Commission of Audit – if you don’t need it, you’re not getting it

“Business as usual is not a viable option for Australia” … the Commission of Audit’s much anticipated report has just been released.

The message is clear, if you don’t absolutely need something from Government, you’re not going to get it in future.

In the lead up to the 13 May Budget, the recommendations are significant and fundamentally rework access to the age pension, health care, family benefits, and the efficiency of the Government and the services it delivers.

Of course, not all (if any) of these recommendations will be introduced, however it will be an interesting political battle to see how this level of reform rolls out.

As anticipated, the report heavily focuses on the services provided by the public purse, who is accessing them, and why.  Co-payments are a key theme.

Key recommendations from Phase 1 include:

Family

• Abolition of Family Tax Benefit B.
• New single means test for Family Tax Benefit A (maximum rate of the benefit paid up to a family adjusted taxable income of $48,837 and then phasing out at 20 cents in the dollar until the payment reaches nil).
• Removing the Large Family Supplement and Multiple Birth Allowance.

Superannuation

• Increasing preservation age to 5 years below Age Pension age.
• Extending phased preservation age increase so preservation age reaches 62 by 2027.

Pensions

• Changing the age pension indexation arrangements to a new benchmark of 28% of Average Weekly Earnings.
• Tightening age pension eligibility by:
  • Linking eligibility to 77% of life expectancy.
  • Replacing the current income and assets test including means testing the family home and increasing the income withdrawal taper to 75%.
• Tightening Seniors Healthcard eligibility and aged care eligibility.

Health care

• High income earners to take out private health insurance for basic health care, precluding them from accessing health insurance rebates.
• Deregulate private health insurance.
• Co-payments for Medicare
  • General patients to pay $15 per service (up to the safety net of 15 visits then $7.50 from that point forward).
  • Concession card holders to pay $5 per service (then $2.50 once they have exceeded 15 visits).
• Co-payments for some medications on the Pharmaceutical Benefits Scheme that are currently free.
• Co-payments for emergency department visits.

Working parents

• Paid parental leave scheme – Retaining the 1.5% levy on large companies but scaling back the scheme to cap at Average Weekly Earnings (currently $57,460), indexed annually.
• Child Care Rebate and Child Care Benefit to be replaced with one means tested scheme.  The Scheme would cover in-home care and another types of available care.

Employment & Unemployment

• Requiring unemployed people aged between 22 and 30 without dependants to relocate to areas of higher employment to access benefits.
• Minimum wage capped at 44% of Average Weekly Earnings.

Business incentives & assistance

• Abolish the Export Market Development Grant, amongst other grants.
• Scaling back Austrade and Tourism Australia funding and merging into a commercial arm of the Department of Foreign Affairs & Trade.
• Reducing R&D funding.
• Abolishing the Farm Finance Concessional Loans Scheme.
• Where a business has gone into liquidation without paying staff benefits, the Fair Entitlements Guarantee Scheme would be limited to a maximum 16 weeks redundancy payment and limit the wage base to Average Weekly Earnings.
• Medical indemnity schemes that subsidise the cost of indemnity insurance to be scaled back.

Privatisation

Privatise government bodies that operate in commercial markets across the short, medium and long term including:

• Short term
  • Australian Hearing Services.
  • Snowy Hydro Limited.
  • Defence Housing Australia.
  • ASC Pty Ltd.
• Medium term
  • Australian Postal Corporation.
  • Moorebank Intermodal Company Limited.
  • Australian Rail Track Corporation Limited.
  • Royal Australian Mint.
  • COMCAR.
• Longterm
  • NBN Co Limited

Overall, the report recommends abolishing 7 Government bodies, merging 35, consolidating another 22 into the portfolio department, privatising 9, and reviewing another 26.

It will be interesting to see what the Government adopts in the Federal Budget on 13 May 2014.

Sources

• National Commission of Audit, Australian Government –http://www.ncoa.gov.au/report/index.html
• Knowledge Shop –http://www.knowledgeshop.com.au/blog/bid/344234/Commission-of-Audit-if-you-don-t-need-it-you-re-not-getting-it?
• Financial Review – 2 May 2014