Your A-Z for the 2023 federal budget

Treasurer Jim Chalmers has handed down his first major budget for the Labor government. The budget is a complex document containing the government’s revenue and expenditure. Here is a quick guide to understanding some of the terms you might come across in his speech or the budget papers. 

BONUS: You will also find the most popular words starting with each letter of the alphabet used in the previous editions of the budget. 

A: Alternative financing

This refers to a situation when the government uses another form of “repayment” instead of paying directly for a particular project or policy. This may include acquiring an equity stake in the company carrying out the said project. 

Most popular words used in previous budgets starting with the letter A: Australia, affordable housing

B: Budget papers

The federal budget comprises four key documents that are collectively known as the budget papers. These include: Budget Strategy and Outlook, Budget Measures, Federal Financial Relations, and Agency Resourcing. 

Most popular words used in previous budgets starting with the letter B: better, benefit, build

C: Capped funding

Capped funding is when the government commits a certain amount of funds for a particular policy, and this amount does not change with an increase in the demand or even the actual cost of the program. Committed funding is a subset of capped funding. 

Most popular words used in previous budgets starting with the letter C: care, cut, carbon

D: DTBNYA

DTBNYA stands for decisions taken but not yet announced. These form a part of the contingency reserve as policy decisions that have been taken by the government but their details and costs have not yet been disclosed to the public.

Most popular words used in previous budgets starting with the letter D: debt, decade, decisions. 

E: Expense

Expense refers to the cost of providing government services. These include things like Medicare, age-based pensions, funding provided to public hospitals and wages paid to public sector employees.

Most popular words used in previous budgets starting with the letter E: economy, education, equality.

F: Fiscal balance

It is one of the major indicators that measure the effect of the government’s budget on the Australian economy. Is the budget in surplus or deficit? The fiscal balance is one of the aggregates that represent this.

Most popular words used in previous budgets starting with the letter F: family, future, fund.

G: Gross debt

This is the amount of money the government owes before taking into account any assets that could offset any amount from the debt. To get a clearer picture of the government’s financial liabilities, one should also take a look at the ‘net debt’, which takes into consideration the financial assets of the government.

Most popular words used in previous budgets starting with the letter G: global, govern, growth

H: Headline cash balance

This method of accounting relates to the government’s cash transactions only. This is the amount of actual money received or paid by the government in a particular financial year, without taking into account the period in which the transaction actually took place.

Most popular words used in previous budgets starting with the letter H: health, high, hard.

I: Indexation

How do you measure inflation (or deflation)? It is the process of adjusting the price of a commodity by factoring in economic variables such as the value of money over time, among other things. 

Most popular words used in previous budgets starting with the letter I: infrastructure, invest, inflation, increase.

J: J-Curve

Not used for a long time, the J-curve theory suggests a country’s trade deficit will actually worsen upon the depreciation of its currency, mainly because in the short term the number of exports will outweigh the number of imports due to higher exchange rates. 

Most popular words used in previous budgets starting with the letter J: jobs, just.

K: K-shaped recovery

A K-shaped recovery refers to a situation where different parts of the economy recover at different rates. For instance, the rich bounced back economically on the back of a robust and bullish stock market, while certain segments of the economy, like small businesses continue to struggle.

Most popular words used in previous budgets starting with the letter K: kickstart, know, keep.

L: Liability

Liabilities include any expenses incurred or amounts owed by the government that are not yet paid. 

Most popular words used in previous budgets starting with the letter L: Labor, livelihood, living

M: Marginal tax rate

The marginal tax rate is the rate of tax that is applied to each additional dollar that an individual or a company earns. It is also the highest rate of tax an individual pays on a certain portion of their income. 

Most popular words used in previous budgets starting with the letter M: more, March, medicine.

N: Not for publication

Not for publication, popularly known as ‘nfp’, comprises the estimates that have been calculated while preparing the budget but are not publicly available due to reasons like national security. 

Most popular words used in previous budgets starting with the letter N: new, nation.

O: Ongoing programs

These are government programs with no end dates and generally refer to the more long-term initiatives, like childcare subsidies and age-based pensions. 

Most popular words used in previous budgets starting with the letter O: outlook, optimistic

P: Portfolio budget statement

As the name suggests, a portfolio budget statement is issued by a minister for their area of responsibility (i.e. their portfolio). These statements complement the budget papers and consist of detailed breakdown of all past, current, and proposed programs and objectives under each ministry. 

Most popular words used in previous budgets starting with the letter P: progress, people, price, pragmatism

Q: Quarterly review of the economy   

This refers to the review of the Australian economy’s GDP every three months in a financial year.

Most popular words used in previous budgets starting with the letter Q: quality, quickly.

R: Revenue

Revenue is the ‘income’ of the government and is calculated on an accrual basis — calculated for the time period in which it is earned, not actually received. The major source of revenue for the government is the various forms of taxes, including income tax, goods and services tax etc. 

Most popular words used in previous budgets starting with the letter R: ready, responsible, resilience.

S: Surplus

A rare feat to achieve for governments around the world is a surplus budget — where the income of the government exceeds its expenditure. 

Most popular words used in previous budgets starting with the letter S: save, surplus, spend, Speaker, stronger.

T: Terminating program

A terminating program is a government benefit policy with a specified end date. An example of this would be any program or incentive specifically launched for COVID-19, like unrestricted access to one’s superannuation fund.

Most popular words used in previous budgets starting with the letter T: tax, transport, technologies.

U: Unemployment rate

It is the percentage of individuals in the economy who are part of the labour force but are unemployed as they actively look for work. The unemployment rate is one of the strongest indicators of the health of an economy. 

Most popular words used in previous budgets starting with the letter U: uncertainty, unemployment, unique.

V: Value-added tax

Australia’s version of a value-added tax is known as the goods and services tax. It was implemented in 2000. The standard value added tax in the country is 10%.

Most popular words used in previous budgets starting with the letter V: value, viable, voice.

W: Wage-push inflation

This refers to a situation in an economy where inflation rises due to an increase in the real wages of the citizens. It pushes up the prices of goods and services in the market due to higher purchasing power of individuals.

Most popular words used in previous budgets starting with the letter W: wages, war, women, waste, work.

X: Not applicable

Y: Year-to-date

This refers to the time period from the beginning of the calendar to the current date. It can be either a financial year or a calendar year. 

Most popular words used in previous budgets starting with the letter Y: year, young.

Z: Zero-based budget

A zero-based budget is prepared from scratch, i.e., no balances from the previous year are brought forward to adjust the government’s performance purely on the basis of a specific year. 

Most popular words used in previous budgets starting with the letter Z: zoning, zero.

Found this budget glossary useful? You can read about more budget-related terms with their meaning on the website of the Parliament of Australia. 

To see SmartCompany‘s full budget coverage, click here.