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Tuesday, 19 August 1980
Page: 310

The following table compares the actual outcome with the Budget estimate for each function.


Estimate Actual Difference

(a)   Block grants for pre-schools have been reclassified from 'Social Security and Welfare' to Education'. The Budget estimates for 1979-80 have been adjusted to take account of this change. (jb) The bulk allowance for prospective wage and salary increases was not apportioned by function at the time the estimates were prepared but was effectively apportioned during the year as actual increases occurred. The disbursement of this provision is therefore partly responsible for some of the differences between estimates and outcomes at the functional level.

Defence- up $121 million

Defence outlays exceeded the Budget estimate by $121 million, reflecting cost increases during the year and the effect of post-Budget decisions taken to increase defence preparedness in the light of international developments. In real terms actual defence outlays were around 3 per cent greater than last year (an increase of about 2.6 per cent was implied in the Budget estimates).

Outlays on defence equipment and stores exceeded the estimate by $93 million. The major components of that increase were the initial payment ($25 million) associated with the ordering of a fourth guided missile frigate (FFG), the rescheduling of payments for the three FFGs already on order ($25 million), and increased costs of fuels and lubricants together with increased purchases of these products ($38 million).

Manpower costs were $8 million greater than allowed for in the estimates. Outlays associated with the maintenance of industrial capacity were $7 million above estimates; these outlays included the provision of an additional $6 million working capital to the Government Aircraft Factories for the continuing production of Nomad aircraft and also to finance unsold stocks of the aircraft. Acquisition of sites and buildings cost $5 million more than estimated because of the purchase from the NSW Government of maritime docks at Woolloomooloo for the expansion of the naval dockyard at Garden Island. There was a shortfall of $8 million in outlays on buildings and works mainly because of slippages in projects such as the Cairns Patrol Boat Base, the Williamstown Naval Dockyard Development, and the construction of FFG facilities at Garden Island.

Education- up $4 million

A shortfall of $7 million on tertiary student assistance payments (reflecting lower than forecast numbers of recipients and lower average allowances) was more than offset by a number of smaller differences from the estimates.

The post-Budget decision to introduce a school-to-work transition program in conjunction with State Governments added $5 million to Education outlays. Recoveries through overseas student charges were $4 million less than estimated because of a lower than estimated number of students identified as liable for the charge (partly attributable to post-Budget refinements to the scheme) and a greater than assumed proportion paying the lowest scale of charge. Outlays on schools in the ACT were $3 million more than estimated, reflecting general cost increases related to higher than estimated enrolments.

Health- up $4 million

There was a number of largely offsetting but significant variations within this function. Overruns on estimates occurred on payments of medical benefits ($28 million), medical and hospital services for veterans and their dependants ($14 million) and nursing home benefits ($8 million). In large measure these overruns reflected higher usage and demand levels, particularly by pensioners, than those assumed at Budget time. In addition the number of approved nursing home beds increased more than allowed for in the Budget and attracted a higher than expected average rate of benefit. Of the $14 million increase in expenditure on medical and hospital services for veterans, $8 million related to medical services to veterans outside repatriation institutions and reflected, in part, increases during the year in doctors' and dentists' fees.

Payments to the Health Insurance Commission were $6 million more than estimated because redeployment of staff did not occur as quickly as expected following the wind-up of Medibank Standard. Additional costs for the construction of Calvary Hospital (ACT) and increases in operating costs of hospitals and other health facilities resulted in outlays on health services in the Territories exceeding the Budget estimates by $3 million.

Offsetting the major part of these increases were shortfalls of $38 million in hospital payments resulting mainly from hospital operating budgets being negotiated at lower levels, and $23 million in pharmaceutical benefits (down $17 million for the general population and $7 million for pensioners) reflecting usage rates lower than assumed. Grants to the States under the Community Health Program were $5 million less than estimated because of a change in the timing of payments to the States.

Social Security and Welfare- down $95 million

Unemployment benefits were $73 million less than estimated. A lower than estimated number of beneficiaries, due in part to the improvement in the employment situation during the year, was the major factor in this shortfall. There were also significant shortfalls in payments of age pensions ($21 million), assistance to veterans and their dependants ($20 million), widows' pensions ($11 million) and invalid pensions ($9 million). In each case the actual numbers eligible for such benefits were less than estimated at Budget time; increases in indexed pension and benefit rates were also lower than allowed for. Outlays on aged persons' homes and hostels were $11 million less than estimated at Budget time mainly because approved projects did not proceed at the rate originally assumed. Grants to the States for deserted wives were $3 million less than estimated; the shortfall was largely attributable to the withdrawal of Victoria from the arrangements in 1979-80. This withdrawal also contributed to an overrun of $12 million on the estimate for special benefit payments, but the bulk of that increase reflected a greater than estimated number of other beneficiaries.

The major overrun in the social security and welfare function was $35 million for family allowances, where a higher than estimated number of children attracted the allowance and payments made to banks in respect of the 1 July 1980 family allowance pay-day were brought to account in 1979-80. Smaller overruns included $3 million for sickness benefits, $2 million for sheltered employment allowances and $2 million for supporting parents benefits.

