Expenditure Review Principles

The following principles are for application when reviews of government programs or activities are undertaken. When assessing programs or activities against the principles, evidence must be used to demonstrate whether or not they are the most appropriate, efficient and effective way to achieve the Government’s outcomes and objectives.

1) Appropriateness

  1. Activity is directed to areas where there is a role for government to fill a gap left by the market:
    1. social inclusion – government activity should address social inequity by redistributing resources in ways that improve opportunity and support for individuals, families and communities, allowing them to participate in the economy and society consistent with the Government’s social inclusion agenda; or
    2. market failure – government activity should address market failures by improving social and economic welfare through improved resource allocation, where the benefits of government intervention outweigh its cost (including in the provision of public goods, for example, in environmental sustainability, national security and defence); and
  2. Activity is undertaken by the most appropriate level of Australian government – whether expenditure is better undertaken by the Government or a lower level of government.

2) Effectiveness

  1. Activities to have clear and consistent objectives and be effective in achieving their objectives and represent value for money for the expenditure of taxpayer funds; and
  2. Activity involving tax expenditures or financial instruments (for example, guarantees, loans or investments) to demonstrate why an outlay program is likely to be less effective in achieving the activity’s objective(s).

3) Efficiency

  1. Government programs to be administered and delivered in the most efficient way achievable, taking into account both short and long term economic and fiscal consequences;
  2. Activity targeting market failure in one market to not unnecessarily reduce economic efficiency in other markets; and
  3. Consideration to be given as to whether part or all of the cost of a Government activity should be recouped directly from the beneficiaries of that activity.

4) Integration

  1. Government agencies to be able to work together effectively to consistently deliver the Government’s policy objectives within clearly defined lines of responsibility.

5) Performance assessment

  1. Government activity to be subject to robust performance assessment and measurement.

6) Strategic Policy Alignment

  1. Proposals to address whether the activity is consistent with the Government’s strategic long term policy priorities, in particular to areas that help sustain economic growth through improved productivity and participation.

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Contact for information on this page: reviews@finance.gov.au

Last updated: 19 October 2013