Guide to the Budget Process

Introduction

The Budget process allows the Government to:

• set its fiscal objectives in respect of revenue, expenses, the operating balance (before gains and losses excluding ACC revenue and expenses), debt and investment;
• maintain effective fiscal control and plan for the coming year and beyond;
• allocate available resources, consistent with the Government's strategic objectives and priorities;
• fulfil the legislative requirements for the Budget; and
• seek authority from Parliament for spending, borrowing and taxing.

Specific phases of the Budget

The Budget process can be divided into distinct phases:

Strategic phase

The strategic phase generally occurs from June to December. This involves the development of an overall strategy for the Budget, including strategic priorities and targets for spending, revenue, operating balance and public debt intentions.

Decisions taken during the strategic phase are reflected in the Government's Budget Policy Statement (BPS) which is required to be tabled in Parliament by no later than 31 March.

During this time, agencies prepare spending and/or savings initiatives on Ministers’ behalf and these are put forward for consideration.

Decision-making phase

The decision-making phase generally occurs from January to April. During this period, the Treasury assesses initiatives developed by agencies and prepares recommendations on which initiatives Ministers should support.

This advice is then considered by Budget Ministers (the Prime Minister, the Minister of Finance and the Associate Ministers of Finance) who put forward a Budget package to Cabinet for a final approval.

Budget production phase

Following decisions by Cabinet on the Budget package, the Treasury and agencies prepare all the required documents for presentation on Budget Day. This includes the Estimates of Appropriations, the Budget Economic and Fiscal Update, the Fiscal Strategy and Child Poverty Reports, as well as a media kit containing the Minister of Finance's Budget Day speech, and any other discretionary products such as the Budget at a Glance, press releases, and the Summary of Initiatives.

Legislative phase

The final phase of the Budget process involves obtaining Parliamentary approval for the Government to spend, borrow and tax (all spending for the year ahead). This includes examination of the Estimates and Supplementary Estimates for each Vote by the appropriate select committee.

Subsequent changes after the Budget

Where additional appropriations are needed during the course of the year, spending is authorised by Parliament before the end of the financial year, via the Appropriation (Supplementary Estimates) Bill. In the interim, authority for additional spending is provided by an Imprest Supply Act.