Gail —  May 14, 2014 — Leave a comment


Tony Shepherd, President of the Business Council of Australia and former Chairman of the Board for Transfield, pushed for the creation of an audit commission before the election. The Business Council of Australia (BCA) represents the CEO’s of the top 100 Australian companies. After the election Prime Minister Tony Abbot appointed Mr Shepherd as the chair of the National Commission of Audit (NCOA), along with three senior public servants and one former liberal minister.

It comes as no surprise that it is based on neo-liberal economic thinking which is now accepted by all major political parties in the Western world and beyond. Even if it is not all adopted, the report is important as a wish list of what the business community would like to see in Australia. If it does not scare you to death, you don’t understand what these people have planned for us. The NCOA is a declaration by the 1% about how they think the 99% should live. Now Tony Abbot and Joe Hockey are about to shove it down our throats. The only good thing about the NCOA report is that it shows all of us where Tony and Joe get their instructions. No need for conspiracy theories here.


In order to sell these changes to the Australian people the government has said over and over that there is a budget crisis caused by falling income and rising expenses leading to increased government debt. Professor Raja Junankar is quite blunt in his assessment of the alleged budget crisis: “It is just a political stunt to try and persuade people that we have to cut back on things that this Government would like to cut back on anyway.”i Consider these facts about the our economy. Australia

– has the third-lowest debt as a percentage of GDP in the OECD;

– has had a very low level of government debt for the last 30 years;

– has current interest payments on its loans of less than 1% of GDP;

– has low interest rates and low unemployment;

– has a GDP per capita which ranks 4th among OECD countries;

– spends less on welfare as a percentage of GDP on than all but 4 countries;

– spends less on pensioners as a percentage of GNI than most OECD countries, including the US;

– has more pensioners living in poverty than any OECD country except Korea;

– spends slightly more per capita on healthcare than OECD average;

– spends less on healthcare as a share of GDP than the OECD average;

– did not increase spending per capita on healthcare from 2000-2011;

– has seen the share of wages in the GDP go down and the share of profits go up in the last 20 years.ii

Again, to quote Professor Junankar: “If we listen to the politicians it appears that the Australian economy is suffering from a major crisis of ballooning government debt and an impending crash… in fact, Australia has a ‘miracle economy’.”iii What the facts about the Australian economy show is that while being quite well off as a country, we are not very generous in providing support for people who are unemployed or needing some kind of government assistance. The recommendations of the NCOA will only make this worse.


To see more clearly how the budget crisis is a scam, we need only look at how the NCOA and the government plan to “fix” the problem. They want to cut pensions, charge “co-payments” for medical services and consular assistance overseas, and end industry related research funding. If the government was dealing with a genuine budget crisis, they would look at INCOME from taxes as well as EXPENDITURE on pensions and healthcare. They say income will be looked at later. But why not look at them NOW, before the drastic cuts are introduced in the budget?

The fact is that superannuation tax concessions – worth as much as $35 billion a year – will cost the government more than it outlays on the aged pension within two or three years. So why not try to recover the money lost in these tax concessions? There are billions of dollars in tax income lost due to other rorts like negative gearing and salary packages.iv These are left out of the discussion because THE GOVERNMENT AND THE BUSINESS COUNCIL ARE NOT SERIOUS ABOUT BALANCING THE BUDGET. The “budget crisis” story is repeated over and over to scare us into accepting the cuts to social services. So what is their plan?


The idea of cutting payments to aged pensioners is particularly nasty when you realize that compared to other rich countries Australia has very low public spending on age pensions but relatively high rates of aged poverty. Further, the suggestion that the pension age should be raised to 70 is simply a recipe for greatly increased aged poverty. Because of age discrimination and the fact that older workers are usually replaced by younger people on less pay, it is hard for many people to stay in work or find a new job after 55.

