Three members of the Howard government’s national audit commission have backed Joe Hockey’s plans to take a knife to welfare and other spending.
Maurice Newman, John Fraser and Bob Officer, who were tasked by John Howard in 1996 with an audit of government finances, agreed the Treasurer had no choice but to look at cutting spending.
Mr Fraser, who is now the chairman of UBS Global Asset Management, said there was a fundamental need to target expenditure.
“I don’t think a treasurer of any government, whether it be Labor or the current government, would be able to avoid this sort of action,” Mr Fraser said.
Professor Officer — who chaired the review for Mr Howard — also threw his broad support behind Mr Hockey’s plan to rein in spending.
And Mr Newman, now the chairman of Tony Abbott’s business advisory council, backed the need to target welfare.
On Wednesday night, the Treasurer warned of the huge costs of social programs and said the new “age of responsibility” would have to include corporate Australia also, and released details from his audit commission report showing that spending on the age pension, disability support pension, hospitals and schools were growing too fast compared with the overall economy and other government programs.
Mr Fraser said he agreed with Mr Hockey that “someone always pays”. “The generation of which I’m a part were very happy to endorse or facilitate very generous regimes for pension payments, aged pension, for welfare more generally, which I think in many cases became middle-class welfare. Something has to be done, and it’s always difficult,” Mr Fraser added.
Mr Fraser said the welfare budget needed to be “properly targeted”, because otherwise “people who really deserve the generosity of the community lose out on this because the welfare is spread to people who perhaps don’t need that welfare”.
Speaking to The Australian yesterday, Professor Officer warned that holding up cuts to spending risked “much greater hardships” down the road and described cuts to corporate welfare as “way overdue”.
“If it’s delayed too long, you are going to have to go much harder,” he said.
“You finish up with a European-style economy. That’s a fair bit down the track, but the risk is when you do have to, eventually, because just reality forces you to start cutting back expenditures, they are in such a scale at that stage, the costs and the hardships invoked are going to be much greater than if you try to do it earlier.”
While he believed that the Howard government left a structural deficit also, this was “considerably” exacerbated by the Rudd and Gillard governments. “And there’s few economists who I believe don’t think we need to do something about our structural problems. It’s the old story of not in my backyard, or make someone else pay, not me.”
On cuts to welfare, he said the question was “what welfare” was cut.
Mr Hockey has revealed that the audit commission has found that the cost of the age pension alone is forecast to rise from $39.5 billion this year to $72.3bn in the next decade.
Professor Officer said, speaking as a pensioner, he thought the scheme was often “too generous”.
“I know if I’d made that statement at a dinner party I’d get hassled to blazes, but there are issues there.
“It’s quite subjective and it depends where you’re coming from,” he said.
Mr Newman supported the need for welfare cuts. “This is the problem we’ve got with middle-class welfare. In all honesty, is it appropriate that people like me should not have to make some sort of co-payment.
“It’s pretty hard to make the case as to why I should be supported by other taxpayers,” Mr Newman added.
“It seems also to me that the generation which is the baby-boomer generation is a selfish one, which pays very little heed to the intergenerational inequity.”
He said the government was simply signalling well ahead “that the retirement age will have to be increased further, that people who are looking to live on the old-age pension, which has been essentially a safety net not to allow people to live high on the hog, we have to be more sparing on who accesses these things and who accesses other forms of welfare”.
“There is no alternative.”