2001-02 BUDGET PAPER No. 1

BUDGET STRATEGY
AND OUTLOOK
2001-02

CIRCULATED BY
THE HONOURABLE PETER COSTELLO, M.P.,
TREASURER OF THE COMMONWEALTH OF AUSTRALIA, AND
THE HONOURABLE JOHN FAHEY, M.P.,
MINISTER FOR FINANCE AND ADMINISTRATION,
FOR THE INFORMATION OF HONOURABLE MEMBERS
ON THE OCCASION OF THE BUDGET 2001-02
22 MAY 2001

 Commonwealth of Australia 2001
ISBN 0 642 45741-7 1
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Guide to the 2001‑02 Budget Papers
Budget Paper No. 1
Budget Strategy and Outlook 2001-02
Budget Paper No. 1 is comprised of 11 Statements.		Statement 1
•	Overview of budget and economic forecasts.
•	Discussion of the Government’s medium‑term fiscal strategy.
•	The Government’s key Budget priorities.	
			
Statement 2
•	Changes to the budget estimates since the 2000‑01 Mid‑Year Economic and Fiscal Outlook (MYEFO).
•	Summary of revenue, expenses, net debt and net worth estimates.
•	Analysis of the sensitivity of the budget estimates to changes in key economic parameters.		Statement 3
•	Economic developments since MYEFO.
•	The outlook for the domestic and international economies.
•	Revised economic parameter forecasts.	
			
Statement 4
•	The role of productivity growth and new technology in economic growth.
•	The United States experience.
•	The Australian productivity acceleration.
•	The outlook for productivity growth and the role of government.		Statement 5
•	Developments in taxation and non‑taxation revenue since MYEFO.
•	Forward estimates of revenue.
•	Summary of revenue policy measures.
•	Revenue statistics.	
			
Statement 6
•	Developments in expenses and net capital investment since MYEFO.
•	Forward estimates of expenses and net capital investment, presented by government function.
•	Summary of expenses and net capital investment policy decisions since MYEFO.
•	Expenses statistics.		Statement 7
•	Details of the Commonwealth’s budget funding requirement.
•	Budget funding programme.

Statement 8
•	Trends in the finances of the Commonwealth, State and Local levels of government.
•	Size and structure of the Australian public sector.		Statement 9
•	Government Finance Statistics financial statements for the Commonwealth government sectors.	
			
Statement 10
•	Australian Accounting Standard financial statements for the Commonwealth general government sector.
•	Notes to the Accounting Standard financial statements.
•	Statement of financial risks.
•	Additional Commonwealth Government agency statistics.		Statement 11
•	Discussion of external budget reporting standards.
•	Historical data for the Commonwealth’s key fiscal aggregates.
•	Discussion of budget concepts.

Guide to the 2001‑02 Budget Papers
Budget Paper No. 2
Budget Measures
Detailed information on the Government’s budget policy initiatives		Budget Paper No. 3
Federal Financial Relations
Detailed information on the Commonwealth’s financial relations with the State, Territory and Local Governments	
			
Budget Paper No. 4
Agency Resourcing
Information on the resource requirements and resource bids of Commonwealth government agencies, including the Appropriation Bills.		Budget Speech
A transcript of the Treasurer’s budget speech as delivered on 22 May.	
			
Budget Overview
An overview of the 2001‑02 Budget, providing summary information on the Government’s:
•	current and forecast budget position;
•	economic forecasts; and
•	budget priorities and strategy.		Budget Related Papers
Portfolio Budget Statements
Detailed information on the expected financial position of each Commonwealth government agency.	
			
