This year’s budget could be a watershed for Australia but it requires the government to do more than stay on the same path of fiscal consolidation that it outlined previously.
Australia’s current situation suggests we face a difficult conundrum. We need to adopt a new, more sustainable approach to fiscal discipline at a time when a range of factors, both global and domestic, are conspiring to make this task ever more difficult.
The challenge for the government in this budget will be finding the structural savings to underpin longer-term fiscal discipline without detracting from programs that enhance the productive capacity of the economy.
This submission, titled BCA Budget Submission 2012–13: Preparing for a Better Future, is backed by a detailed report from Mercer – ‘Back to Policy Fundamentals’ – recommends the development of a set of clear medium-term fiscal policy rules to help Australia’s economy stay strong in the face of global uncertainty and domestic challenges already underway.
A second set of recommendations concerns the essential, parallel objective of growing an economy that allows Australia to get ahead of these challenges and realise opportunities from our place in the fastest growing region of the globe.