The “forward estimates” system evolved in Australia from the late 1970s through the 1980s,[1] and is used at both the Federal and State levels.
The forward estimates provide a mechanism for discipline within the budgeting process that enables a greater focus on strategic policy issues,[1] and provide a strategic framework for budgetary decision-making in the medium-term.
Forward estimates are based on assumptions about local and global economic parameters, and the process develops estimates for the level and composition of expenditures for three years beyond the budgeted fiscal year, with the assumption that existing policies are maintained, planned policies are implemented, and that the Government's planned objectives continue to be pursued.
The Charter of Budget Honesty Act 1998[5] places an obligation on the Government to regularly update the economic projections, including annually for the Budget economic and fiscal outlook report, semi-annually for the Mid-year economic and fiscal outlook report (MYEFO) and, prior to an election, for the Pre-election economic and fiscal outlook report (PEFO).
[6] At a Federal level, the Department of Finance is responsible for updating the forward estimates at regular intervals to reflect changes in economic parameters and the effects of government policy decisions.