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5 Steps on how governments develop their Budget (and understanding when to engage)

· Catriona McNaughton,Budget,Analysis

Each year, funding for government initiatives occurs through the government budgetary cycle, with the formal Budget prepared annually and usually presented ahead of the following financial year (the Commonwealth and Victorian Budgets for example are usually handed down in May whilst NSW and other states is in June). The Budget is the Government's most important political, economic and social document, setting priorities and how the Government intends to deliver on these priorities. Understanding the process to reach this point (noting that timings will differ for each jurisdiction) is critical to understanding when best to engage with government on funding initiatives and your budget submission.

If you want to have your matter considered in a Budget process – you need to engage early and engage often and this means getting your matter in front of the right people no later than three months after the previous Budget was brought down.

1. Ministerial consideration

The first gateway is whether the relevant Minister supports a certain concept or initiative so ensuring the Minister is supportive is critical to any further progress. The need or case for government funding can be initiated from a range of sources both internal and external to government and presented to the Minister through a number of channels, the most likely of these is from the relevant Department. This means, from the outside, it is important to have support from both the relevant Department and Minister and to have this support early enough for your budget submission to be considered by the Minister ahead of the formalised Budget process.

2. Cabinet’s expenditure review committee – the ‘razor gang’

The committee of Cabinet tasked with Budget considerations (most commonly referred to as the expenditure review committee) is responsible for allocating funding across Government, considering the various competing priorities while also setting the overall expenditure. The members of the committee are all Ministers with significant authority within the Government. Each year, the committee meets to review proposals put forward by Ministers. These meetings often begin six to eight months before the Budget is set because they need time to consider the complexities of all of the initiatives and must also allow time for these to be built into an overall government budget. Generally, there are a series of formal stages where committee decisions and feedback are provided to Ministers with either proposals rejected or with requests for further information and context. Any proposals that are not included early in this review process would be unlikely to secure funding.

3. Budget Papers

Once the committee has finalised its deliberations and the Treasurer has approved all elements, the Treasury Department (or similar) prepares the formal Budget papers. They provide projections of government revenue and expenditure, capturing the decisions of the expenditure review committee and outline the Government’s strategic priorities and objectives. The Budget is usually presented across multiple papers capturing different aspects of the Budget. For example, the Strategy and Outlook which outlines the economic conditions, financial performance and fiscal and economic strategy is usually kept separate from papers with specific initiatives. The remaining papers may be separated for different reasons depending on the State/Territory and their convention but often include separate papers for capital and services.

4. The Budget

The Budget is formally introduced to Parliament by the Treasurer (officially through the ‘Appropriation Bill’) and often follows very specific timing conventions. For example, in Victoria this is almost always introduced on the first Tuesday in May and was only delayed this year as a result of the Federal Election. By passing parliament, the Budget gives the Government the authority to spend public money on the items outlined.

Before the Budget is formally introduced into Parliament, the papers are usually made available to the media and stakeholders in a tightly controlled environment (called a media lock-up) so that they have the relevant information to communicate aspects of the Budget as it is introduced.

5. Proposals and initiatives

The implication of this process is that initiatives must be front of mind with sufficient momentum and information for the responsible Minister to submit to the expenditure review committee, a process that occurs well in advance of when the money will be spent. Those that are not will likely have to wait for the next funding cycle, potentially causing significant delays to execution of projects or programs.

To be safe, organisations should be looking to engage with government almost as soon as the previous Budget was published, if they are seeking future funding. Many organisations wait too long and miss the critical window between Budget release and the next Budget cycle process.

Catriona McNaughton is the Manager - Communications at FPL Advisory.

FPL Advisory is a team of specialists resolving risks and creating opportunities with respect to government. We work with public sector and corporate clients to execute strategies for owning and managing change