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Audits point to the way ahead

By Scott Prasser - posted Thursday, 29 August 2013


The Abbott Coalition is under serious pressure to cost its policies and to explain how it will cut government spending if it is to "bring the budget to surplus, pay back the debt (and) respect taxpayers' money".

The costings issue is being partially addressed through the Coalition's expert panel of former respected senior public servants and the promise to release details "before polling day". But the questions of how to achieve a budget surplus and where the necessary program cuts are to be made remain more problematic - politically during the election campaign and in terms of policy priorities for an incoming Abbott government.

Tony Abbott's response, other than the promise to be fiscally virtuous, is his announcement last year that he will appoint a special commission of audit "to identify savings and efficiencies in all areas of government" and deliver "better value for money and sustainable budget surpluses into the future".

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Naturally, like previous opposition leaders, Abbott points out that the opposition does not have the resources of Treasury to identify in detail where all the savings and efficiencies are to be made. Hence the need for an audit commission once in office.

However, Labor has portrayed the audit commission as another election gimmick used, as Finance Minister Penny Wong says, "to justify deeper cuts than those they were prepared to reveal before an election", and ideologically driven rather than based on legitimate management principles. Labor points to the Newman government's audit commission in Queensland under Peter Costello, with its particular but debatable levels of identified public sector debt, accompanying public service cuts, privatisation agenda and proposed changed delivery mechanisms, as a case in point.

Such criticisms have also been made about most previous audit commissions, but it is important to understand what they are and whether they serve legitimate purposes in modern government.

Audit commissions are a relatively new and very Australian phenomenon, with the first one appointed by the incoming Greiner Coalition government in NSW in 1988. They are ad hoc, temporary bodies with expert members from outside of government empowered to review government budgetary systems, finances and programs.

Thirteen audit commissions have been appointed since 1988 - seven between 1988 and 1996, and six since 2008. All except the 2009 South Australian commission were appointed by non-Labor state and territory governments after long periods in opposition that usually inherited some level of financial crisis from their Labor predecessors. The only commonwealth audit commission was appointed by the Howard Coalition government in 1996.

Appointing audit commissions has reflected incoming governments' desire for independent advice, because they saw existing public service finance departments as a part of the problem in increasingly politicised public service organisations. They were driven by the need toget new ideas quickly.

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Moreover, unlike internal Treasury or cabinet expenditure reviews, most audit commission reports are made public, so they can be critically assessed. This is one of their great strengths.

Audit commissions have heralded wide-ranging changes, many now regarded as accepted good public sector management practices. Examples include corporatisation of government owned business enterprises, accrual accounting, improved delivery arrangements, competitive tendering, improved budgetary processes, more flexible public service workplace arrangements and rationalisation of administrative arrangements. They helped establish the budget honesty arrangements evident in this election. Commissions have contributed to updating public sector organisational architecture across different jurisdictions, highlighting the number of agencies, poor reporting processes and contradictory governance arrangements.

They have also made controversial recommendations, reflecting a more economic rationalist agenda than some prefer on issues such as purchaser-provider splits, privatisation, outsourcing, public service cuts and balanced budgets. Consequently, audit commissions have appeared to provide the rationale for cuts that a new government was intent on making, which some have seen as excessive and driven more by ideology than policy necessity - even when the cuts preceded commission reports, as with the Kennett government and in Queensland.

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This article was first published in The Australian on August 28, 2013.



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About the Author

Scott Prasser is Professor of Public Policy and was Executive Director of the Public Policy Institute at the Australian Catholic University. Scott has worked previously in senior policy and research roles in federal and state governments and in several universities in Victoria, NSW and Queensland. Recently, Scott co-edited with Associate Professor Nicholas Aroney and J.R. Nethercote the book Restraining Elective Dictatorship: The Upper House Solution? He has just written with Helen Tracey a report entitled Beyond Gonski: Reviewing the Evidence on Quality Schooling.

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