Richard Di Natale (Victoria, Australian Greens) Share this | Link to this | Hansard source

Pursuant to order I present the report of the select committee's inquiry into the Abbott government's Commission of Audit, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

I seek leave to speak to the report.

Leave granted.

This inquiry was timely because there was intense public interest in the budget and in the work of the commissioners, particularly because of what it meant for the future of the country. I would like to thank the committee for a very broad-ranging inquiry that covered many aspects of the Australian economy and society. I would like to give special thanks to the deputy chair, Senator Lundy, and to the secretary, Lyn Beverley, for their hard work in making the final report of this inquiry that we are tabling today such a timely and comprehensive document.

Our inquiry was able to take a detailed look at the workings of the Commission of Audit. We examined their terms of reference and questioned many of the underlying assumptions that they were working towards. We heard from experts about the true state of the national economy. We looked at the effect of the commission's recommendations on health and welfare and on employment. We looked at alternatives to the many cuts that were recommended, including examining Australia's overgenerous use of tax concessions.

There is very little doubt that the Commission of Audit report had a very significant influence on the federal budget. Not every recommendation found its way into the federal budget—which is really not surprising, when you consider how radical some of their proposals were. But what is surprising is that in some cases the response to the commission of audit from the government went even further than the commissioners recommended.

Mr Hockey says that criticism of his budget is political in nature, and he is right, because politics is a contest of ideas. It is about priorities. It is about whether we want to live in a caring and compassionate country or a cruel and harsh one. Politics forces us to make decisions about what we think is fair and decent. So, yes, Mr Hockey, our criticism of the budget is intensely political—and rightly so.

Mr Hockey slams criticism of his budget as class warfare—then, in the same breath, he tells average Australians that they work for over one month each year to support welfare recipients. The hypocrisy of that is simply breathtaking. The very definition of class warfare is perpetuating the myth that hardworking Australians are having their taxes wasted on dole bludgers and no-hopers. We know from the work of the committee that is a lie: the vast majority of Australians get much more out of the tax system than they put in. We get it in the form of health care, education, income support, the roads we drive on and so on. We also learnt that most of what people work towards, through their taxes, is not paying for dole bludgers—it is actually paying for assistance for older people. In other words, people work hard to contribute to their retirement and the retirement of their co-workers.

It is true, though, that some high-income earners do contribute more to the system. But it is also important to remember that many professionals—people like myself: doctors, lawyers, pharmacists, dentists—have managed to achieve high incomes in large part because we received a taxpayer funded university education. We were beneficiaries of the system. As a medical student, I was lucky enough to get a taxpayer funded education. I was also lucky enough to get into a decent hospital training program. After that, working as a GP, I was able to get income thanks to Medicare. It was not my hard work that made those conditions possible; I was the beneficiary of the tax system. Without that, I would not have been able to achieve the things I have. As a result of that, I also have a responsibility to make a contribution and help those people on lower incomes who did not get the same start that I had—a stable home environment, a decent school, some good luck; all of those things. That is why I, like many other Australians, want to make sure that we do contribute so that people who do not have the same luck, the same start in life, might get the opportunities that mean even they could one day become a dentist, a lawyer, a pharmacist and so on.

It is convenient, and we saw this through the Commission of Audit work, to foster resentment about paying tax. You create an environment where you can slash services. Terms like 'great big new tax' and the like demonise the fact that we need to collect tax for things like health care, education, disability support, transport and so on. That taxation is the price we pay for a fair and decent society.

One of the things the report did was look in detail at the issue of tax concessions. Look at the language Mr Hockey uses: he talks about lifters and leaners; he talks about making sure we end the culture of entitlement. What we learnt was that Australia is one of the most generous countries in the world when it comes to providing tax handouts to the big end of town. Mr Hockey will not say that the average worker has to spend weeks to fund tax concessions and subsidies like fossil fuel subsidies in the form of the diesel fuel rebate or other subsidies for superannuation, private health insurance and so on. The bulk of these benefit people on high incomes. Why is it that the average Australian should pay for the cheap fuel of the mining industry—an industry that has made massive profits, most of which go offshore? Why should you slug ordinary Australians? Why is it most Australians have to work to pay for the massive superannuation tax concessions? I think it was former Liberal leader John Hewson who said this was one of the areas the government should be focusing on, and recommended that to the Commission of Audit. He says we are approaching $150 billion in super tax concessions, most of which go to the wealthy. Through this committee process, people were able to learn about the huge handouts that go to the big end of town and the priorities of both the commissioners and the government in framing their budget.

