Commission of audit recommendations released
May 01, 2014
ENDING universal healthcare, selling state-owned assets and ditching the Prime Minister’s signature paid parental leave scheme are among a series of drastic recommendations made in today’s commission of audit report.
The $2.5 million report — commissioned by the Abbott government — also recommended cutting 15,000 public sector jobs and instigating a $15 charge to see the doctor amid a list of 86 recommendations designed to save the government $70 billion a year and produce a one per cent budget surplus by 2023.
Some of the most significant recommendations include:
• End of universal health care and a $15 charge for doctors visits
• Cutting 15,000 public service jobs and selling state-owned assets
• Slower rollout of the NDIS and raising the pension age to 70, while including the family home in means testing for the aged pension.
• Abolish seven Commonwealth agencies, merge 35 and privatise nine
• Reject paid parental leave in favour of focusing on child care
• Strip the dole from young unemployed people who don’t move to areas with jobs and freeze the minimum wage for 10 years
• Premiers should have the power to decide income tax rates in their states
The report warns if Australia continued with “business as usual” we could face 16 years of consecutive budget deficits
— where the government spends more than they take in taxes and revenue — with net debt rising to $440 billion by 2023-24
Treasurer Joe Hockey said some of the recommendations will be ignored, but the ultimate reply will be on budget night when we find out what the government has in store.
“Some of this the government will not proceed with, others are clearly in the public domain for debate and discussion,” he said. “What this report proves is that we’ve inherited a mess.”
Keep reading for more on what the commission recommends:
FAREWELL UNIVERSAL HEALTHCARE
High income earners should be shut-out of full Medicare cover and into private insurance, in what would amount to the end of universal health care. And even low income earners would have to make “a small contribution” to their costs.
The commission wants a surcharge on all health costs and not just the $6 on GP services the Government is expected to announce in the Budget. The report states there should be a $15 surcharge for GP services up to safety net threshold, and $7.50 after that. Even concession card holders should pay $5 per service and $2.50 after the safety net threshold.
The private health insurance market should be reviewed to provide greater incentives for take-up. The commission said: “People on higher incomes should take greater individual responsibility for the cost of their health care. They are better placed to take out private health insurance and should be required to do so.”
MASSIVE PUBLIC SERVICE JOB CUTS
The report recommends 15,000 public servants face the axe as it claims there are too many middle managers paid between $120,000 and $147,000 a year.
It said the eight biggest departments should prepare to cut staff, with Tourism Australia and Austrade, which are part of the Department of Foreign Affairs singled out as wasteful.
It also listed another 42 government bodies to be abolished with more to be sold off or merged. Some of the biggest targets are Clean Energy Finance Corporation and Climate Change Authority.
SAY GOODBYE TO THE LOCAL POSTIE
The nation needs a leaner government with Australia Post and the Snowy River Dam among the assets recommended for sell off, and even processing of visas privatised.
It says 99 of the Commonwealth’s 194 authorities and agencies need “attention” with seven abolished, 35 merged with other bodies, nine privatised and the remainder consolidated or reviewed.
The report listed the core Commonwealth responsibilities were communications, Treasury, Finance, border control, the Attorney-General, foreign affairs and trade, and defence.
It urges the privatisation of 10 Commonwealth organisations including Defence Housing, the Royal Mint, the MPs’ taxi service COMCAR, NBN Ltd, as well as Australia Post, the Snowy Hydraulic Ltd and the Australian Rail Track Corporation.
The audit commission found Commonwealth spending is set to increase by $280 billion over the next 10 years unless changes are made. Some 70 per cent of the increase would come from 15 programs, such as the age pension.
“The commission recognises the unfairness of saddling today’s children with our debts,” said commission chairman businessman Tony Shepherd.
“With an ageing population there will be fewer people of working age to look after the retired.
“They should not inherit our debt as well as the burden of looking after us.”
