Budget 2014: How will the Commission of Audit recommendations affect your business?

Business groups have welcomed the federal government’s National Commission of Audit but have voiced strong opposition to several of its key recommendations.

The commission’s report, which is 900 pages long and contains 66 recommendations, calls for a sharp reduction in government spending and more autonomy for the states when it comes to areas such as income tax, education and health.

While the government isn’t saying which of the report’s recommendations will make the cut in this year’s federal budget, the commission has recommended limiting industry assistance to “areas of genuine market failure” and reducing payments for the government’s proposed parental leave scheme to the average weekly wage. 

Council of Small Business of Australia executive director Peter Strong said while he welcomes the government’s overall attitude towards small business, the Commission of Audit was predictable and tailored towards larger companies.

“I thought the whole thing was boring,” he said. “The issue here was there was no identity between a small business and how they do things and other people. The government’s doing a very good job in the small business area but I am disappointed in the report. It’s missed a lot of opportunities.”

Strong said he would have liked the report to acknowledge the vital role SMEs play in the economy.

“We are the ones who earn the revenue that runs the country,” he said. “We are also the ones who do the innovation that increases productivity.”

In its report, the commission recommends the Commonwealth “wind back its involvement in the vocational education and training sector”. The report suggests abolishing all Commonwealth vocational education and training programs, including the National Workforce Development Fund and Commonwealth support for apprentices.

“I’m really confused by that,” says Strong. “We’re trying to have an agenda across all states. We want the national apprenticeship system so that when you move across the country you don’t have to get new licences and work out if you can go out and do the job.”

Strong says he doesn’t want to see a situation where a carpenter who has trained in Victoria doesn’t get employed in NSW because employers don’t like another state’s training system.

Industry groups have also been critical of the recommendations to eliminate government assistance for exporters. The report suggests closing the Export Market Development program, the Export Finance and Industry Corporation, ending tourism grants and cutting funding to Austrade and Tourism Australia. 

The report also recommends raising the pension age to 70 by the 2050s and including the family home when means testing eligibility for the pension.

David Knowles, partner at Pitcher Partners, says while he welcomes the report he has some concerns about how potential changes to superannuation and the aged pension will affect business owners.

“Australian business people have been investing in good faith in their businesses over their lifetime knowing that the family home was outside the net,” he said. “This is a game changer. It means people may have to sell the family home or borrow against it to fund their retirement. This is particularly concerning given that the retirement age will increase to 70.”

However, Paul Drum, head of policy at CPA Australia, says the report is a “very important element of a bigger picture”.

“It’s important to remember that it is a consultant’s report and not government policy,” he said.

When asked about the timing of the report’s release, Drum said CPA Australia thinks “it’s important for all good businesses to do a stocktake of their expenses”.

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