Supplementary expenses table and the Contingency Reserve
Expenses
Table 3.21 shows estimates of Australian Government general government expenses by function and sub‑function for 2011‑12 and the forward years.
Table 3.21: Estimates of Australian Government general government sector expenses by function and
sub-function
Table 3.21: Estimates of Australian Government general government sector expenses by function and
sub-function (continued)
Contingency Reserve
The Contingency Reserve (other purposes function) is an allowance, included in aggregate expenses, principally to reflect anticipated events that cannot be assigned to individual programs in the preparation of the Australian Government budget estimates. The Reserve is used to ensure that the estimates are based on the best information available at the time of the Mid‑Year Economic and Fiscal Outlook (MYEFO). It is not a general policy reserve.
While the Reserve is designed to ensure that aggregate estimates are as close as possible to expected outcomes, it is not appropriated. Allowances that are included in the Reserve can only be drawn upon once they have been appropriated by Parliament. These allowances are removed from the Reserve and allocated to specific agencies for appropriation and for outcome reporting closer to the time when the associated events eventuate.
The Contingency Reserve contains an allowance for the tendency for estimates of expenses for existing Government policy to be revised upwards in the forward years, known as the conservative bias allowance. Since the 2011‑12 Budget, the allowance has been drawn down to ¼ of a per cent of total general government sector expenses (excluding GST payments to the States) in the first forward year (2012‑13), ¾ of a per cent of expenses in the second forward year (2013‑14), and 1 ½ per cent of expenses in the third forward year (2014‑15). The drawdown of the allowance reduced expenses by $813 million in 2012‑13, $800 million in 2013‑14 and $1.6 billion in 2014‑15. The drawdown of the conservative bias allowance during the MYEFO estimates update is consistent with long standing practice and does not represent a saving or offset to Government spending measures.
The Contingency Reserve also makes allowance in 2011‑12 and the forward years for anticipated events, including the following:
- a provision for underspends in the current financial year reflecting the tendency for budgeted expenses for some agencies or functions not to be met;
- commercial‑in‑confidence and national security‑in‑confidence items that cannot be disclosed separately, and programs that are yet to be negotiated with State and Territory governments;
- decisions made too late for inclusion against individual agency estimates;
- the effect on the budget and forward estimates of economic parameter revisions received late in the process and hence are not able to be allocated to individual agencies or functions; and
- provisions for events and pressures that are reasonably expected to affect the budget estimates — for example, a provision for the continuation of drought relief in 2011‑12 and 2012‑13.
The Contingency Reserve includes a provision for the costs associated with Australia hosting the G‑20 in 2014.
The Contingency Reserve also makes provision for future increases in Australia's Official Development Assistance yet to be allocated to specific aid programs. However, in Table 3.21 in this attachment, these expenses are allocated to the Foreign Affairs and Economic Aid Support sub‑function. The provision is currently set at $254 million in 2012‑13, $768 million in 2013‑14, and $1.4 billion in 2014‑15. The provision is increased or decreased in line with the forecasts for the national accounts and when new aid proposals are funded.
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