Charter of Fiscal Responsibility
The Financial Accountability Act 2009 requires the Treasurer to prepare and table in the Legislative Assembly a Charter of Fiscal Responsibility giving details of the Government’s fiscal objectives and the fiscal principles that support those objectives.
The Treasurer must report regularly to the Legislative Assembly on progress the Government has made against the outcomes stated in the Charter.
The fiscal principles of the Queensland Government are broadly based around three themes (objectives): fiscal sustainability; a competitive tax regime; and managing the State’s balance sheet.
Fiscal Sustainability
It is appropriate for governments to borrow to fund capital investment as the investment benefits users and, society more generally, over the life of the asset. However, it is not sustainable for governments to borrow to fund recurrent operating expenses as the repayment of debt will be borne by future taxpayers at the cost of other government services or through higher taxes.
Principle: In the General Government sector, meet all operating expenses from operating revenue (where operating revenue is defined as total revenue from transactions and operating expenses are defined as total expenses from transactions less depreciation).
In this financial environment, fiscal discipline is important – expenditure needs to be restrained.
Principle: Growth in own-purpose expenses in the General Government sector to not exceed real per capital growth.
Governments need to run operating surpluses to ensure the structural soundness of their spending decisions, to buffer them against unexpected events and to allow them to invest in infrastructure without having to rely solely on financial markets.
Principle: Achieve a General Government net operating surplus as soon as possible, but no later than 2015-16.
Competitive Tax Regime
While governments should raise sufficient revenue to meet the service and infrastructure needs of its people, it is important that business has a low cost environment, to promote economic development and jobs growth.
Principle: Maintain a competitive tax environment for business.
Managing the State’s Balance Sheet
It is important for governments to maintain a strong balance sheet to provide stability, flexibility and the capacity to deal with any emerging financial and economic pressures.
Principle: Stabilise net financial liabilities as a proportion of revenue in the Non-financial Public Sector.
The State’s policy of setting aside funds to meet future liabilities and reinvesting all earnings provides the capacity to manage cycles in investment markets without affecting the Government’s ability to fund services to the community.
Principle: Target full funding of long-term liabilities such as superannuation in accordance with actuarial advice.
Last reviewed 18 August 2009
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