Appendix B: Costing conventions

The following are standard conventions for the preparation of fiscal costings:

Costings will focus on the effect of a policy on the Australian Government's key Budget aggregates (both cash and accruals). They will be produced in a manner consistent with normal Budget costing methodologies.
Economic data and forecasts used in the preparation of costings will be consistent with the pre-election economic and fiscal outlook report.
Costings will be on a current price basis.
Costs will be on a June financial year basis and costings will be provided for the current financial year and the following three financial years.
Full year, part year and one off effects (the steady state full year cost will be made clear) will be distinguished.
Costings will generally be best point estimates. However, in some cases the Secretaries may consider it appropriate to report ranges rather than point estimates.
Costings will be prepared in accrual and cash terms. For each policy, the impact on the fiscal balance and underlying cash balance (and headline cash basis as appropriate) will be reported.
Where relevant, the revenue and expense components of a policy costing will be identified separately (it is expected that most costings will typically involve revenue elements or expense elements only).
In undertaking costings, departmental expenses will be included where analysis of the policy shows that these are material. Existing programs/policies of a similar nature will be used as a guide. Costings will not generally account for the impact on Public Debt Interest payments, except in those circumstances outlined in Part 4 of these guidelines.
Assumptions used in costings will be based on the best professional judgment of the Secretaries.

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