Housing- down $16 million

Net outlays for housing in the ACT were $11 million less than estimated. Greater than expected repayments by mortgagees accounted for $6 million of this difference, and the balance reflected lower demand than assumed for loans under current arrangements. Early repayment of loans by some banks contributed a further $5 million to the total shortfall in housing outlays. Home Savings Grant payments were $3 million less than estimated, reflecting an underestimation of the effect of rising home prices on application rates for grants which were available only in respect of homes not exceeding $40 000 in value. Net payments under Defence Services Homes arrangements were $5 million more than estimated largely because the sale of surplus land proceeded more slowly than assumed and the funds drawn under the provision for borrowers' excess deposits to be available for specified purposes were underestimated.

Transport and Communication- down $20 million

Qantas Airways Limited discharged aircraft loans of $25 million earlier than expected while exchange rate fluctuations on loans raised in foreign currency on behalf of the Australian National Airlines Commission (TAA) resulted in repayments being $3 million above the estimate. Receipts from light dues were $4 million more than estimated, reflecting greater than estimated shipping movements. In addition there was a shortfall of $6 million in payments to the States for mainline upgrading under the National Railways Network (Financial Assistance) Act 1979 because agreements were finalised with only two States (Queensland and Victoria).

These reductions were partly offset by an $11 million increase against the estimated costs of operation and administration of civil aviation services; $6 million of this reflected increased salary costs, while receipts from air navigation charges, which are offset against these outlays, were $4 million less than estimated. Payments to Australian National Railways to meet operating losses were $3 million more than estimated, reflecting costs of wage determinations and increased fuel prices; these increased costs were partially offset by additional revenues generated by stronger demand and by higher freight rates and fares effective from 1 March 1980.

Industry Assistance and Development- down $12 million

Net outlays associated with the wool industry were $14 million less than estimated, mainly reflecting late June wool tax collections not transferred to the Australian Wool Corporation (for promotion and market support purposes) until July 1980. Similar timing factors connected with the receipt and spending of the dairy industry stabilization levy, together with higher than forecast dairy industry returns (with consequent lower underwriting outlays for dairy products), led to a shortfall against estimates of $4 million in net outlays on the dairy industry.

Advances under the rural adjustment scheme were $4 million less than estimated. Outlays on energy research and conservation also fell short of the estimate by $4 million due mainly to delays in projects financed from the newly created Energy Research and Development Trust Account.

Phosphate fertilizer bounty payments were $11 million more than estimated, reflecting higher consumption following an improvement in seasonal conditions and, more importantly in this context, some building-up of stocks in anticipation of phosphate price increases. Outlays on the petroleum products subsidy were $9 million more than estimated, mainly due to the Government's decision to reduce the freight differential borne by country consumers from 1 April 1980 but reflecting also increased transport costs.

Labour and Employment- down $22 million

Shortfalls of $16 million for the National Employment and Training (NEAT) scheme and $12 million for the Commonwealth Rebate for Apprentice Full-time

Training (CRAFT) scheme resulted from the cost of claims under the schemes being less than assumed in the Budget. For NEAT the effects of the 1978 changes to benefits and conditions were greater than estimated and for CRAFT the average days attendance at educational institutions claimed was less than assumed.

Foreign Affairs and Overseas Aid- up $19 million

Post-Budget decisions to provide additional aid for Kampuchea, Tanzania, Uganda and East Timor and assistance for Afghanistan and Zimbabwe refugees accounted for $15 million of the increase in this function. General administrative expenditure, mainly for the overseas operations of the Department of Foreign Affairs and the Overseas Property Bureau, was $4 million more than estimated at Budget time.

Administrative Services- down $16 million

Customs and excise administration expenditure was $7 million less than estimated. Factors contributing to this shortfall included the transfer, at the end of November 1979, of the Narcotics Bureau to the Australian Federal Police (included under the function 'Law, Order and Public Safety'), delays in the procurement and delivery of communications and ADP equipment, and delays in Nomad aircraft becoming operational for use in customs coastal surveillance.

Recoveries under the function were $4 million more than estimated and resulted from relatively small increases in a large number of items, including rents and survey fees collected by the Department of Administrative Services, and the miscellaneous revenues of the Departments of Finance and Business and Consumer Affairs and of the Taxation Office.

Payments to or for the States, the Northern Territory and Local Government Authorities nec- up $10 million

This function includes outlays on natural disaster relief assistance; in accordance with past practice, no contingency allowance was made in the 1979-80 Budget for disasters that might occur during that year. In the event several disasters, including cyclones in Queensland and Western Australia and drought in Queensland, occurred after the Budget estimates were prepared and the drought in Western Australia continued. Payments made for relief and restoration expenses associated with these disasters were the main factor contributing to outlays under this function exceeding the Budget estimate.

Public Debt Interest- up $43 million

Significantly higher than estimated subscriptions to Treasury Notes and rates offered on them were the major factors in interest payments exceeding the estimate by $43 million. Because the interest liability for Treasury Notes is recorded at the time of issue, changes in the balance of net sales between these and other securities have immediate effect on interest payments.

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