Need for independence

17 April 2015

Australian politicians have been urged to set up independent and non-partisan economic forecasting bodies to take the politics out of budgets and long-term planning.

The call from visiting US academic Professor Alan Auerbach, came during a two-day policy forum at Crawford School of Public Policy on intergenerational issues affecting the Asia-Pacific. The event was organised by the East Asian Bureau of Economic Research.

Professor Auerbach, from the University of California, Berkeley, said independent budget authorities could help expose gaps in logic and provide support and pressure for needed changes in fiscal policy, while avoiding some of the political controversies.

“Independent fiscal councils serve an important auditing role, rather than directly constrain or determine fiscal policy,” Professor Auerbach said. The US has a Congressional Budget Office to produce its own forecasts, including long-term deficit projections.

“Although the fiscal council is still a relatively new and evolving mechanism, it may well play an important role in helping countries undertake large and long-term fiscal adjustments”, Professor Auerbach said.

The move would see responsibility for major reports, such as the recent Intergenerational Report, taken out of Treasury or other policy departments and given to the Parliamentary Budget Office or a new independent authority.

The Parliamentary Budget Office in Australia was set up under the previous government, but it only produces costings for members of Parliament, and does not produce its own economic forecasts.

The latest Intergenerational Report, prepared by Treasury, was released in March.

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