budget cuts

Probably the primary purpose of the Commission of Audit, announced this week, is to provide political cover to the Abbott government to get cuts and reforms that are likely to cause controversy onto the political agenda. The commission is unlikely to recommend too many things that haven’t already been thought up by bureaucrats, MPs themselves or think tanks. Here’s a list of recommendations that Tony “corporate wealth destroyer” Shepherd and his friends may or may not make, but which would address their terms of reference to examine just what role government should be playing and how the budget can be made more sustainable over the long term.

1. Privatisation

  • The sale of Medibank Private is a good start, and Labor should have done it — it will have no impact on health insurance premiums, and the only cost will be the loss of the annual dividend.
  • Australia Post should be next — that could generate $5 billion in revenue.
  • The purpose of SBS Television should also be clarified: SBS Radio continues to provide a crucial service for newly arrived immigrants; SBS TV, however, is now a hybrid, a commercial broadcaster with public policy goals relating to multiculturalism. Are those goals still relevant? If not, SBS TV could be privatised and SBS Radio moved to the ABC. If so, in an era of multichannelling, does SBS need to be separate from the ABC anyway?

2. Closure

  • The Australian National Preventive Health Agency is simply a lobbyist for nanny state interventions and could be wound up without drama.
  • The Foundation for Alcohol Research and Education should be closed and whatever is left of its beer excise funding returned to taxpayers; no legislation would be required, as it was established by a memorandum of understanding between then-senator Meg Lees and then-PM John Howard.
  • The Australian Sports Commission plays no worthwhile role beyond allocating funding to elite sports, which produces no community benefit; elite sports programs should be shut down and funding partly reallocated to encouraging community sports participation.
  • The Export Finance and Insurance Corporation is a corporate welfare body that offers little of value to the national interest and should be shut down.
  • The Australian Strategic Policy Institute is a redundant think tank that does the sort of job the Department of Defence is paid to do.
  • The Australian Sports Anti-Doping Authority engages in policing something that has nothing to do with the functions of government; if sports want to be credible, let them fund their own anti-doping body.
  • Close down the advocacy function of the Human Rights Commission and leave it to perform its core task of providing the victims of discrimination with a low-cost alternative to litigation.

3. Withdrawal of government roles

  • Propping up the private health insurance industry with both regulation and taxpayer assistance generates little public benefit in terms of reduced healthcare expenditure. Allow what has become a hybrid state-private industry to stand or fall on its merits.
  • End handouts to the automotive industry and reduce automotive tariffs for both used and new cars to zero.
  • Reverse the expansion of national security and law enforcement agencies and security theatre designed to address a confected “War on Terror”.
  • Withdraw the research and development tax incentive except for small businesses and start-ups, as it merely funds R&D that would be done anyway; in fact, remove all corporate welfare except those with a demonstrated track record of driving innovation that would not otherwise have occurred.
  • End government support for home owners via the capital gains tax exemption for the family home in favour of incentives to encourage new home building.
  • Reduce the tax differential between income and superannuation tax for the wealthy.
  • End the prohibition-based approach to drug use, which merely makes criminals wealthy and costs taxpayers huge amounts in law enforcement and criminal justice system costs, as well increasing as violence and property crime.

4. Infrastructure

  • End the uneconomic use of infrastructure and reduce externalities by making infrastructure funding and ‘special purpose payments” conditional on user-pays, particularly for road projects — all state capitals and Canberra should have road user charging.
  • Remove political decision-making from key projects by establishing Infrastructure Australia as a fully independent body that controls infrastructure funding.

5. Federalism

  • Directly link “special purpose payments” to tight implementation time frames for Council of Australian Government decisions. The era of states taking years to implement simple regulatory harmonisation should end.
  • Implement via COAG a one-stop oversight of health expenditure programs, either at the Commonwealth or state level, but not both.

That’s of course assuming the Commission of Audit is actually about genuinely identifying what roles government should or shouldn’t play and making the budget more sustainable over the long term — and not, say, an excuse to engage in the usual ideologically motivated pursuit of a conservative blacklist.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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