to UP TO THREE YEARS in advance; Forecasts used to CALCULATE: operating balance and cash flow, revenue collections and liabilities, public debt, foreign trade, wage prices, GDP growth; departmental efficiency…
  14. 14. Format Strengths and Weaknesses As communication tool, document seems TRANSPARENT and DESCRIPTIVE: regarding performance in public finances; challenges and conditions the government has to face; as well for outcomes achieved yearly; Document content is EXTENSIVE, in fact TOO LONG; On the other hand, the PRACTICAL EFFECTIVENESS of the format can be questioned, considering the budget seems to be TOO OPTIMISTIC (very much focused on positive outcomes and expectations) but doing little reference to shortcomings and downgrades; NEEDS to be more CLEAR on justifications and specific measures to be taken in relation to planned PROGRAMS…
  15. 15. Effective Control/ Evaluation? “MOODY’S DOWNGRADE JUSTIFIES CUTS…” (26/11/12) http://finance.ninemsn.com.au/newsbusiness/aap/8570470/moodys-downgrades-qld-outlook Downgrade from Aa1: STABLE to Aa1: NEGATIVE; Rise in INFRASTRUCTURE costs; Rise in PUBLIC DEBT; Lack of EXPENDITURE DISCIPLINE (uncertainty in tightness for appropriations and discresion control); Economic RECOVERY PACKAGES proposed after 2011 floods (size of France and Germany, 75% of State’s area as disaster area) seemed too optimistic; Public finance must RETURN TO SURPLUS BY 2014-15 (deteriorating financial performance since 2007-08)…
  16. 16. Total Expenditure 2010-11 (A$ Billion) Total Expenditure 2010-2011(Billion) Annual Leave Central Scheme $1.27 29% Total Expenditure 2010-2011(Billion) Superannuation Benefit payments $1.14 26% Total Expenditure 2010-2011(Billion) Borrowing costs $0.93 22% Total Expenditure 2010-2011(Billion) Long service leave reimbursements $0.32 7% Total Expenditure 2010-2011(Billion) Grants & subsidies $0.22 5% Total Expenditure 2010-2011(Billion) All other expenses $0.19 4% Total Expenditure 2010-2011(Billion) Supplies & services $0.16 4% Total Expenditure 2010-2011(Billion) Benefit payments $0.12 3% Annual Leave Central Scheme Superannuation Benefit payments Borrowing costs Long service leave reimbursements Grants & subsidies All other expenses Supplies & services Benefit payments ZELIG
  17. 17. Total Expenditure 2011-12 (A$ Billion) Total Expenditure 2011- 2012(Billion) Annual Leave Central $1.43 23% Total Expenditure 2011- 2012(Billion) Superannuation Benefit Payments $2.12 33% Total Expenditure 2011- 2012(Billion) Borrowing costs $1.43 22% Total Expenditure 2011- 2012(Billion) Long service leave reimbursements $0.40 6% Total Expenditure 2011- 2012(Billion) Grants & Subsidies $0.39 6% Total Expenditure 2011- 2012(Billion) All other expenses $0.20 3% Total Expenditure 2011- 2012(Billion) Supplies & services $0.16 3%Total Expenditure 2011- 2012(Billion) Benefit payments $0.24 4% Annual Leave Central Superannuation Benefit Payments Borrowing costs Long service leave reimbursements Grants & Subsidies All other expenses Supplies & services Benefit payments
  18. 18. Expenses Comparison: Two Years Expense, 2010- 2011, 4,363,451 Expense, 2011- 2012, 6,368,034 2010-2011 2011-2012
  19. 19. Expenses Comparison: By Detail
  20. 20. Expenditure Trend 2007-2008
  21. 21. Total Revenue 2011-12 (A$ Billion) Total Revenue Commonwealth grants 19,587,340 51% Total Revenue Taxes,fees,fines& levies 9,358,255 24% Total Revenue Royalties,propert y income&other territorial revenue 2,977,567 8% Total Revenue Interest 33,781 0% Total Revenue Administered item revenue 6,363,548 17% Total Revenue Other revenue 132,462 0% Commonwealth grants Taxes,fees,fines&levies Royalties,property income&other territorial revenue Interest Administered item revenue Other revenue
  22. 22. Total Revenue: By Detail
  23. 23. Revenue Trend 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
  24. 24. Revenue Trend Duties Payroll tax Land tax Other tax Fuel subsidy First home owner grant Queensland huilding boost Royalties
  25. 25. Conclusion: SWOT Analysis JERRY OPPORTUNITIES STRENGTHS WEAKNESSES THREATS
  26. 26. Conclusion: Final Recommendations Make an effort and implement measures enough to ADOPT A SURPLUS POLICY: Creating MORE JOBS by altering the style of economic INCREASE;  MOVE part of RESOURCE-consuming and ENVIRONMENT-affecting INDUSTRIES to other developing countries for cheaper natural resources and labor resources;  Keeping cutting down governmental expenditure by TIGHTENING APPROPRIATIONS and restricting discresion CONTROL;  Explore NEW FORMATS for budgeting, try to be a bit of LESS OPTIMISTIC…
  27. 27. THANK YOU FOR YOUR ATTENTION! CITY U MAPPM 2012/ 13

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