The government’s Commission of Audit will look at extending “user pays” and encouraging individuals to provide for themselves, in an inquiry directed to achieving a sustainable surplus within a decade.
The five member commission is chaired by Business Council of Australia president Tony Shepherd and includes former Howard government minister Amanda Vanstone, former Treasury secretary Tony Cole, former Finance department secretary Peter Boxall and former director-general of the Western Australian department of Industrial and Regional Development Robert Fisher.
It will examine every area of federal government and the “architecture” of federal state relations.
Apart from ticking off on the commission, cabinet today also approved increasing Australia’s debt ceiling from $300 billion, which will soon be hit, to a large $500 billion. Legislation for the rise will be brought in when Parliament commences next month.
Announcing the new ceiling, Treasurer Joe Hockey said: “We need to move quickly to deal with this, particularly in the wake of what’s been revealed in the United States in recent times.
“We need to put it beyond any doubt and we do not want to have to revisit this issue again.”
The commission, the first since that set up by the Howard government in 1996, is on a breakneck timetable. It is to provide an initial report in late January and a second by end March. Some of its recommendations will be considered for the May budget.
“Every area of government will be examined. There are no restrictions,” Hockey said.
It is charged with identifying waste, unnecessary federal-state duplication, and areas where the Commonwealth should not be involved, as well as recommending how to improve the efficiency and effectiveness of delivering services and policy advice.
Its aim is for savings that would deliver a surplus of 1% of GDP before 2023-24.
The first phase will look at federal-state roles and overlap, and areas from which the Commonwealth might retreat. The commission’s proposals will feed into the coming White Paper on the Reform of the Federation.
Searching for greater efficiency in spending. the commission will look at the scope for further privatisation. Only Medicare Private has been identified for sale by the government so far.
Among issues the commission is asked to review are “savings and appropriate price signals – such as the use of co-payments, user-charging or incentive payments – where such signals will help to ensure optimal targeting”.
As well, the commission will report on the long term sustainability of the budget position, identifying ways to address the risks “including by introducing appropriate incentives to encourage self-provision of services by individuals”.
Phase two of the inquiry will examine the condition and adequacy of Commonwealth infrastructure. It will also look at how to improve the assessment of programs and agencies and to strengthen Commonwealth budgeting arrangements.
Vanstone was a minister from 1996 to early 2007 when she left for a diplomatic appointment. She served in a range of portfolios, including employment and education, and immigration.
Early this year the Business Council produced a sweeping blueprint for budgetary and other reforms. In the run up to that plan Shepherd said: “The plan we’re putting forward for Australia requires political leaders who are prepared to lose their jobs to get things done.”
In a downgrading of bureaucratic influence, the BCA’s chief economist Peter Crone is to head up the secretariat for the commission. The secretariat will be based in the Finance Department.
The commission may hold public and private hearings, receive submissions from stake holders and the public and directly liaise with government departments.
Finance Minister Mathias Cormann said “Labor left a budget in very bad shape”.
The two ministers answered questions on the announcements for only about six minutes, with Hockey appearing anxious to get away.
Shadow finance minister Tony Burke said the government was taking the debt ceiling to half a trillion dollars and asking parliament to vote on it before it saw the mid year budget update.
He said Hockey’s plans on cuts and debt ceiling were a million miles away from what was put in the election.
BCA CEO Jennifer Westacott said: “The Australian community expects government to deliver value for money and to ensure that we are living within our means as a country. We expect them to keep our economy resilient against global volatility, and to plan and provision for the future.
“These are the perspectives people in business bring to their roles every day, and the appointment of Tony Shepherd to head up the Commission of Audit will ensure they are brought to bear on this important national endeavour.”
She called on the opposition to give the commission bipartisan support.