MIL-Evening Report: Beyond the Spin, Beyond the Handouts, Here’s How to Get a Handle…
In just three weeks, some of us will find ourselves delving into a sea of budget papers on the night they’re released. For most, however, the treasurer’s announcement during the budget speech or a skim through the budget’s summary document—often referred to as the “glossy”—will be the main source of information. These provide a neatly packaged insight into the government’s financial plans, aligning precisely with what the government wishes the public to know. But for those seeking a deeper understanding of the government’s intentions and commitments, there is a more revealing source hidden within the main budget document, around page 87.
Established by the Charter of Budget Honesty Act of 1998, this section is a testament to Peter Costello’s drive for financial transparency. While initially envisioned as a means to scrutinize previous governments’ financial management, the Act evolved to promote accountability in government spending and budgeting strategies. One of the key features of this legislation is the requirement for the publication of a fiscal strategy statement—a critical document that outlines the government’s financial strategy and objectives.
The fiscal strategy serves as a self-imposed examination question, asking, “Given what we aim to achieve with our budget, how do we plan to accomplish it?” This approach has proven remarkably effective in encouraging governments to articulate and organize their financial strategies, thereby making their budgets more purposeful and comprehensible to the public.
Over the years, the fiscal strategy statement has undergone several amendments, reflecting changing priorities and economic conditions. For example, Treasurer Jim Chalmers has indicated plans to update the strategy in the upcoming budget to shift focus from inflation to promoting economic growth. This alteration will offer insight into the government’s prioritization and strategic planning.
Historically, these statements have outlined major shifts in fiscal policy. Initial strategies focused on achieving a budget surplus and maintaining tax rates, later evolving to address spending ratios and tax burdens. The Coalition government’s 2014 budget introduced a commitment to reducing payments to GDP ratio and aiming for a surplus. By 2020, in response to COVID-19, the strategy adapted to prioritize economic support over immediate deficit concerns, demonstrating the government’s flexibility in addressing unprecedented challenges.
The 2021 update marked a significant shift, committing to sustained spending until unemployment levels were significantly reduced, a strategy that has contributed to achieving budget surpluses and a low unemployment rate of 3.5% – a 50-year low. This decision is a testament to the impact of strategic fiscal planning on economic health and employment rates.
As we approach the upcoming budget announcement, understanding the fiscal strategy statement becomes crucial. It offers a clear view into the government’s long-term financial objectives beyond the immediate figures and announcements. By examining this statement, one can gain a comprehensive understanding of the government’s economic priorities and the mechanisms in place to achieve them, providing a more nuanced perspective on the budget’s impact on the country’s future.