What was very clear is that—rather than picking on young kids who are doing their best to get a job and are now going to be cut off from income support, and will struggle to feed and clothe themselves; or the single mother whose tax support will be cut; or the pensioner with a chronic disease who will face huge out-of-pocket health care costs—there was an opportunity for the commissioners and the government to start looking at addressing the real age of entitlement, and that is the entitlement that exists at the big end of town. It is true that there is some heavy lifting going on there—but there is a hell of a lot of leaning, too.

The report does not say that all of these tax concessions and subsidies should be removed tomorrow. What it does say is that we need to have an open, frank and factual debate about these huge tax concessions. We need to look at whether we really want to target the poor, the sick and the vulnerable or whether we want to target those who can afford to do a little bit more of the heavy lifting, and truly end the age of entitlement.

Kate Lundy (ACT, Australian Labor Party) Share this | Link to this | Hansard source

I also rise to speak on the tabling of this final report of the Select Committee into the Abbott Government's Commission of Audit. I am grateful for this opportunity to speak to the report being tabled today. As you see, this report provides quite a damning insight into the process that went on to form part of Mr Abbott and Mr Hockey's unfair and disreputable budget. The secretive processes, the flawed assumptions and the lack of evidence to support recommendations contained in the Commission of Audit report were of great concern to the committee. Let me spell out some of these concerns. The conflicts of interest identified among commissioners and the secretariat were not made clear, and the processes for managing these conflicts were not disclosed, even though it was asserted they were addressed. As was highlighted in the committee's first interim report, the processes used by the National Commission of Audit to gather and analyse information lacked transparency. We spent many hearings trying to provide that transparency through the committee's work. It was not forthcoming. We were also concerned about the processes around stakeholder meetings. These appeared to the committee to be ad hoc, and the ways the submissions were dealt with remaining unclear.

The committee was pleased that submissions made to the commission were eventually made public, however, we were also disappointed that information on meetings and consultation with stakeholders has not been provided, so we still do not have the full picture. We are also very concerned about the time frame provided for a report of this scale. We do not believe the time frame was sufficient. The chair of the commission urged that the recommendations be adopted in full, yet admitted that they did not have the time to work through each proposal thoroughly with each relevant department. I will come back to that point shortly.

On this point there were agencies that were identified by the commission for abolition which had not even been given the courtesy of a meeting with the commissioners, or with even one of the commissioners, to explain their role and function and perhaps, if necessary, justify it. It is worth making the point that there were agencies that were not even given a heads-up that they had been flagged for abolition, or scrapping, until the day the Commission of Audit report was published. You can imagine the shock that that would have provided to the professionals providing those functions on behalf the Commonwealth.

During the course of the inquiry the committee requested costings for each of the commission's recommendations. This information was not forthcoming. The commission went on to admit that they did not prepare costings for all of their recommendations and did not undertake detailed financial modelling. In fact, in an answer to a question on notice the commission noted that they instead provided advice on, 'the broader order of magnitude of savings potentially arising from its recommendations.' I would like to emphasise that without the detailed financial modelling estimates provided can only be treated as indicative. There is no basis for accuracy in that regard.

What a shock it was when many of the recommendations in the Commission of Audit report landed, front and centre, in the budget that the Abbott government handed down. The lack of costings and the limited evidence-base relied upon was not appropriate for a report of this magnitude, as I said, or for it to form the basis of so many of the Abbott government's measures in the budget. For example, in relation to the GP co-payment recommendation, we know now that it has become policy. The chair of the commission admitted that they did not have technical expertise for that analysis. The committee proved that the commission's terms of reference were based on a number of incorrect assumptions. There was the contrivance that the government needed to respond to some kind of budget crisis or spending blowout. This so-called budget crisis has been thoroughly discredited by reputable economists.

As far as the broad fiscal policy is concerned, the ACTU pointed out in their submission to the inquiry that Commonwealth revenues as a percentage of GDP were slightly lower than they were in the 1996-97 budget at the time of the last Commission of Audit and substantially below the level of the 2007-08 budget handed down by the then Liberal Treasurer, Mr Costello. In fact, Commonwealth expenditure as a percentage of GDP is only 0.2 per cent higher than it was in 1996-97 when the last review was undertaken.

Another example of the false assumptions made—very relevant to the constituency I represent in the Australian Capital Territory—is the assumption from the outset that the Public Service is too large and inefficient. The fact is, and evidence shows, that the Australian Public Service indisputably ranks as one of the most efficient and effective in the world. We had substantive evidence, as you would expect, from the CPSU National Secretary, Ms Nadine Flood, to this effect. She was able to point to statistics from comparable countries around the performance of the Australian Public Service. Government employment as a percentage of the population is currently lower than it ever has been. Notwithstanding this, the Commission of Audit called for a range of agencies and functions to be transferred from the Commonwealth to states as well as extensive outsourcing of public services like Centrelink. I will come back to that in a moment. The commission gave an extremely conservative estimate that these measures would result in the loss of almost 15,000 Public Service jobs. But, I remind my colleagues, we know that a detailed analysis was not done and as the CPSU, the union representing public servant workers, pointed out, given the massive amount of work the commission wanted to cut or outsource, they expected this number to be closer to 25,000 jobs lost.

