Commission of Audit Released

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The National Commission of Audit has been released with 64 recommendations having been put to the Government.  Debate will rage in the media and social media about the strengths and weaknesses of the recommendations.

We would like to hear your thoughts

Recommendations we like include:

  1. Putting more money aside to fund currently unfunded future government superannuation liabilities.  This mainly affects military pensions.  The issue here is that unless government starts putting away funds now and investing them, in years to come, paying out these entitlements is likely to put significant strain on the Commonwealth’s cash flow
  2. Increasing the age whereby people are eligible for the Age Pension to be 77% of the average life expectancy of Australians.  A large part of the problems faced by European countries in recent years has been having too much of their populations eligible for age pensions too young
  3. Encouraging the States to introduce a co-payment structure for public hospital emergency departments for less urgent conditions.    Any disincentive which encourages people not to use emergency departments as a GP is worth considering as it could reduce pressures on the public system and allow for quicker treatment of those in genuine need of emergency assistance
  4. Reduce the number of government bodies and reassessing the operations of other bodies.  Practically every Australian has stories of Government wastage through red tape etc.  We would suggest reviewing the amount of administration staff to specifically look for duplications and where perhaps some of our public servants are given less than their best effort at work.  Such wastage is not tolerated by business of any size so why do we tolerate it from Government?

Recommendations we don’t like include:

  1. Allowing State Governments to levy income taxes.  This system is employed in the United States and makes it much harder for taxpayers.  While this recommendation, if adopted, would likely be very good for us, it is unnecessary complexity.  This recommendation does not specifically indicate increasing income tax collections but our concern is that if given the power, over time, the States will help themselves rather than deal with their own overspending.
  2. Increasing the superannuation preservation age to be five (5) years below age pension age.  The beauty of superannuation is it is a low tax environment for people to be able to save for their retirements.  Our concern is that if the age at which it can be accessed is increased, people will shun superannuation and focus more on investments outside of super.  While there are advantages of investing both inside and outside of super, outside investments can result in increased taxation obligations which could ultimately reduce overall savings/investments on retirement.
  3. Requiring higher-income earners to take out private health insurance for basic health services in place of Medicare. Isn’t this just discrimination?  All working Australians (subject to income tests) contribute towards the cost of our health system. How is it fair to say to anyone the must contribute to the cost of such basic services but aren’t entitled to the benefits?  The proposed cut of is earnings above $88,000 per year which we believe to be grossly low.
  4. Requiring young single people aged 22 to 30 without dependants or special exemptions to relocate to higher employment areas or lose access to benefits after a period of 12 months on benefit.  There will always be places within our great country where there is a shortage of employment.  Is forcing young people to move away from their families necessarily the right move?

Troy Pearce

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