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2010-10-13

An independent national fiscal institution needed

Comments on Peter van Onselen “Political debate ignores role of debt in development”, 13/10/2010, http://www.theaustralian.com.au/business/political-debate-ignores-role-of-debt-in-development/story-e6frg8zx-1225937860456
The current political and institutional arrangements are the main source of the problem you have identified in this post.

It seems there should be a rebalance between political government and more independent institutions that have adequate resources and the capacities to look into longer term and policies, as well as the evaluation of current and past policies for their alignment with longer terms issues.

What that means is we should consider and establish an independent institution similar to RBA in terms of independence from the day of the government to look after fiscal policy matters and policy options and effects.

It is a new thinking but has been long overdue.

PS: politics in western countries including Australia are mostly focused on shorter terms due to the political processes and the election cycles.  That is a fundamental weakness with the current state of democracy.

To balance that and to take account the importance of both democracy and longer term national interest, there should be some institutions which look after long term issues and policies and which are independent of the government and politics which are of short term in nature.

The independent judicial system in western countries is a good example.  A number of independent central banks in terms of monetary policies are another.

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