Economics Government in Action

Economics Assignment- Government in Action by Amin Lalani
Commonwealth Government Budget
The Commonwealth Budget is an official document presented in May each year, that sets out the government's revenue and expenditure plans for the coming financial year. By varying its intended expenditure (G) and revenue (T), the government can influence the overall level of economic activity, and have a significant influence on the level of inflation and unemployment.
Fiscal Policy
Fiscal policy is a macroeconomic policy that can influence resource allocation, redistribute income and reduce the fluctuations of the business cycle. Its instruments include government spending and taxation and the budget outcome.
Objectives of fiscal policy include:
  * Stabilising the level of economic activity
  * Maintaining low inflation
  * Reducing the level of unemployment and achieving general policy goals relating to the distribution of income and Australia's place in the global economy.
Sources of revenue
Commonwealth Government's revenue comes from tax and non-tax revenue. 92 per cent of the revenue comes from taxation sources which include:
  * Personal income tax
  * Company tax
  * Goods and Services Tax
  * Excise duty (imposed on the producers of certain goods)
  * Custom duty (imposed on importers of goods)
  * Other tax revenue
Non-tax revenue raises 8 per cent of total government revenue which includes
  * Profits from government enterprise
  * Interests, dividend and royalties paid to the government
Areas of government expenditure
The largest contributors to growth in spending over the period   were social security and welfare, and health. Together, spending on these items accounted for over one half of the growth in total spending over the period 2012-2013.
Social security and welfare spending contributed on third of spending growth of $132 billion in   2012- 2013 and contained four of the major program contributors to overall spending...