Fiscal Policy

Reasons for Actual Budget Outcomes

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Christian Bien

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In most cases, actual budget outcomes are not the same as budget estimates. This can be contributed to a range of factors such as:

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Political Factors
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  • Budget measures do not pass through both houses of government or are modified - for example, the 2016/17 budget included estimated revenues from a 32.5% backpacker tax which was compromised to only 15% from political pressure 

  • New policies are introduced and passed in both houses in government to which the budget has not been considered.

Topic Menu
Concept of Fiscal Policy
Government Revenue and Expenditure Sources
Budget Outcomes
Reasons for Actual Budget Outcomes
Methods for Financing a Budget Deficit
Automatic and Discretionary Stabilisers
Fiscal Policy Stances
Strengths and Weaknesses of Fiscal Policy
Contemporary Fiscal Policy

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  • Economic estimates were wrong - budget estimates are based off predictions in future economic indicators. Actual economic indicators are often different from budget estimates, leading to changes in revenue and expenditure.

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External Factors
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  • Unforeseen event - a natural disaster may require the government to contribute government spending to assist in affect areas. This expenditure is unplanned and not included in government budget estimates. 

  • Changes in the exchange rate 

  • Changes in terms of trade 

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