News National Analysis: Scorched earth audit no help to PM
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Analysis: Scorched earth audit no help to PM

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This is Thatcher on steroids.

Tony Shepherd’s five-volume Commission of Audit outlines the most radical shake-up to the Commonwealth since federation.

The five-person review team, led by the senior business figure, has delivered a scorched earth manifesto that reaches into every nook and crevice of the federal government.

In one sense it is heroic, outlining a broad suite of reforms that include tightening defence spending, slashing business welfare, and opening up ‘closed-shop’ operations like pharmacy to competition.

But ultimately, the Commission of Audit represents a political minefield for a government that has lost credibility in the past fortnight.

The Commission of Audit represents a political minefield. Picture: AAP
The Commission of Audit represents a political minefield. Picture: AAP

The Commission continues the government mantra – the budget’s in ‘crisis’ and radical surgery is required to ensure future generations are not saddled with ballooning debt.

If Joe Hockey started the conversation about ending ‘the age of entitlement’, the Shepherd review has published a conservative manifesto on how to achieve this.

The proposals would deliver savings of $60-70 billion per year within a decade – if the Government has the ticker to implement them.

But many, perhaps most, of the 86 recommendations are politically high-risk.

The prime minister and treasurer now have the difficult task of deciding how many of these reforms are worthwhile embracing.

Politically, the Commission’s report is doomed to fail. Many of the recommendations needing parliamentary approval would struggle to pass the Senate.

Politically, the Commission’s report is doomed to fail.

Amanda Vanstone, a former Howard Government Minister who carried the can for several cock-ups, was a member of the five-person review. Surely she had the smarts to realise they were laying a minefield for the Abbott Government?

Instead the 1200-page report reads like the wild-eyed wish list of big business, arguing for slash-and-burn rather than sensible, gradual reform that maintains the Australian ethos of a ‘fair go’.

Tighten the aged pension? Yep. Slash health spending? Why not. Delay the national disability insurance scheme? Of course.

To Mr Shepherd’s credit, the audit team has not backed away from recommending big cuts to industry assistance. But even in this area, the Commission adopts an insular view.

It wants export assistance slashed, at a time when manufacturers are struggling to compete against low-cost competitors, and fails to outline how these cutbacks would do anything but add to unemployment.

The release of the Audit, just 11 days before the budget, is likely to further inflame tensions within the Coalition.

Take the recommendation to sell off Australia Post. The Prime Minister will run a million miles from privatising the national postal service, unwilling to further antagonise his Coalition colleagues who are incensed over the Government’s temporary ‘debt’ tax.

Just as crazy-brave, the recommendation to include the family home in a new assets test for the pension would be political suicide. Sorry Mr Shepherd, but some things are sacrosanct in Australia.

Sorry Mr Shepherd, but some things are sacrosanct in Australia.

Other recommendations just don’t make sense and suggest the Audit team have not done their homework.

Selling off the Defence Housing Authority, for instance. The DHA delivers annual profits to the Commonwealth of $100 million-plus. But the organisation is carrying significant contingent liabilities that would severely erode its value to a potential buyer. Better leave that one alone too, PM.

Having built-up expectations of a ‘horror’ budget, the Abbott government finds itself in a bind. It will be marked down by the markets and commentators if it fails to deliver significant savings and genuine reforms.

But it risks a major backlash from voters, who remain unconvinced about Mr Abbott’s leadership qualities, if it embraces the Mr Shepherd’s pure ideology.

Despite his solid majority in the House of Representatives, Mr Abbott will not risk alienating middle Australia to satisfy the fiscal fetishes of the hard right.

Like the 2010 Henry taxation review – which was largely ignored by a hesitant Kevin Rudd – the Shepherd Commission of Audit risks becoming a collector’s item.

The national interest would have been better served by delivering a set of reforms that were palatable and achievable.

Steve Lewis has 22 years experience in reporting Canberra politics, and is a senior adviser with Newgate Communications. He is also the co-author of the best-selling political novel, The Marmalade Files, and the forthcoming The Mandarin Code.

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