The NCOA recommends that older unemployed people be forced on to Newstart ($250 per week), which will increase levels of poverty and homelessness. According to Veronica Sheen, a Research Associate at the Monash School of Social Sciences, the current system provides a modest but adequate standard of living for older Australians. The lower amounts of support recommended by the NCOA “sets the ground for the pauperisation of some groups of older people, especially single women (a group highly reliant on the full age pension) and those in rental accommodation.”v


Further evidence that budget crisis is a fraud can be seen from the fact that the NCOA has a lot to say about the minimum wage. The minimum wage HAS NOTHING TO DO WITH PRODUCING A BUDGET SURPLUS, however one of the most serious changes recommended by the NCOA is found in their suggestions for this policy. According to the ACTU their plan is to:

– Abolish the independent umpire that sets the minimum wage;

– Cut the real value of the minimum wage every year for ten years;

– Scrap the national minimum wage altogether in ten years’ time;

– Pit each state against each other to see who can have the lowest wage after that.

“This big business plan is a massive attack on the Australian way of life. Their strategy is clear: bust apart the wages safety net and drive everybody’s wages down. This is not just an attack on the low paid. It is an attack on all of us – every person who earns a wage in this country. By destroying the wage floor big business is trying to drive everyone’s wages down.”vi


In the first stage of cutting the minimum wage NCOA recommends setting a minimum wage for low-skilled workers at 44% of average WEEKLY earnings. The minimum wage is currently 43.3% of the average FULL-TIME wage, which is considerably higher than the average WEEKLY earnings. If the NCOA’s recommendation is implemented, the current minimum wage of $622.20 per week would be reduced to $488.90 per week.vii For people in part-time and casual jobs, it would reduce the current hourly rate of $16.37 to $12.80 per hour (plus a casual loading). For many people, including the 10% of the female workforce that is underemployed, this would be a large loss of income.viii


At the moment if you are on a pension and earn income between $100 and $250 per fortnight this reduces your fortnightly payments by 50 cents in the dollar. Rather than improving this, the COA recommends that payments for all benefits and pensions should be reduced by 75 cents in the dollar. Since all unemployed under the pension age will only get the low Newstart payments, they and all other unemployed must choose between living on $250 per week or finding any kind of low-paid work. In effect the recommendations of the NCOA are simply intended to force many people off pensions.

“If implemented, the recommendation means that there will be a greater disincentive for people to take on any work as it will be more trouble than what it’s worth. It is exactly counter to the type of help a government would want to give people to get off income-support payments. It erodes people’s capacity to help themselves through paid work and will increase poverty. It could also extend participation in the grey or black economy.”ix


The NCOA recommendations for Medicare would completely change our universal, publicly funded health system. The recommended GP co-payments are large at $15 and would undermine one of Medicare’s chief goals: to ensure everyone could see a doctor when they needed to. Even a lower charge of $6 would deter many low and middle income earners from visiting the GP. Research has shown that co-payments on poor and middle income people worked as a strong disincentive for seeking medical treatment at a primary care level.x

General practice is the most efficient part of the health system. It helps to minimise the number of people who ended up needing far more expensive hospital or chronic care. AMA President Dr Steve Hambleton explained that “the main problems we’ve got with our health system are the growing amounts of chronic disease and our ability to treat lots of diseases that we couldn’t treat that well in the past.”xi

While the NCOA recommendation for a system of copayments would drive lower and middle income earners out of the Medicare, they also want the high income earners to leave it as well and pay for basic health services through the private insurance system. These recommendations would lead us to two health care systems, one for the well-off and one for everyone else. This also opens the door for higher-income groups to continually contest government expenditures on a health system that they do not use themselves. As Veronica Sheen explains, “the Commission of Audit’s recommendation has the potential to set up the type of inequalities in health care combined with the exorbitant costs of the system that we see in the US.”xii


One of the long term goals of the NCOA for education is to transfer all policy and funding responsibilities for primary and secondary schools to Australia’s state and territories. This is a well-known right-wing goal which if carried out would make our education system look more like the one in the US. The consequence of such a change would be to entrench existing inequalities. States would be under pressure to cut education t funding overall, and would probably respond by removing funding from “unsuccessful” schools and increasing funding for “successful” ones.

The NCOA also recommends that the government should abandon the needs-based funding model in the Gonski reforms from 2018 onwards. They believe that increased funding does not necessarily lead to better student outcomes. Along with other right-wing commentators, they put the onus for student achievement on schools and teachers without any reference to the levels of their funding. The Business Council would like to see the federal funding and oversight of education removed because this is where the pressure comes from to improve outcomes for students who have a poor record of academic performance.xiii


To show just how mean spirited and short sighted the Business Council is, I must quote the contribution to a discussion of the recommendations of NCOA by Roy Green, Dean of UTS Business School at University of Technology, Sydney.

