Joe Hockey’s commission of audit on the Commonwealth budget and government spending is a reasonable notion but there are some important issues that have probably been overlooked in the initial discussion about what it might uncover.
Before we even start to consider what might be recommended, it is important to emphasise that any government minister worth their salt should already be demanding their department come up with a range of areas where ‘wasteful spending’ can be cut. If they are not doing this, they are not doing their job very well.
I have a quick suggestion right off the bat. How about banning business class air travel on flights under a couple of hours for public servants, defence personnel and ministerial staff?
It is an expensive joke to see how many business class seats are filled on the arduous Canberra to Sydney and Melbourne flights, which are often so short the dill infused gravlax and Pike’s riesling cannot even be served.
It is difficult to make a case that the members of the commission of audit have any more insight into many individual items of departmental spending than the bureaucrats and their ministers. It is possible, if not probable, that the audit will miss some areas that are ripe for the chop.
There is another issue with the timing and operation of the commission’s work. By waiting for the final report to be produced in May next year, Treasurer Joe Hockey is explicitly allowing current wasteful and unproductive spending to continue for at least seven more months before acting to stop it.
This is a lazy approach to policy making.
In Opposition, Hockey and his Coalition team were vocal in their suggestions of excessive government spending and waste. There must have been some substance to these claims and surely there are a few items the government can get from the pre-election filing cabinet and implement forthwith.
The Abbott government has been quick to implement changes to asylum seeker rules and operations and with the repeal of the carbon tax. Surely there is some low hanging fruit in government spending that Hockey could pick right now and do the tax payer a favour by addressing it expeditiously rather than waiting until May for the audit to come through.
That is what he can do to know that he is the one pulling the fiscal policy levers.
Hockey has been very hasty to increase the Commonwealth government debt ceiling to $500 billion. He has also seen fit to spend a thumping $8.8 billion in support of the Reserve Bank’s balance sheet. Quick economic policy action is clearly possible without the input from any audit commission.
It will be interesting to see how much Hockey is prepared to cut once the audit is completed. If the economy is soft next year, fiscal austerity for the sake of it will be damaging. Will Joe Hockey be prepared to cut spending and dampen an already weak economy?
The answer will depend, in large part, on what the government is doing on the other side of the budget – spending.
It will be implementing several big ticket items, including the National Disability Insurance Scheme, education funding and the paid parental leave scheme. It is also aiming to undertake a massive increase in defence spending and has flagged infrastructure spending as a priority.
The end point on the budget bottom line and impact on the real economy remains to be seen, but if the decision to increase the debt ceiling to $500 billion (a level $100 billion more than is needed) is any guide, get set for more spending than savings over the course of this parliament.
By the time the commission of audit reports and the government acts on those findings, the government will have been in power for eight months and the next election will be just over two years away. It seems a pity to waste a quarter of the first term of the Abbott government for it to come up with anything to address government spending, which it has identified as a priority to get back under control.
Stephen Koukoulas is managing director of Market Economics and was an economics advisor to the former Prime Minister Julia Gillard