BUT YOU MIGHT GET A NANNY
The report also rejects the Prime Minister’s “signature” $5 billion paid parental leave scheme and says the focus should be on child care.
It wants its costs pared back and the savings put into child care, including for in-house nannies.
Mr Abbott has had to compromise to keep his PPL option alive buy limiting the payout to a maximum possible of $50,000 for six months rather than his preferred $75,000.
But the commission of audit said the limit should be average earnings or about $29,000 over six months.
The savings should go to expanded child care assistance. The 1.5 per cent tax on big business proposed by Mr Abbott should go ahead so that the program is Budget neutral.
The recommendation is unlikely to be picked up by the Government but it will make it harder for the Prime Minister to defend his scheme.
The commission option supports the view of many parental and welfare organisations that high child care costs are a bigger problem for families than well paid maternity leave.
The report says the current child care subsidies should remain with 80 per cent paid for low income earners and a base of 50 per cent for all families. But it should include in-home care such as nannies currently not covered.
Recognising that access to child care is a fundamental for many women who are seeking to enter the workforce, the commission proposes that savings that arise from the commission’s recommendations on paid parental leave be redirected to fund this proposal to expand eligibility for child care assistance,” says the report.
DON’T EXPECT TO BLUDGE ON THE DOLE
The report calls for a leaner Commonwealth government, and in some cases that will be interpreted as a meaner government.
The commission report says young unemployed people should lose the dole if they don’t move to areas with jobs. It would help reduce the $10 billion paid each year to job seekers.
To create jobs it says the minimum wage should be set at 44 per cent of average weekly earnings effectively frozen at its present rate — about $622 a week — for 10 years.
OR AS A STUDENT
Students should start paying back their HELP loans when they earn the minimum wage of $32,354 instead of the current threshold of more than $51,000, the Commission recommends.
FAMILY TAX BENEFITS UNDER FIRE
The commission urges the Government to alter the Family Tax Benefit A and B to better target those in need and to ensure the concessions don’t remove the incentive to find work.
It says there should be a new, single means test up to $48,837 taxable income a year, after which the benefits phase out.
Family Tax Benefit B should be abolished.
Sole parents with a child aged under eight should be covered by a new Family Tax Benefit A supplement of about $4200.
EXPECT TO WORK UNTIL YOU’RE 70
And it wants the family home included in means testing for the age pension, a measure the Government has rejected.
The audit commission wants the qualifying age for the pension to rise to 70 by 2053.
The Government has said it will not touch the age pension unless it gets a mandate at the next election.
STATES DECIDE THEIR OWN TAX
Premiers should have the power to decide income tax rates in their states with the Federal Government collecting the money and handing it over with no conditions attached.
That’s the radical proposal in the Commission of Audit report which would see a partial return to the days of state income taxes.
The commission believes the measure would give states greater control over the funds they get from the Commonwealth and create competition among the states to attract industry by altering tax rates.
The proposal could be a topic tonight as Premiers gather in Canberra for a dinner ahead of Friday’s Council of Australian Governments meeting.
The report recommends “substitution of a new untied source of revenue to the states” using income tax money to replace specific purpose grants from the Federal Government.
The idea is for 10 per cent of income tax revenue to go to the state governments to provide them collectively with revenue of about $25 billion a year.
The Federal Government would take $25 billion from the $45 billion it gives the states in tied grants.
Premiers would have the ability to ask the Federal Government to vary the income tax rate in their state to bring in less money. This lower rate could be used to promote the state to business and job creators, with states competing for them to set up within their borders.
“It would be possible to extend the incomer tax sharing arrangement by allowing the states to periodically adjust the surcharge rate (either up or down y several percentage points),” says the report.
“This has the potential to inject further competition tension within the Federation as states would have the autonomy to set rates and compete among themselves.”
The report’s authors believe Prime Minister Tony Abbott will be interested in the idea as he favours reducing Federal Government involvement in state affairs.