“In a mishmash of free market ideology and wishful thinking, the Commission of Audit recommends the abolition, scaling back or “consolidation” of almost all government industry and innovation programs. While the rest of the world is focused on new sources of growth in knowledge based products and services, these recommendations would make Australia increasingly dependent on the export of unprocessed raw materials in volatile global markets.

“Against all the evidence of the factors that drive growth and competitiveness in high cost economies like Australia, the government is advised to SCRAP PROVEN COST EFFECTIVE PROGRAMS, such as Commercialisation Australia, Enterprise Connect, Cooperative Research Centres and the Clean Energy Finance Corporation.

“Meanwhile, other governments, even conservative ones, in Europe and the US are expanding such programs with beneficial results in the wake of a global economic crisis which Australia largely managed to escape, thanks ironically to a swift and well-calibrated public policy response.

“Examples include the Technology Strategy Board and Catapult Centres in the UK which have contributed to the repositioning of that country’s manufacturing sector towards “smart specialisation” in global value chains. Isn’t this exactly what is required in Australia as a response to the closure of car assembly and other large scale production facilities?

“Instead the Automotive New Markets Program, which is designed to assist components suppliers to diversify and globalise their production, will be strangled at birth. The Innovation Precincts Program, which might have accelerated the development of world competitive clusters of Australian expertise, will not even get started.”xiv

Clearly the very large companies which make up the Business Council are not interested in Australia’s tax dollars going to assist smaller and more innovative businesses get started. As Roy Green explains, this will insure that in the future Australia’s only form of economic activity is the export of raw materials into the world market. So where are all the unemployed people going to work?


As we might expect, the recommendations of the NCOA are just what the doctor ordered for the Business Council. Low rates of overall tax mean that as companies and as individuals the members of the Business Council will be better off. However other recommendations provide more direct benefits. The cutting or removing the minimum wage will benefit all employers and will ultimately lead to lower rates of pay across the whole economy.

Pushing all high income earners into private health insurance will benefit the big insurance companies in the Business Council. Privatizing Medibank, Australia Post and the Snowy Hydroelectric system will eliminate these as public companies which compete effectively with Business Council members. Remember very big companies prefer a system with a few large companies that do not actually compete with each other. Finally, the recommendations to outsource payment, IT and property management services will benefit companies which are likely to be represented by the Business Council.xv


The policies outlined in the report by the NCOA will destroy the central features of Australia’s social contract. Starting with the 1907 Harvester Judgment, which set standards for the minimum wage, Australia has developed a set of programs covering pensions, health care, social services, the minimum wage and public education. These have ensured that most Australians have at least a basic standard of living and extremes of poverty and inequality have been largely avoided. The most important failure of this system is that it has not effectively met the needs of Aborigines and Torres Strait Islanders. Needless to say, they will be even worse off if the recommendations of the NCOA are accepted by the government

The NCOA and big business want low rates of taxation, limited government expenditure, no regulation of private companies and the privatization of virtually all government activities. They want to mirror social policy in the US by removing the central features of our social contract. Their recommendations are the blueprint for its destruction.

There are about 900 pages in the Commission of Audit report. In order to understand more about its recommendations you will need to examine the many articles which look at specific aspects, such as minimum wage, education, health, family benefits, industry policy, etc. My only suggestion is that you should be very sceptical of anyone reported in the media who thinks that there is something good or even acceptable in this report.

The private media outlets are after all very large corporations and have a vested interest in hiding the serious consequences of these recommendations. The public media are directly funded by the government. As a result it is impossible for them to launch a serious and extended criticism of these recommendations, particularly when their funding is itself up for review. The NCOA report was written by and for the big end of town. THEY ARE ONLY LOOKING AFTER THEMSELVES, AND IT IS TIME THAT WE DID THE SAME!

vii; response by Veronica Sheen, Research Associate, School of Social Sciences at Monash University.
xiii; response by Glenn C. Savage, Researcher and Lecturer in Education Policy, Melbourne Graduate School of Education at University of Melbourne.
xiv; emphasis added.xv The report of the Australia Institute “Auditing the auditors: The People’s Commission of Audit” can be downloaded here: Auditing the Auditors


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