MEDIA RELEASE: Richard Goyder right to call for fiscal rules

The call by Wesfarmers chief executive Richard Goyder for a rigorous framework and set of rules for responsible fiscal policy is welcome, the Centre for Independent Studies (CIS) says.

CIS Senior Fellow Robert Carling says Mr Goyder’s comments — that parliament should be subject to the same financial disciplines and constraints as are households and businesses, and that formal debt or spending limits on government may be appropriate — align with the Centre’s own analysis.

“In the  report ‘Fiscal Rules for Limited Government: Reforming Australia’s Fiscal Responsibility Legislation’, we reviewed the Howard government’s Charter of Budget Honesty and found it had proven inadequate to the task of subjecting fiscal policy to the rule of law and a framework consistent with long-term fiscal sustainability and high standards of transparency and accountability,” Mr Carling says.

“We proposed a new Fiscal Responsibility Act to provide a de-politicised framework for fiscal policy in which the budget balance, the level of net debt, and the revenue and expenditure shares of GDP are subject to legislated and enforceable rules designed to ensure the long-term sustainability of fiscal policy and restrain the size of government.

“For example, we proposed capping the Commonwealth revenue and expenditure shares of GDP at 25%.

“We also proposed a new body, the Fiscal Commission, to enhance the independence, transparency and accountability of the budget process.

“Events since 2009 have only served to reinforce the need for a more rigorous and disciplined framework for the conduct of fiscal policy,” Mr Carling says.

Robert Carling is a Senior Fellow in the Economics program at The Centre for Independent Studies, and co-author with Stephen Kirchner of the report Fiscal Rules for Limited Government: Reforming Australia’s Fiscal Responsibility Legislation, CIS, 2009.