Within the current field of economics literature, there exists a vast scope for more research to be conducted on optimal fiscal policy. This thesis seeks to evaluate the efficiency of the previous coalition government's fiscal policy over the past eleven years, using data from 1964/65 until 2006/07. Our results indicate that the Howard Government's fiscal strategy did not move in accordance with the tax smoothing hypothesis. However, we do find evidence of a structural break of the tax smoothing surplus in the late 1980s.