Analyzing the Australia’s Budget between the years 2002 and 2003
By Jimmy Jackson
A budget is an estimate of Commonwealth revenue and expenditure for the forthcoming fiscal year. The Budget contains information on matters such as economic forecasts, the provision of G/S, the Government's social/political priorities and how the Government intends to attain these priorities.
The main objectives of the federal government are to gain:
- full employment of people 15-over who are willing and able to work
- price stability - government attempting to maintain stable prices by controlling inflation rates
- external balance - low current account deficit
- economic growth - increasing real GDP per capita so living standards improve
The role of a budget is to assist the government in achieving its economic objectives. The 3 possible budget outcomes are a Budget Surplus, this occurs when total level of economic activity is reduced by increasing taxes and lowering government spending. A Fiscal Policy is the use of government taxes and spending to alter macroeconomic outcomes. The contractionary fiscal policy (G<T) would be used to reduce spending and inflation. A Balanced Budget is the effect of the neutral stance of fiscal policy (G=T) where government spending is fully funded by tax revenue. Tax payers may spend/save less. A Budget Deficit increases output and level of economic activity by lowering taxes and increasing government spending. The expansionary fiscal policy (G>T) increases the amount of money available to the population.