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National fiscal consolidation and the challenge to Australian federalism

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  • Neil Warren

Abstract

Following failure of the stimulatory policies post the 2008 financial crisis and the resulting instability of the Euro, national fiscal consolidation with real sanctions for non-compliance has become a key focus of most governments as they address escalating budget deficits and rapidly rising public debt. The problem is that agreement by central governments to adopt national fiscal rules, whether self-imposed or imposed by some supranational institution, leaves unaddressed how such rules and sanctions should be adopted by (or imposed on) sub-central and local governments. To date, the primary focus has been on whether the encouragement given over recent decades to fiscal decentralisation has worsened public debt levels and made national fiscal consolidation by central governments more difficult. This article argues that what is missing from this discussion is attention to the intergovernmental institutional arrangements and how they and their reform are potentially crucial to both national fiscal consolidation and ensuring retention of the benefits of fiscal decentralisation.

Suggested Citation

  • Neil Warren, 2013. "National fiscal consolidation and the challenge to Australian federalism," The Economic and Labour Relations Review, , vol. 24(2), pages 161-180, June.
    • Handle: RePEc:sae:ecolab:v:24:y:2013:i:2:p:161-180
    DOI: 10.1177/1035304613482819
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    References listed on IDEAS

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    1. Charles Wyplosz, 2012. "Fiscal Rules: Theoretical Issues and Historical Experiences," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 495-525, National Bureau of Economic Research, Inc.
    2. Foremny, Dirk, 2011. "Vertical aspects of sub-national deficits: the impact of fiscal rules and tax autonomy in European countries," MPRA Paper 32998, University Library of Munich, Germany.
    3. Xavier Debrun & David Hauner & Manmohan S. Kumar, 2009. "Independent Fiscal Agencies," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 44-81, February.
    4. Robert Hagemann, 2011. "How Can Fiscal Councils Strengthen Fiscal Performance?," OECD Journal: Economic Studies, OECD Publishing, vol. 2011(1), pages 1-24.
    5. Mr. George Kopits & Mr. Steven A. Symansky, 1998. "Fiscal Policy Rules," IMF Occasional Papers 1998/011, International Monetary Fund.
    6. Feldstein, Martin, 2013. "Coordination in the European Union," Journal of Policy Modeling, Elsevier, vol. 35(3), pages 434-439.
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    Cited by:

    1. Caillan Fellows & Brian Dollery & Rui Marques, 2022. "An Evaluation of the Financial Sustainability of Remote Australian Local Councils," Economic Papers, The Economic Society of Australia, vol. 41(2), pages 110-127, June.

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    More about this item

    Keywords

    Federalism; fiscal consolidation; fiscal decentralisation; fiscal rules; public debt;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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