The new Abbott government should address its self-identified budget emergency by cutting wasteful spending now. Reducing government will also help prepare Australia for its future fiscal challenges. There are some simple steps that can move the budget back to surplus in the short term.
The government should refocus its spending away from expensive and ineffective assistance to the middle-class and towards those in need. By refocusing family tax assistance, the government can save nearly $6 billion a year. A further $8 billion could be saved by ending industry assistance programs other than a select few aimed at research and development. Additional savings can be found by addressing inconsistencies in indexation of payments.
Another important step is to address the duplication of government departments at a state and federal level. By simply abolishing two of those departments (the federal departments of agriculture and education), the government could save up to $1.3 billion.
Further savings can be found in health care by ending poorly targeted or ineffective programs such as GP management plans and rebates under the Better Access to Mental Health Services scheme. A small copayment on Medicare services could save more than $1.4 billion.
Simon Cowan is a Research Fellow in the Economics Program and Program Director of TARGET30.
Dr Jeremy Sammut is a Research Fellow in the Social Foundations Program.
Jennifer Buckingham is Research Fellow in the Social Foundations Program.
Robert Carling is a Senior Fellow in the Economics Program.
Trisha Jha is a Policy Analyst in the Social Foundations Program.
Alexander Philipatos is a Policy Analyst in the Economics Program.