The Commission of Audit was always going to be an exercise in ideology. We knew from the Terms of Reference and from the heavy influence of the Business Council of Australia.

The Commission’s recommendations confirm this. So, we think it’s time for the People to audit the auditors – will you help us?

Why, for example, do their recommendations include changes to the minimum wage when they were asked only to consider government expenditure?

Why, for example, do their recommendations include abolishing universal health care when federal health spending as a percentage of GDP has been stable over the past 15 years?

Why, for example, do the Commissioners acknowledge that superannuation tax concessions “disproportionately benefit higher income earners” yet their recommendations ignore this and instead focus on means-testing the aged pension?

If the federal government adopts even some, if not all, of the Commission’s recommendations it will fundamentally change the fabric of Australian society. We must change the narrative: debt is not a burden for future generations, poor health outcomes and poor educational attainment are. 

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P.S. We are hard at work producing our own report “The People’s Commission of Audit”. Please consider supporting us – your donations make such work possible.

1. It’s not a spending problem, it’s a revenue problem
2. The Americanisation of health and education
3. Gains for business
4. TAI talks Commission of Audit in the Media

It’s not a spending problem, it’s a revenue problem

The federal budget has a revenue problem, not a spending problem. Yet the Commission of Audit was tasked only with examining government expenditure.

How can an audit examine the integrity of the budget position when it ignores the elephant in the room: that Australia is one of the lowest taxing governments in the OECD?

The government currently collects tax at a rate well below average as a percentage of GDP. If John Howard had relied on our current level of taxation he would have run deficits in 10 of the 12 years he was in office!

Tasked with achieving savings sufficient to deliver a surplus of one per cent of GDP prior to 2023-24, without the option of looking at the taxation system, the Commission’s recommendations were always going to be savage.

The Commission has recommended unprecedented cuts to government spending aimed mainly at middle and low income households. It hopes to save between $30 and $40 billion per year by 2017-18.

While the wealthy and big corporations get off lightly those on welfare payments such as the aged and disability pensions, unemployment benefits, sole parents and carer payments will see the growth rate of their income cut if the Commission’s recommendations are adopted.

Hardest hit are those on the minimum wage who will see their wages fall in real terms by one per cent each year over the next 10 years. This is despite the fact that the minimum wage has nothing to do with government spending. It is a topic on which the Business Council has been vocal though.

If these recommendations are implemented in full it would be hard to find any low-income family that would not be hurt by these changes.

The Commission has made some recommendations around means-testing of the pension, the health care card and family tax benefit which will affect higher income households but most of the pain of the cuts will be felt by middle and low income families.

The Commission has shown that trying to bring down spending to match low levels of revenue can only be done by cutting into some of what Australian’s consider to be the bedrock of government services, including universal health care and education as well as caring for our elderly and disabled. If these savage cuts are what is required to move the budget to surplus then surely that is confirmation that the budget has a revenue problem, not a spending problem.

The Americanisation of health and education

Despite federal health spending as a percentage of GDP being stable over the past 15 years and Australia having one of the most efficient health systems in the world, the Commission has suggested abolishing universal health care and adopting a user-pays system. This would include compulsory private health insurance and $15 co-payments for GP visits.

There are two reasons for taxing something; either you want to discourage it or you want to raise revenue. Discouraging people from visiting the GP will create long term health and financial issues. Evidence shows that catching problems early gives better health outcomes and saves the government money in the long run. But perhaps when you’re considering using sickness as a revenue base, prevention isn’t better than cure.

The Commission has also suggested big changes to higher education with higher interest rates on HELP debts as well as repayment starting at the minimum wage (made even crueller by the fact that they have recommended cutting the minimum wage in real terms). University students would also pay more and the government pay less with student contributions to their degrees increasing from 41 to 55 percent. They have also suggested university fees for Bachelor degrees should be fully deregulated allowing universities to charge whatever they want.

It has also recommended that the federal government have no role in vocational education and training. This includes defunding all training programs and support for apprentices.

All these proposed changes push Australian education towards a US-style user-pays system. There are already user-pays provisions in the Australian education system but Australians rightly believe that education should be based on merit and open to all people regardless of the wealth of their parents. These changes would help to limit education to the wealthy and prevent social mobility. Over the long term they would make Australia a less equitable country.

 Gains for business

The Commission has recommended a raft of privatisations including Australia Post, Snowy Hydro, Defence Housing Australia, the NBN Co. and even the Royal Australian Mint. It has also recommended more outsourcing of government services to the private sector including the payment of welfare.

This is corporate Australia’s chance to buy into profitable government businesses and to sell more services to the public sector.

What was not in the recommendations is also interesting. Fuel subsidies to businesses have not been touched despite the fact that they now amount to almost $6 billion per year. With few cuts to corporate welfare and a swag of privatisations and outsourcing of government services the biggest winners from these recommendations is business.

We knew that the former President of the BCA would deliver for his members, but not even we thought his determination to do so would be so transparent.

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TAI talks Commission of Audit in the Media

The Institute provided expert analysis immediately following the release of the Commission of Audit. For a better perspective of the Audit and the impacts it could have on our country, you can watch our Senior Economist, Matt Grudnoff on ABC News 24 immediately following the release of the Audit. Matt was also on Radio Adelaide this morning, you can listen here. Ben Oquist, TAI’s Director of Strategy provided some balance to the Sydney Institute on The Drum. Richard Denniss provided excellent analysis on ABC News 24 Panel.