A raft of potentially explosive spending cuts to government services
and payments have been recommended by the Federal Government's
Commission of Audit.
Family payments, child care, health care,
education, unemployment and pension payments, aged care and the National
Disability Insurance Scheme are all among those areas in the firing
line.
The audit also recommends swingeing cuts to industry
assistance and the public service and a radical shake-up of the way all
governments tax and do business.
Treasurer Joe Hockey has been quick to emphasise that the report is "not the budget" but has not ruled out adopting any of the proposals.
Since
it was set up in October, the commission has focused on the 15 biggest
Commonwealth spending areas and found the long-term outlook for the
budget is "ominous".
Its 86 recommendations, detailed in more than 1,200 pages,
address major structural changes that the commission says could save
the budget tens of billions of dollars a year and achieve a surplus of 1
per cent by 2023-24.
Commission chief and former head of the
Business Council of Australia Tony Shepherd says the best course of
action for the Government is to "act now, act incrementally, act
fairly".
He has advised against "sudden shocks" for people, but
says the Government "must bring future spending commitments in line with
our means".
"Let's spend the taxpayers' money as though it were our money," Mr Shepherd said.
"Let's spend it carefully and frugally."
Embed:
Chart showing projected cost of large programs over next decade
undertaken detailed costings of these recommendations" and says
portfolio-by-portfolio reviews should yield "significant additional
savings".
The Treasurer says the report proves the Coalition "inherited a mess".
"The challenge now is to get on with the job of fixing the mess, and we will," he said.
He
said the report is "to the Government, not of the Government", but
would not lay out which recommendations the Coalition would adopt or
reject.
"I want to lay down to you - this is not the budget," he
said. "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 with 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."
Labor has leapt on the report as proof the Government plans to hit working families in this month's budget.
"It
is a plan to cut the services that families rely on and to put greater
pressure on cost of living," Opposition Leader Bill Shorten said.
"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."
Families
People with children would be hitwith cuts to Family Tax Benefit payments, with FTB Part B abolished, and
Part A subject to tighter eligibility tests.
Around 60 per cent
of families, mostly single parent families or those with one parent
staying at home, receive FTB Part B, which pays a maximum of $4,241 a
year.
But the commission says it is "not well targeted" and is a "significant" disincentive for mothers to work.
The other payment, FTB Part A, costs the budget around $15 billion a year and is paid to around 70 per cent of families.
The commission says the income cut-off should be lowered to better help "those in need".
Childcare and parental leave
Childcare payments, currently the Childcare Benefit and Childcare Rebate, are proposed to be merged and means-tested.However, the commission recommends the payment be available for types of child care not currently covered, including nannies.
That
would be funded by savings made to the Prime Minister's signature
wage-replacement paid parental leave scheme. The commission wants to
lower the threshold and cap it at average weekly earnings – currently
$57,460.
Yesterday, in a major backdown, Tony Abbott confirmed he
had already decided to lower the cap from his preferred $150,000 annual
wage to $100,000.
Health
Thehealth system is currently "not well equipped" to deal with Australia's
ageing population and rising costs, according to the commission.
It
says high income earners should be forced to take out private health
insurance to cover basic health needs, in place of Medicare, with no
access to the private health insurance rebate.
The widely reported
Medicare co-payment is also on the commission's wish-list, but at a
higher rate than has been mooted: $15 per visit and $5 for concession
card holders, instead of the $6 fee for high-income earners.
It wants cuts to the $19 billion Medicare Benefits Schedule, which includes hundreds of medical services, for example pathology.
Free medicines would also be a thing of the past, with broad changes recommended to the Pharmaceutical Benefits Scheme.
The
commission says co-payments for medicines should be increased by $5 and
for concession card holders a $2 fee should be imposed when the safety
net limit has been reached.
Learn or earn
Schools spendingfrom the Commonwealth should be capped at 2017 levels from 2018 and
beyond, according to the commission, with all policy and funding
responsibility handed to the states.
It wants university students
to pay more for their education, calling for "increasing the average
proportion of costs paid by students from 41 per cent to 55 per cent".
People
between the ages of 22 and 30 with no children who have been on
unemployment benefits for a year should be required to move to areas
with more job opportunities or lose the payment, the commission argues.
Growth
in the minimum wage should be contained by establishing a benchmark of
44 per cent of average weekly earnings, even though the minimum wage has
little bearing on government spending.
Retirement
Photo
Commission of Audit chairman Tony Shepherd at Parliament House today
AAP: Lukas Coch
proposals. It calls for the age pension – the budget's single biggest
item at $40 billion – to be indexed to 28 per cent of average weekly
earnings instead of the current link to the higher average weekly
earnings of men.
The commission says the rationale is an
"anachronism" given the major role women now play in the workforce. As
previously reported, it wants the age pension eligibility age raised to
70, by 2053, and says the change would not affect anyone born before
1965.
The age at which someone could access their superannuation -
currently set at 60 - should also be increased to five years before the
age pension age, according to the commission.
It wants fewer
people able to access the seniors health care card by including
superannuation payments in the eligibility test for the first time.
The commission also argues the full value of the family home should be included in the means test for aged care support.
The disability support pension and carers payments would also be subject to tighter eligibility rules.
Acknowledging
the "significant risks involved", the commission has also recommended
the Government examine the option of outsourcing the government payment
system currently administered by Centrelink.
NDIS
TheNational Disability Insurance Scheme (NDIS), which passed Parliament
with bipartisan support and to wide acclaim a year ago, is also set to
be wound back.
The commission says it must be introduced more slowly than the July 1, 2019 date set by the previous Labor government.
It also wants the scheme implemented by "exercising budget control to ensure long-term financial viability".
Public service targeted
Akey theme running throughout the report is the need for cuts to the
public service to avoid duplication and to allow the private sector to
step in.
The commission says if all of its recommendations are adopted, 15,000 public servants will lose their jobs.
It
wants wholesale changes to the number and role of government bodies,
reducing the number of existing major government bodies from 73 by
cutting seven, merging 35, consolidating 22 into departments and
agencies and privatising nine, with a further 26 to be reassessed.
Taxes
Oneof the more startling recommendations from the commission is that the
Commonwealth allow the states and territories to collect income tax to
"make them more responsible in their own sphere".
It gives the
example that the current rate of 32 per cent could be cut to 22 per
cent, allowing the states to raise the gap or set their own level in a
"state income tax surcharge".
If adopted, it would allow a United
States-type scheme of tax competition between states with a guarantee
that taxes would not rise overall.
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