Some 40 per cent of Australia's public servants are employed in Canberra and live in our region. We have already lost upwards of 6,000 APS positions since the Abbott government took office. While the Canberra economy is becoming increasingly diverse, there is no understating that such a significant reduction in the size of the Public Service will lead to economic challenges for Canberra. I am pleased that the ACT government in their recent budget brought down a series of thoughtful measures to help the ACT economy along. We have faced these types of challenges before. We are in a much stronger position to withstand some of the impacts, but it is through the thoughtful and clever budgeting of the ACT government which ensures that our level of economic activity remains as high as possible and confidence does not take a nosedive.

The Australian Public Service was subjected to tough efficiency dividends under the previous government that I was a part of. There is no denying that there was little left to cut with the application of those dividends. But one key difference was that our efficiency dividend sought to target the non-jobs area where waste and inefficiencies did exist. That remains as a stark difference from the arbitrary and ideological approach of trying to create smaller government with little consideration to the function and operation of the Public Service itself.

In conclusion, I want to reflect more broadly on this exercise. What we now know is that the Commission of Audit report and all of its hastily pulled together recommendations, which are without a substantive evidence base, form the basis and heart of many of the Abbott government's recent budget decisions. That audit has put a deep fear into the people of Australia as they now observe an unfair budget: a budget they had no idea was coming; a budget that was not foreshadowed in any election promises prior to the general election last year. And yet it has subjected Australians to the most unfair—and now disreputable—budget that they have ever seen. It has been a shock for many people. It will remain so as we continue to see the radical directions that a government which misled the people at the last election continues to take, and no flimsy exercise such as this Commission of Audit and the recommendations put forward will provide any political cover for a government as negligent as this.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The final report into the Senate Select Committee into the Abbott Government’s Commission of Audit that is being tabled here reveals the commission of audit process for what it was: a sham, a fraud and a fig leaf with predetermined outcomes designed to ascertain one single political goal of producing a report that is so outrageous, so devastating, so bad for the people of Australia and so unpopular that it could even try and make the last budget look reasonable. It failed on many levels. The report that was produced by the Commission of Audit was predetermined from the start, and our report into that process reveals this. It was an inquiry where not one of the commissioners was there to properly and adequately represent the community sector and the services sector.

Let me be clear: five very eminent people were chosen to do this Commission of Audit review for the government, and I have no issue with any of them as individuals. Many of them have contributed in many ways, particularly in the business field and many of them have a contribution to public policy. My issue throughout this whole process was that they were the only voices that were participating in this. Rather than having a balanced process, with people from the community sector, from the charity sector and from the trade union sector included as part of this discussion, you had a process that was stacked by the Business Council of Australia, who themselves had called for this review in the first place.

Let us be clear, the first people to call for a Commission of Audit were those in the Business Council of Australia. They called for this process, and in calling for it, they produced their own report in the middle of last year about what they would like to see in a commission of audit review. The government then appointed the chairman of the Business Council of Australia to head up the inquiry and, more worryingly, hired the policy director from the BCA—the person who had already produced their report—as the head of the secretariat. This was not an open process; this was not a transparent process; this was not a fair and equitable process; this was a predetermined process. The terms of reference themselves were highly worrying. There is no doubt that if you are going to have a debate about debt and about spending, firstly, you have to be honest about the facts—and there is a lot of debate going on in politics at the moment about what those facts are. Secondly, you have to make sure that you are looking at not only expenditure but also income. I think a major flaw in this process was that failure to have a proper process where the income component was also being looked at.

So, what did you get at the end of this? You got a series of outrageous measures and outrageous proposals that came through from the Commission of Audit, some of which, worryingly, this government seems to think are something that they want to inflict on the Australian people. The ideas that came through included ideas like the co-payment for Medicare services; they floated a $15 fee, but the government proposed a lower figure. It is another example of where this report has been—

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

A co-payment was a Hawke government idea.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Order!

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Ideas about the deregulation of university fees is another thing that the government has chosen to adopt.

Helen Kroger (Victoria, Liberal Party) Share this | Link to this | Hansard source

He was in a nappy then. He would not know about the Hawke co-payment idea.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Order on my right!