Internet
The Commonwealth budget papers and budget related information are available on the central Budget website at:  www.budget.gov.au	

Contents
Guide to the 2001‑02 Budget Papers	iii
Statement 1:  Fiscal Strategy and Budget Priorities
Part I:  Overview	1-3
Part II:  Fiscal strategy	1-8
Part III:  Budget priorities	1-12
Statement 2:  Fiscal Outlook
Fiscal aggregates	2-3
Variations to the fiscal balance estimates	2-4
Net debt and net worth	2-12
Cash flows	2-16
Appendix A:  External reporting standards	2-18
Appendix B:  Sensitivity of fiscal aggregates to economic developments	2-19
Statement 3:  Economic Outlook
Part I:  Overview	3-3
Part II:  The outlook for the international economy	3-6
Part III:  The outlook for the domestic economy	3-11
Part IV:  Uncertainties	3-26
Statement 4:  A More Productive Australia — Policy and Technology
Part I:  Introduction	4-3
Part II:  The United States experience	4-5
Part III:  The Australian productivity acceleration	4-15
Part IV:  Looking to the future	4-22
Part V:  Conclusion	4-24
Statement 5:  Revenue
Part I:  Overview	5-3
Part II:  Estimates of revenue	5-9
Appendix A:  Changes in revenue estimates since MYEFO	5-24
Appendix B:  Forward estimates of revenue	5-26
Appendix C:  Revenue measures	5-28
Appendix D:  Tax expenditures	5-33
Appendix E:  Cash revenue statistics and history	5-35

Statement 6:  Expenses and Net Capital Investment
Introduction	6-3
Part I:  General government expenses	6-4
Part II:  General government net capital investment	6-59
Appendix A:  Expenses Measures	6-70
Appendix B:  Net Capital Investment Measures	6-71
Appendix C:  Expenses Statistics	6-72
Statement 7:  Budget Funding
Net Funding Requirement	7-3
Debt Issuance Programme	7-4
Statement 8:  Trends in Public  Sector Finances
Introduction	8-3
Fiscal balance	8-6
Cash surplus	8-9
Net debt and net worth	8-15
Appendix A:  Size and structure of the public sector	8-21
Appendix B: Non‑financial public sector — supplementary cash tables	8-22
Statement 9:  Government Finance Statistics Statements
Government Finance Statistics Statements	9-3
Statement 10:  Australian Accounting Standard No. 31 Budget Financial Statements
Budget Financial Statements	10-3
Statistics, concepts and notes to the  AAS31 Financial Statements	10-7
Appendix A:  Additional agency statistics	10-15
Appendix B:  Statement of Risks	10-31
Statement 11:  Budget Concepts and Historical Data
Part I:  Budget concepts	11-3
Part II:  Historical general government data	11-14

Notes
(a)	The following definitions are used in this Budget Paper:
•	‘real’ means adjusted for the effect of inflation;
•	real growth in expenses is measured by the non‑farm Gross Domestic Product deflator;
•	Budget year refers to 2001‑02, while the forward years refer to 2002‑03, 2003‑04 and 2004‑05; and
•	one billion is equal to one thousand million.
(b)	Figures in tables and generally in the text have been rounded. Discrepancies in tables between totals and sums of components are due to rounding:
•	estimates under $100,000 are rounded to the nearest thousand;
•	estimates $100,000 and over are generally rounded to the nearest tenth of a million;
•	estimates midway between rounding points are rounded up; and
•	the percentage changes in statistical tables are calculated using unrounded data.
(c)	For the budget balance, a negative sign indicates a deficit while no sign indicates a surplus. 
(d)	The following notations are used:
NEC/nec	not elsewhere classified
AEST	Australian Eastern Standard Time
-	nil
..	not zero, but rounded to zero
na	not applicable (unless otherwise specified)
nfp	not for publication
$m	$ million

(e)	References to the ‘States’ or ‘each State’ include the Territories, because from 1993‑94 onwards, general purpose funding has been on the same basis for all jurisdictions. The Australian Capital Territory and the Northern Territory are referred to as ‘the Territories’. The following abbreviations are used for the names of the States, where appropriate:
NSW	New South Wales
VIC/Vic	Victoria
QLD/Qld	Queensland
WA	Western Australia
SA	South Australia
TAS/Tas	Tasmania
ACT	Australian Capital Territory
NT	Northern Territory
Budget Strategy and Outlook 2001‑02 is one of a series of Budget Papers, the purpose of which is to provide information supplementary to that in the Budget Speech. A guide to the series is printed on pages iii and iv of this Paper.