• Visit The New Daily later today for full details on the Commission of Audit report.

Tony Abbott’s Commission of Audit report due to be released today will suggest huge changes to the size of the existing government.

Sources have told The Age that the report will propose that entire agencies should be axed and certain responsibilities be surrendered back to the state.

If adopted, the changes could mark the biggest reworking of the federation ever to be undertaken.

The 86 recommendations, to be unveiled this afternoon, are said to include the privatisation, abolition or delegation back to the state of several agencies, including the National Preventive Health Agency and Defence Housing Australia.

Senior ministers said that the proposals were typical of an “economically dry” business type, but conceded that most would be changed or deemed politically untenable.

If adopted, the changes would result in a decentralisation of the existing government, with states receiving similar responsibilities to those held in the early decades of federation.

A source who has seen the report told The Age that it is focused on the theme of competition, urging states to become competitive in their provision of services at the lowest possible costs.