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Budget Paper No. 1

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Budget Paper No. 1 Statement 9: Statement of Risks A range of factors may influence the actual budget outcome in future years. The Charter of Budget Honesty Act 1998 requires these factors to be disclosed in a statement of risks in each Budget and Mid-Year Economic and Fiscal Outlook. This Statement outlines general fiscal risks, specific contingent liabilities and specific contingent assets that may affect the budget balances. Contents Risks to the Budget — Overview ............................................................... 249 Specific risks to the Budget ......................................................................................... 251 Agriculture, Water and the Environment .................................................. 258 Fiscal Risks ................................................................................................................. 258 Contingent liabilities — unquantifiable ........................................................................ 258 Attorney-General’s ..................................................................................... 259 Fiscal Risk ................................................................................................................... 259 Contingent liabilities — unquantifiable ........................................................................ 260 Defence ....................................................................................................... 260 Fiscal Risk ................................................................................................................... 260 Significant but remote contingencies .......................................................................... 261 Contingent liabilities — unquantifiable ........................................................................ 261 Contingent liability — quantifiable ............................................................................... 262 Education Skills and Employment ............................................................ 262 Fiscal Risk ................................................................................................................... 262 Contingent liability — quantifiable ............................................................................... 263 Statement 9: Statement of Risks | Page 245 Finance ........................................................................................................ 263 Significant but remote contingency ............................................................................. 263 Contingent liabilities — unquantifiable ........................................................................ 263 Foreign Affairs and Trade .......................................................................... 267 Fiscal Risk ................................................................................................................... 267 Significant but remote contingency ............................................................................. 268 Contingent liability — quantifiable ............................................................................... 268 Health .......................................................................................................... 269 Contingent liabilities — unquantifiable ........................................................................ 269 Contingent asset — unquantifiable ............................................................................. 271 Home Affairs ............................................................................................... 272 Fiscal Risk ................................................................................................................... 272 Significant but remote contingency ............................................................................. 272 Contingent liabilities — unquantifiable ........................................................................ 272 Industry, Science, Energy and Resources................................................ 274 Fiscal Risk ................................................................................................................... 274 Significant but remote contingencies .......................................................................... 274 Contingent liabilities — unquantifiable ........................................................................ 276 Contingent liability — quantifiable ............................................................................... 278 Infrastructure, Transport, Regional Development and Communications ........................................................................................ 279 Fiscal Risk ................................................................................................................... 279 Significant but remote contingencies .......................................................................... 279 Contingent liabilities — unquantifiable ........................................................................ 281 Contingent liabilities — quantifiable ............................................................................ 284 Prime Minister and Cabinet ....................................................................... 284 Contingent liability — unquantifiable ........................................................................... 284 Contingent liability — quantifiable ............................................................................... 284 Treasury ...................................................................................................... 285 Fiscal Risk ................................................................................................................... 285 Significant but remote contingencies .......................................................................... 285 Contingent liabilities — unquantifiable ........................................................................ 287 Contingent liabilities — quantifiable ............................................................................ 289 Veterans’ Affairs ......................................................................................... 291 Fiscal Risk ................................................................................................................... 291 Page 246 | Statement 9: Statement of Risks Government loans ...................................................................................... 292 Loan Items .................................................................................................. 296 Agriculture, Water and the Environment ..................................................................... 296 Education, Skills and Employment .............................................................................. 298 Foreign Affairs and Trade ........................................................................................... 299 Health .......................................................................................................................... 300 Industry, Science, Energy and Resources .................................................................. 300 Infrastructure, Transport, Regional Development and Communications .................... 301 Prime Minister and Cabinet ......................................................................................... 302 Social Services ............................................................................................................ 302 Treasury ...................................................................................................................... 303 Statement 9: Statement of Risks | Page 247 Statement 9: Statement of Risks Risks to the Budget — Overview The forward estimates of revenue and expenses in the 2021-22 Budget incorporate assumptions and judgments based on the best information available at the time of publication, together with a range of economic assumptions and other forecasts and projections. Events that could affect fiscal outcomes include: • changes in economic and other parameters, including the path of recovery from the COVID-19 pandemic in both Australia and overseas, as well as other global economic developments more broadly • matters not included in the fiscal forecasts because of uncertainty about their timing, magnitude or likelihood • the realisation of contingent liabilities or assets. The revenue and expense estimates and projections published in the 2021-22 Budget Papers are based on a range of economic and other parameters. These parameters are consistent with the domestic and international outlook detailed in Statement 2: Economic Outlook. While the economic recovery in Australia is well underway, there are still significant international and domestic risks, including those associated with the COVID-19 pandemic, and the outlook remains highly uncertain. Economic outcomes that differ from the parameters used in the Budget represent a material risk to the Budget estimates. Statement 8: Forecasting Performance and Scenario Analysis examines the impact on receipts and payments of altering some of the key economic assumptions underlying the Budget estimates. A significant portion of government expenditure is for demand-driven programs. Outcomes for these programs could differ from the estimates and projections due to changes in economic circumstances and other factors. For example, differing levels of unemployment will mean expenditure for related social services
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