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Senator Kroger, the fact that I happen to have been born overseas and, as a migrant, did not come to this country until 1988 is perhaps nothing that should be made light of or joked about. But I know that was not your intention.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Order, senators! Not across the chamber. To the chair, Senator Dastyari.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

There is also the idea of increasing the interest rates on student HELP debt, the idea of not proceeding with the final two years of Gonski, the discussion about those who are younger without dependents moving to areas of higher employment by directly impacting their access to welfare, abolishing the family tax benefit B, lowering the Paid Parental Leave scheme, scrapping the Australia Network and consolidating—which is a nice way of saying cutting—a whole series of Indigenous programs. All of these were ideas that the government chose to adopt, and there was a series of ideas that the government did not adopt. My concern about this process from the start was that it was a stacked committee with a stacked inquiry with a predetermined set of outcomes that would allow the government to say, 'Look how terrible these measures are; we're not going that far. We're only going to go 75 per cent of the way, we're only going to go 60 per cent of the way' in order to make what the government knew was going to be a series of broken promises in the budget process look reasonable. And frankly, they failed. They failed because it does not matter how you set it up. It does not matter how many inquiries, processes, documents, sham reviews or commissions the government was going to conduct. The fact is that the budget that got produced—and this played a key role in providing input—is bad for Australia and bad for Australian families. That is why there is an outcry across the country by so many different people, so many different groups and so many different organisations that say that this is not the budget that they were promised, these are not the measures that they were told about before the election, and there was a series of promises.

From the start of the process, those on this side of the chamber made it very, very clear that we felt this was going to be nothing more than a fig leaf to cover what was going to be a sham process to give the government cover for broken promises. Unfortunately we were proven right. The final budget that was produced at the end of this had repeated broken promise after broken promise.

What concerns me is that we have here a series of recommendations that I worry the government is going to adopt as part of the MYEFO process. I worry that there is a series of measures here that are more damaging, more painful and more hurtful, and that even this government, with its tin ear, felt it was not appropriate to impose them now, but they are going to be imposed on Australian families. Until the government is able to give us an ironclad commitment that the remaining ideas are off the table, that is a danger we will live with.

In concluding I do want to acknowledge the incredible work of Senator Richard Di Natale, who chaired the inquiry, and Senator Kate Lundy, who was the deputy chair. Senator Di Natale was incredibly gracious and accessible with his time and the time of his staff. They spent a lot of time working on this process, and it should be acknowledged that the way in which he conducted himself throughout the process was of the high standard that we expect of a place like the Australian Senate. The deputy chair, Senator Lundy, did an incredible job. There were a lot of meetings at the start of the year—which I know a lot of people were not here for. The committee team, the committee staff and the secretariat did a fantastic job, as always. I note that these kinds of inquiries tend to be simply additional work on the already very heavy workload, and I think that should be acknowledged.

Finally, I acknowledge that that the coalition senators participated in a very healthy debate as part of this process. I acknowledge Senator Smith and the several opinion pieces that he wrote in the Fin Review; I think I wrote a few as well, where we clearly disagreed with one another. There was a lot of enjoyment and Senator Smith is clearly a big fan of Bob Hawke and Paul Keating. He kept speaking about them at every inquiry meeting we had, and I promised him that I will one day get him a signed poster from the two of them.

Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

I also would like to make some brief remarks with regard to the Senate Select Committee on the Abbott Government's Commission of Audit—not the title that I would necessarily have chosen, but it does capture a couple of important points. The first is that the new government, led by Tony Abbott, did indeed commission the work of a national audit commission process. In doing so, it set about an urgent review of the scope, efficiency and function of the Commonwealth government that it inherited on 7 September. In doing so, it set itself the task, through the National Commission of Audit process, to look at how best to achieve the savings necessary to deliver a one per cent budget surplus prior to 2023-24. I can understand that some people in the Senate and in the Australian community might be a bit alarmed and want to know, 'Why such a lengthy period between the present and 2023-24?' Fundamentally there are two views in our community at the moment, and these were ably demonstrated and vigorously discussed, as Senator Dastyari has suggested, through the National Commission of Audit Senate Select Committee process. Those views fall into one of two camps. There is the head-in-the-sand camp, which believes there is no problem with the financial arrangements of the Commonwealth and we are destined for a glorious future and nothing need change. The second view—a view that I subscribe to without hesitation, and a view that many Senate colleagues on this side subscribe to—is that there is a budget emergency.

If you look at the comments of the Australian Industry Group, if you look at the comments of the Business Council of Australia; indeed if you look at the comments of the IMF and the OECD more recently, you will discover that they agree that there is a budget emergency, and the Commission of Audit Committee dissenting report covers those issues well.

Ursula Stephens (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Order! The time for the debate has expired.