Coalition plans new budget rules to lay 'credible' path to surplus and tackle debt Treasurer Joe Hockey is says he's confident the US will dodge the catastrophic impact of a debt default. Courtesy Sky News Treasurer Joe Hockey wants new budget rules to lay credible path to surplus and deal with debt. JOE Hockey has revealed he will implement new budget rules to protect Australia against a "volatile" global economy, but says he is confident the United States will dodge the catastrophic impact of a debt default. Speaking to Sky News' Australian Agenda from Washington, the Treasurer said the Coalition had to "stop the haemorrhaging in the budget and we will make the decisions to stop the haemorrhaging in the budget." Mr Hockey said the Coalition would lay down a "credible" path back to surplus and a plan to tackle Australia's debt. "Now, that means we will have a new set of fiscal rules which we will announce in due course," he said. Labor promised a series of fiscal rules in recent years, including a two per cent limit on the growth in government spending each year, but struggled to meet the targets. Mr Hockey has yet to indicate whether the Coalition would pursue similar goals. The Treasurer also confirmed the Coalition would need to lift Australia's debt limit, from $300 billion, to "prevent Australia breaching the debt limit before Christmas." Parliament is due to return in mid-November. After Labor released its economic statement on the eve of the election, Mr Hockey demanded the government recall parliament to raise the debt ceiling. Gross debt is forecast to hit $370 billion by June 2017. Mr Hockey said the Coalition would soon announce its terms of reference for its commission of audit, promised at the election. He said he would "go through every area of expenditure across the Commonwealth to get best value for taxpayers." He said the government also needed to put in place medium and long-term structural reforms to grow the economy and inoculate "us against what will be a fairly volatile period over the next few months and perhaps the next three to four years." At some stage, the US will ease back on its policy of quantitative easing, and Mr Hockey said this would have ramifications for Australia. There hasn't been this sort of withdrawal from the printing of money before and therefore no-one is quite sure where it is going to go, so what I can say is there will be volatility in the global economy over the months, and maybe the near future in terms of years. "That's why we have to focus on medium term structural reform, focus on the longer term issues that help to build a more resilient economy, rather than focus on the day-to-day volatility that's reflected in equity markets," he told Sky. Mr Hockey, who has had held a round of meetings in Washington including with the heads of the US Federal Reserve, International Monetary Fund and World Bank, also expressed optimism the US could resolve its debt crisis. He said while the negotiations between the House Republicans and Barack Obama had ended, talks were now being held between Senate Democrats, Senate Republicans and the White House. US Senate in talks to reach deal on fiscal crisis America cannot default. The impact of a default by the United States' government is catastrophic for the global economy. The impact of it would be felt immediately. I am absolutely confident that having spoken to a number of congressmen and senators from both sides of the House, I'm confident that there will be a resolution. It might not be pretty but it will a resolution and America will not default. The US needs to increase its debt limit to meet financial commitments including funding the US government, but elements of the Republican Party want measures tacked on to the debt bill, including repealing President Obama's watershed 2010 healthcare laws. Asked about the tactics of the so-called "Tea Party" Republicans, Mr Hockey said they were "engaging in extreme tactics" and the lesson was to understand that it should never get to this point because "America can no longer afford its lifestyle." The message for us is you have to live within your means. The message is you need to undertake budgetary reform before it's too late, before you get to this point. He did not see any parallels between the Australian parliament and the behaviour of the US Congress in relation to the debt limit.