Fiscal Policy is the federal government policy which influences the economy through the budget by changes in tax， welfare payments and government spending (Swift 2003). The main objectives of fiscal policy are achieving Smooth fluctuations in Aggregate Expenditure and influence the long-run growth in real GDP (Sloman & Norris 2008).  For example， when an economy is moving into recession， Federal government would provide an economic stimulus by increasing expenditures or reducing taxes through change the fiscal policy. This would maintains the level of household income， and maintain the level of consumption， therefore， people can continue purchasing goods and services from tourism and hospitality industries.  
Monetary policy is handled by Australian’s central bank i.e. Reserve Bank Australia (RBA)， and concerned with the management of the money supply， interest rates and financial conditions (Moyniham & Titley 1993). The objectives are monetary policy are achieving high employment， sound economic growth and low inflation which can be done through the purchase or sale of government securities and controlling the money supply(Sloman & Norris 2008). For example， during periods of recession， RBA would lower interest rates leaving more cash to stimulate the economy. This would decrease the cost of borrowing， interest payment and loans by businesses， and encourage people to spend rather than save because of low interest rates. Therefore， tourism and hospitality industries can continue develop by using debt finance at low interest， and benefit from the cash flow which is being injected into the economy.
In addition， federal government can change government revenues such as goods and services tax (GST)， or change government expenditure on public services to affect the Australian tourism and hospitality industries.  For example， if federal government increase GST， it will also increase the prices of goods and services， therefore， fewer consumers will purchase goods and services provided by tourism industries.  In addition， if federal government increase investment on public and tourism services， such as increase number of national parks and tourism infrastructures will attract more international visitors to Australian， and stimulate domestic travel. Therefore， tourism and hospitality industries can benefit from more goods and services purchased by visitors and increase revenue.
State governments can also affect the Australian tourism and hospitality industries， by changing state revenues through payroll tax， stamp duty and miscellaneous taxes， or change state expenditures on transport and communications， recreation and culture (Sloman & Norris 2008).  For example， if state government increases payroll tax， this will decreases level of consumptions， as people will have less income.  Therefore， people may only buy what they need， and decrease leisure activities， the number of people purchasing goods and services from tourism and hospitality would decrease. In addition， if state government invest more money onpublic transport and increase recreation places， such as public parks， this would increase number of domestic tourists and increase level of consumptions.
Local government can affect the Australian tourism and hospitality industries as well， which can be done through changing local government expenditures on local roads， recreation and culture， community amenities and town planning. For example， local government can host various local events to attract tourists to a particular destination， which can increase number of tourists to the destination， and increase sales， job opportunities for the local tourism and hospitalities businesses.