Recommendations from the federal government’s Commission of Audit could see Australians paying significantly more for services.
(Transcript from World News Radio)
The five kilogram report includes 86 recommendations designed to return the budget to a surplus of one-per cent of Gross Domestic Product by 2023/24, meaning budget cuts of up to $70-billion a year.
But as Thea Cowie reports, Australians will have to wait until the May 13 budget to find out which of the commission’s recommendations will be implemented.
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According to the report, Australia’s fiscal situation is far weaker than it should be, and the long-term outlook is ominous due to an unsustainable increase in spending commitments.
The commission provides a roadmap for saving government coffers up to $70-billion per year within ten years.
But Federal Opposition leader Bill Shorten says Australians should be worried.
“This report is a blueprint of Tony Abbott’s broken promises for his Budget. This is Tony Abbott’s plan to put up your taxes and to cut your services. It is a plan for cuts, not a plan for growth. If he gets his way, Tony Abbott will turn the most basic things in life – education, health care, support for older Australians, into a massive every day struggle for working families.”
Treasurer Joe Hockey is doing nothing to quell rampant speculation over which of the Commission’s recommendations will be implemented .
“This is not the Budget. This is a report to the Government, not of the Government. And we have carefully and methodically gone through the recommendations, there are a number of recommendations that would be described as courageous, to use a term familiar to some in Canberra. There are some recommendations that represent common sense. When you see our budget you’ll understand that we are focused on responding to the challenge in a measured and methodical way.”
The report focuses on reigning in the 15 largest and fastest growing areas of Commonwealth spending.
With Australia’s ageing population chewing up the greatest proportion of that spending, it recommends lifting the pension age to 70 by 2053, including the family home in the pension assets test, and increasing the superannuation preservation age to 62 by 2027.
Commission chair Tony Shepherd says the changes would be incremental and equitable.
“We’ve tried to do it on the fairest possible basis, so that those most in need certainly are covered and then there’s that lineball question of who’s advantaged and we’ve made calls on that and it’s up to the Government whether they accept that or not.”
The report calls for higher income earners to take greater responsibility for their health, by axing the private health insurance rebate and increasing the Medicare Levy surcharge to 3 or 3.5-per cent.
It calls for all patients to contribute to Medicare-funded services, with those on higher-incomes to make a $15 co-payment for their first 15 annual doctors’ visits, and $7.50 thereafter.
Concession-card holders would pay five-dollars and $2.50 thereafter.
Finance Minister Mathias Cormann agrees that Australians who can afford to pay more for services, should.
“Our goal is to replace the age of entitlement with the new age of opportunity, where in a stronger more resilient, more prosperous economy, everyone has the opportunity to get ahead. That’s why we’re so committed to repairing the budget mess we’ve inherited from our predecessors, that’s why we’re so committed to implement all of the policies to build a stronger more prosperous economy which we took to the last election.”
The report also calls for co-payments for all drugs included in the Pharmaceutical Benefits Scheme and for the National Disability Insurance Scheme to be rolled out more slowly.
There are also calls for greater private contributions to higher education and suggestions students should pay higher interest on loans.
And the commission wants the states to take full responsibility for school education policy and funding.
Families could be hit by the abolition of Family Tax Benefit Part B if recommendations are accepted, although single parent families would be compensated with a new supplement.
The Australian Greens’ deputy leader Adam Bandt says if fully implemented, the recommendations would increase inequality.
“This is a recipe for a divided Australia where the poor and low-paid workers are thrown to the wolves. The Commission of Audit is recommending 15,000 public servants lose their jobs through privatisations and cuts. For those workers who need the most help, for young workers, for single parents, for people with a disability they are beaten with a stick while the carrot is removed from them. The minimum wage will be steadily cut in real terms.”
The Commission is criticising the Paid Parental Leave scheme, calling for it to be capped at the average annual earning rate of about $57,000, rather than the current limit of $100,000 dollars a year.
It also calls for more money to be directed into a simpler child care support system.
Greens leader Christine Milne says there would be considerable voter backlash if all of the Commission’s recommendations are adopted.
“It is just wrong and it’s not the kind of country that we want to live in and I think what this is going to do is really sharpen people’s resolve to recognise they made a big mistake in getting behind the Abbott government.”
The Commission also suggests removing the link between Gross National Income and foreign aid spending, and withdrawing from certain international organisations with costly membership fees.
A decision on the future of the ABC and SBS is deferred by the Commission, with the report calling for further research to see if efficiencies and savings can be made without compromising services.
The cost of detaining and processing asylum seekers has been found to be the fastest growing government program over recent years with the annual cost of holding someone in onshore detention now $239,000.
The report states the government could reduce the cost to 2011-12 level of $179,000 largely by renegotiating contracts and reducing services to detainees.
The report recommends extensive consolidation of government bodies, including combining the Department of Immigration and Border Protection with Australian Customs and the Border Protection Service.
It recommends 10 bodies for privatisation in coming years, including Australia Post, Snowy Hydro Limited, and Defence Housing Australia.
Commission chair Tony Shepherd says the number of government bodies is staggering.
“With 900 bodies, 900 bodies – I nearly died, we couldn’t get a list of them all by the way, we’re not sure may even be more – all overlapping, duplicating, all giving advice, often conflicting advice, isn’t there a chance here we might rationalise those, and get some ministerial responsibility – that’d be a novel concept.”
In the area of Indigenous affairs, the commission recommends merging more than 150 Indigenous programs and activities into no more than six programs.
It says this would produce cost savings that could be redirected to education and training for Indigenous youth.
But the report suggests the Commission does not support Tony Abbott’s decision to incorporate Indigenous Affairs into the Department of Prime Minister and Cabinet.
Instead the document recommends establishing a separate agency for Indigenous Affairs within the next three years.
The commission recommends rationalising a further 30 indigenous bodies, amalgamating Indigenous Business Australia and the Indigenous Land Council, and axing the five-million dollar a year grant to the National Congress of Australia’s First Peoples.
The commission also recommends the budget include a 10 year outlook rather than the current four, and that each new spending commitment be evaluated in that timeframe.
It also backs the government’s review of the interaction between the commonwealth and states.
Echoing Arnold Schwarzenegger’s famous Terminator catchcry, Belgian-born Finance Minister Mathias Cormann says the government won’t release its response to the Commission of Audit until it releases its budget.
“The government’s response to the Commission of Audit response will be the budget on the 13th of May. I’ll be back with the Treasurer.”