This is a submission to the Labor Party’s Better Budgeting discussion paper.

The ultimate goal of government spending must be to improve community living standards through the provision of crucial services such as education and health care, public infrastructure, national defence and a social safety net to protect the most vulnerable.

However, the nation’s resources are not unlimited, and improving living standards requires scarce resources to be allocated as effectively as possible. To get the best outcomes for both our economy and our society, government spending must deliver net social benefits.

Resource constraints cannot be addressed by raising taxes to fund additional spending. Higher taxes do not fix inefficient spending and will inevitably impair income growth – and revenues for essential services – over the medium to long term.

In the absence of competitive market pressures, ensuring net benefits for the community requires thorough and transparent evaluation of programs and accurate and reliable accounting of where money is spent.

Good budget processes are central to achieving this. The submission makes five recommendations for strengthening budget processes and accountability including clear fiscal goals and rules, thorough and transparent evaluation of programs and increased independent oversight of the government’s fiscal performance.

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