The Federal Treasury and Finance Departments have been very influential in shaping the National Commission of Audit report released yesterday. It targets a lot of expenditure items and Government bodies that Treasury in particular doesn’t like, such as industry assistance programs and bodies such as Austrade, EFIC and Tourism Australia. Like the Commission of Audit report produced in Queensland last year, the report is an impressive guide to economic reform, but many of its policy proposals are so radical, they will never be implemented. In this way, it reminds me a lot of Fightback! from the early nineties.
The policy proposals in the report are generally soundly based and deserve thorough consideration. Equity considerations are obviously relevant and detailed modelling should be done of the impacts of proposals relating to Family Tax Benefits and childcare on household budgets. I made this and a number of other points in an interview with Pat Hession of Townsville ABC radio yesterday afternoon. Other points I made included:
- the Commission has done a good job of identifying permanent budget savings that are necessary if the Federal Government is going to correct its structural budget deficit (the fact it is spending too much relative to its revenue sources over the entire economic cycle);
- it is prudent to delay the rollout of the National Disability Insurance Scheme to ensure it’s done right and that cost blowouts are avoided;
- the Commission rightly recommended tightening the Paid Parental Leave policy so that the maximum payment is equivalent to average weekly earnings (just under $60,000 p.a.), rather than equivalent to $150,000 p.a. as originally intended or $100,000 p.a. as announced the other day; and
- there is definitely scope for large reductions in the federal public service, as the Government can, in my view, make greater use of information technology and out-sourcing to deliver essential services (and under the Commission’s recommendations, the Federal Government would have significantly fewer policy responsibilities).
Regarding the Commission’s idea of transferring some income tax power back to the States, I can’t say I’m too excited by it. Rather I’d prefer to see a much more radical overhaul of our system of Government (see Great new ANZSOG paper recommends two tiers of Government), removing one layer entirely – a policy proposal even less likely to get up than much of what is contained in the Commission of Audit report.