5The principles of sound fiscal management

#### 5 The principles of sound fiscal management (1) The principles of sound fiscal management are that the Government is to: (a) manage financial risks faced by the Commonwealth prudently, having regard to economic circumstances, including by maintaining Commonwealth general government debt at prudent levels; and (b) ensure that its fiscal policy contributes: (i) to achieving adequate national saving; and (ii) to moderating cyclical fluctuations in economic activity, as appropriate, taking account of the economic risks facing the nation and the impact of those risks on the Government’s fiscal position; and (c) pursue spending and taxing policies that are consistent with a reasonable degree of stability and predictability in the level of the tax burden; and (d) maintain the integrity of the tax system; and (e) ensure that its policy decisions have regard to their financial effects on future generations. (2) The financial risks referred to in paragraph (1)(a) include risks such as: (a) risks arising from excessive net debt; and (b) commercial risks arising from ownership of public trading enterprises and public financial enterprises; and (c) risks arising from erosion of the tax base; and (d) risks arising from the management of assets and liabilities.