How to read the federal budget – the most important parts of the sprawling document

Source: The New Daily

It’s that time of year again – the federal budget is just around the corner and Treasurer Jim Chalmers is busy preparing a pitch to voters about how their taxes are going to be spent.

With hundreds of billions of dollars swirling around Commonwealth coffers, there are no shortages of opportunities, but as ever there are just as many – if not more – priorities.

The beauty is that come Tuesday, May 14 they will all be detailed in hundreds of pages of accounts, forecasts and policy papers that are free for taxpayers to peruse.

It’s a remarkable feature of our political system that the budget is so accessible, but at the same time governments are masters at obfuscation, making it difficult for most taxpayers.

The good news is once you know what to look for, the budget’s secrets are easy to expose.

So let’s run through how you can separate the spin from the policy in the 2024-25 budget.

Speeches, papers and … “glossies”?

The first challenge with the federal budget is that it’s massive, making it easy for governments to spin the details they like and direct our attention away from the things they’d prefer we didn’t notice – like subsidies for fossil fuel companies, for example.

Many of the dirty details are in the thousands of pages that make up the budget, but you’re unlikely to find them in the Treasurer’s speech or paper one, which are highly politicised.

Paper one (BP1) is officially titled “strategy and outlook” and basically represents a more detailed version of the policy pitch in the 7.30pm speech to Parliament, alongside myriad forecasts predicting how the economy, taxes and public spending might change in the coming years.

In contrast, budget paper two (BP2) is where the rubber hits the road on how all those policies will affect Commonwealth finances, either as revenue (like taxes) or spending (like on schools).

BP2 is a treasure trove of detail that includes information not just on what will cost or earn the Commonwealth, but which part of the government is involved and within what year.

Lastly, there’s papers three and four which home in on how taxpayer funds move between departments and agencies within the federal government, and also out to each state and territory government.

These papers really get into the nuts and bolts of how the federal government ticks, but they’re also valuable for taxpayers because you can easily see which agencies are receiving increased funding and where cuts are being made.

That includes the time the Morrison government gutted the Auditor-General’s office following some scathing reports about the government’s conduct.

Budget paper one

Let’s dive into the specifics about papers one and two and what taxpayers should look out for.

It can be useful to think of BP1 as two documents in one; firstly, it functions as a report about forecasts that Treasury has prepared about the economy (both local and global).

This includes predictions about everything from economic growth to wages, employment and inflation.

Government accounts are also forecasted, including debt, spending and revenues.

The all-important tables to look out for here are “domestic economy: detailed forecasts” and “reconciliation of general government sector underlying cash balance estimates”.

These cover both the outlook for the economy and where the budget position is headed.

The other plank of BP1 is details about government policies and budget strategy, which are best thought of as an attempt from the government to surmise its pitch to voters.

This is typically included in the first part of paper one labeled “budget overview”.

Budget paper two

BP2 is packed with detail, and it can be a little overwhelming at first, but thankfully it’s also the only paper with a comprehensive contents list that maps where all the policies are.

Each policy is separated by its status as either a revenue or spending measure, and then again based on which department or agency is responsible (sometimes there are multiple).

The contents section has a neat title list of each measure, which then corresponds to a page number with a more detailed explanation of the policy and the forecast financial impact.

A useful way to navigate BP2 is to canvas this list and highlight or note any areas of interest, and then return to them later to avoid losing the financial forest through the trees.

More detailed explanations of each policy, as well as what they will cost or earn the budget over the forward estimates are available deeper into BP2, categorised by department or agency.

Look out for …

There are a few things to keep in mind when reading through these more detailed documents.

First, pay attention to the years that various expenses or revenue are being booked in, because that can give you clues about how the government actually plans to enact a particular set of policies.

For example: A tax crackdown might start with payments (for the ATO to action a program) before delivering substantial savings to the budget once it’s working and more tax flows in.

Secondly, pay attention to which agencies or departments are receiving funding, because many of the measures in BP2 are broader policy packages containing a multitude of programs.

For example: in last year’s budget the government allocated billions to the next phase of the COVID-19 response, including future vaccines and other medical treatments.

But all that money was split across six different departments and agencies, one of which – the Department of Health and Aged Care – was even listed as NFP (not for publication) in the paper.

Not for publication

That brings us to the all-important NFP designation, which is always controversial because governments have a habit of slapping the label on things they are trying to hide from taxpayers.

There are myriad reasons NFP labels are placed on measures, from national security to commercial-in-confidence agreements when the government is negotiating with businesses.

But the budget doesn’t always say why a measure is NFP and often terms like commercial sensitivities are used to justify hiding large subsidies paid to fossil fuel giants or defence industry.

If you encounter an NFP measure in the budget it’s always worth trying to find out why, because at the very least that can provide some clues into the nature of the funding.

And sometimes, if an NFP measure is included in a broader parcel of funding, you can attempt to deduce how much money might be being paid by looking at the size of the overall policy.

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