The Government Thur 1.5.2014, released the report of the National Commission of Audit. The Commission was established by the Government as an independent body to review and report on the performance, functions and roles of the Commonwealth government. It ceased on 31 March 2014.

The Commission made 86 recommendations

–      64 in its Phase 1 Report which deal predominantly with improving the sustainability of the nation’s finances and

–      a further 22 recommendations in its Phase 2 Report which mostly address public sector performance and accountability as well as infrastructure.

The recommendations offer savings estimated at $60 to $70bn per year within 10 years. They include:

  • increasing the superannuation preservation age to 5 years below the Age Pension age;
  • changing arrangements for Family Tax Benefit Part A by introducing a new single means test;
  • abolishing Family Tax Benefit Part B;
  • that the registry functions of ASIC should be transferred to the ATO;
  • the Commission considers the existing ombudsman offices (including the Taxation Ombudsman) and the Inspector-General of Taxation should be amalgamated within the Office of the Commonwealth Ombudsman;
  • changing current Age Pension indexation arrangements to a new benchmark of 28% of Average Weekly Earnings and maintaining other price indexation arrangements;
  • including in a new Age Pension means test the value of the principal residence above a relatively high threshold.

The Treasurer said that while the Government would not be providing an immediate response to each recommendation, its response to the National Commission of Audit Report will be its first Budget on 13 May.

Commission Chairman, Tony Shepherd AO, said the Commission was not asked to examine the revenue side of the budget. He said the Commission assumed that taxation revenue would return over time to 24% of GDP, which was the average for the period from 2000 to the GFC. This assumption makes an allowance for bracket creep to be returned. If this doesn’t occur, he said the Commission estimates that a person on average earnings who currently faces a marginal tax rate of 32.5% will be taxed at a 37% marginal tax rate by 2023-24. The Commission has recommended 24% of GDP as a reasonable long-term cap on the size of Government while recognising that at times it may be exceeded.

[LTN 81, 1/5/14]