Think tank wants to rethink budget strategy | Liverpool City Champion
The winner of the next federal election must consider a different approach to ensuring long-term fiscal sustainability.
Australia’s Committee for Economic Development is calling for comprehensive fiscal reform in the face of future headwinds, such as an aging population and the costs of climate change.
The think tank argues that strict fiscal targets are blunt tools that limit choices, leading policymakers to impose efficiency dividends, levies and other short-term savings that do not improve value for money. resources or long-term fiscal sustainability.
“The community then bears the burden of arbitrary caps and artificial constraints through longer-term inadequate services,” says Jarrod Ball, CEDA’s chief economist, in a new report.
“This has been seen all too painfully in areas such as the aged care system, hospital funding and higher education.”
He says the arbitrary fiscal targets and narrow focus on budget surpluses that have underpinned Australia’s fiscal approach do not guarantee fiscal sustainability and will come with significant economic costs.
“Several objectives of the current fiscal strategy have been there in one form or another since the early 2000s, although they have not been met, are not solid or are not adapted to economic environment,” Ball said.
Australia has now posted 14 consecutive deficits dating back to the global financial crisis of 2008-2009.
The government now faces a complex juggling act of unraveling needed stimulus during the pandemic and investing in long-term programs such as care for the elderly.
Other challenges for the budget are the growing financial risks of climate change.
In New South Wales alone, the state government predicts up to $17.2 billion in economic costs from natural disasters on average each year by 2060.
“Now is the time for the government to change its approach to ensuring Australia’s long-term fiscal sustainability,” Mr Ball said.
“This includes moving to an overview of the whole of Australia’s finance federation through a national intergenerational report.”
CEDA wants to task the Independent Parliamentary Budget Office with compiling such a report rather than the Treasury.
Among his to-do list, he also calls for a revision of the 25-year-old Budget Honesty Charter Act to increase budget control and transparency, while establishing a rolling timetable for assessing government programs.
Such a fiscal reset would complement the bipartisan agreement to review Reserve Bank of Australia operations after the election.
“Governments must now focus all their policy levers on building Australia’s capacity to develop into the future and to deliver the services that will support the health and well-being of Australians,” said Mr Ball.
Australian Associated Press