Ian McAuley from the University of Canberra examines the philosophy underpinning the audit, along with its likely effectiveness, and comes up with an interesting conclusion which is likely to meet with widespread public approval. An excerpt is printed below, but the full article can be found on The Conversation website.
![Picture](/uploads/8/4/1/7/8417532/1304785.jpg?328)
The first paragraph of the Commission’s terms of reference sets the context, stating:
During this time [the last 20 years] the size of the Commonwealth government has expanded significantly, as has the remit of some of its activities.
It provides no support for this statement. In terms of what one would generally use as indicators of the “size” of government – receipts and payments – the evidence is lacking. See the graph below.
The inference from this preamble is that the Commission’s brief is to recommend spending cuts. It asks the Commission “to make recommendations to achieve savings sufficient to deliver a surplus of 1% of GDP prior to 2023-24” (my emphasis).
Although there are several references to “savings”, there is no requirement to consider the adequacy of public revenue, even though our taxation to GDP ratio at 26% (all levels of government) is the sixth lowest of all OECD countries and compares with an OECD average of 34%. Australia achieved this while running a much lower budget deficit than most of those countries.
If the Commission is to be professionally diligent, this constraint, along with those imposed by the government’s promises not to cut certain expenditures, gives it an almost impossible task, for it is also told to abide by the general economic principle that “government should do for people what they cannot do, or cannot do efficiently, for themselves, but no more”.
In brief, the theory finds that public provision is the best option in many cases... because some markets just cannot operate efficiently.
Finding the optimum division between public and private division is difficult. Some people get more benefit than others from collectively-provided goods (do you listen to the ABC?, how much do you drive on public roads?) and the forms of market failure are manifold. It is probable that Australia, a country with a high level of private consumption and a small public sector, errs on the side of under-provision of public goods.
So it is unlikely that the Commission will find too many potential savings without tipping that public/private ratio away from the optimum. It will undoubtedly find pockets of waste, duplication and areas where there is no market failure reason for public involvement (facilities for spectator sports come to mind), but if it is to do its job professionally it would almost certainly find areas where governments aren’t involved and should be.
The greatest constraint on the Commission is its timeline. There is no time for the thorough processes undertaken by bodies such as the Productivity Commission and the Australian National Audit Office.
The Productivity Commission has a world-renowned reputation for its independence and professionalism. It has public hearings, which generally reveal the complexity of policy proposals and expose unintended consequences of superficially attractive ideas, and it issues public draft reports as a further check. It also produces an annual review on the effectiveness and efficiency of government service provision. The Audit Office undertakes ex-post evaluations of government programs, and is concerned not only with compliance, but also with efficiency.
Perhaps the best way the Commission of Audit can discharge its role, which includes consideration of duplication, is to point to the existence of these bodies of review and to wind up its own operations before incurring any public expense.
It's time for the so called 'Adults' to stop acting like an opposition, and start acting like a government. Assuming they are capable of that... I for one have my doubts.