By Pip Hinman and Jennifer Thompson
The National Commission of Audit's report, released on June 21, provides the framework for the Coalition government's budget cuts. Just as most of the Liberal state governments commissioned an audit soon after their election as a way of "justifying" viciously slashing public services, Howard and Costello will use this 409-page audit to cover their political decision to force greater austerity on the majority while transferring more wealth to the corporate rich. The report is another nail in coffin of Howard's promise that no worker would be worse off under his government. Equally importantly, it provides a road map of where the Coalition would like to go: the government will no doubt "reject" recommendations which bear too high a political price today — only in order to revive them at a later date.
The audit sets the ideological framework for resurrecting the neo-liberal Fightback! program that was decisively rejected in the 1993 election. It sets out to reshape the very terms on which government expenditure is worked out, providing economic rationalist arguments to institutionalise austerity in the welfare system — a job that was begun by the previous Labor administration.
The government will argue that this "neutral" audit is simply about recommending "good management practices". But the real purpose is to provide a justification for harsh cuts to social services. The aim is revealed in one of the report's premises: that "well-managed" government "minimises effects on the cost structure of Australian business".
According to the audit report, the main expenditure pressures on the budget are health and aged care, family support payments (such as child-care) and the age pension. If national savings are to be increased, so its argument goes, cuts will have to be made to so-called middle class welfare.
Razor gang
A leaked razor gang document which includes proposals from both the Department of Social Security and the Department of Finance recommends slashing $6.5 billion from welfare and pensions over four years. The options include: a tougher assets test on pensions; cutting family payments by $1.88 billion; cutting assistance to unemployed people by $1.4 billion; and raising $636 million by stopping social security "fraud". Other proposals include means testing the child-care rebate; cutting the scheme which allows unemployed people to earn up to $60 a fortnight; and abolishing the education and unemployment entry payments.
In a particularly nasty attack, the razor gang also recommends that all blind and aged pensioners be subject to an income and assets test.
According to Welfare Rights Centre director Michael Raper, nearly all these proposals directly contravene Howard's promises that the government would not resurrect Fightback! and would not attack the welfare safety net. "The government's $8 billion deficit reduction strategy is a political, not an economic, imperative", he told Green Left Weekly. "Even if there was a $8 billion deficit, it does not mean that there should be $8 billion worth of expenditure cuts, and certainly not over two years."
These proposals would not assist the long-term unemployed to find work, Raper said, adding that Labor in office had already significantly pared back the programs. "If the government wants to raise revenue, it should reduce the concessions that rich Australia receives. Many high income people get more subsidies than the average pensioner, although much of this is hidden."
As for the $636 million the government expects to gain from clamping down on social security "fraud", Raper said that this did not reflect reality. "The system is already screwed down very tightly."
Age pensions threatened
The audit urges the government to review its policy for adjustments to pensions and benefits. Instead of linking them to CPI increases, it suggests "regular reviews in the light of all relevant circumstances, including budget pressures".
While most pensions do not have formal benchmarks (the main exception being the aged pension, which is set at 25% of the male total average weekly earnings — MTAWE ), they are indirectly linked to this benchmark. Because of the significant increase in the number of women joining the paid work force in a part-time and casual capacity, in the period between 1984 and 1995 MTAWE have risen by 2.2% in real terms while average weekly earings (AWE) have fallen.
Employees' AWE are currently some 15% below MTAWE. The audit recommends that the government adopt AWE rather than MTAWE as the benchmark for all pensions. This would reduce the aged pension correspondingly.
The audit advocates that all pension benchmarks be redesigned with regard to "affordability and incentive considerations"; that benchmarks take into account all supplementary cash and non-cash entitlements (such as transport and pensioner discounts); and that income support be lowered to "enable access to a minimum bundle of goods and services" rather than any "absolute standard of living".
The audit also puts the case that raising benefits acts as a disincentive for people to find work. It recommends that the government de-link unemployment benefits from other income support payments such as rental assistance. The fact that Australia's official unemployment rate has been hovering around the 8-11% mark for the last five years seems to be of little consequence to the audit commission's researchers.
Privatising health care
The report's authors are concerned to contain the cost of government spending on health and health-related services. Most importantly, the recommendations mean moving slowly but surely to dismantle Medicare as a universal health care system. They urge introducing user payments and opportunities for the private sector to get a share of public health and aged care funds.
According to the report, EPAC has projected that total national health spending could increase from 8.4% of GDP to more than 10.5% by 2030 because of population ageing, and the RIM (Retirement Income Modelling) task force projects that it could grow to 14.5% because of increased demand across all ages. Although society's overall health service needs are growing, the report's main concern is to shift the cost to individuals.
For the Medicare Benefits Scheme and Pharmaceutical Benefits Scheme, the report recommends that in preparation for further "reforms", the government should "adopt measures to reduce unnecessary use". Suggestions include means-tested co-payments that would begin to control "demand" through price, as a prelude to moving everyone into private health insurance.
These steps, to be pursued a little later, when people have got used to the idea of a more user-pays system, are outlined under two "Alternative approaches for reform" (Appendix C.5). One involves a single capped grant being given to the states, along with the control of a Medicare levy to collect the "full cost of public health services".
The second, more sinister, option involves the government paying a national health insurance premium for each "eligible citizen" to private health funds, which would then be responsible for securing public hospital and other Medicare health services for their clients.
Funds could "compete" for members by offering add-ons to the standard package. The question is, who will take those "members" — for example older people or people with disabilities — whose needs are more expensive, if they get only a standard payment for them from the government?
The big objection to the current "unbalanced" system of the financially "open-ended" Medicare Benefits Scheme and Pharmaceutical Benefits Scheme ($5.7 billion and $1.9 billion respectively in 1994-95) combined with capped funding grants to the states, is the chance that it gives for those with capped funding and other limits to shift costs back to the Commonwealth.
Cost shifting has mainly involved cash-strapped public hospitals sending outpatients to GPs, specialists and pharmacies for their services, some charging of public patients to Medicare and minimising public hospital stays so that additional drugs and services will be met by Commonwealth-funded outlays. This shows that the actual problem is that public hospitals are inadequately funded. Rather than the government meeting increased funding needs, however, the report proposes that individuals take more of the burden.
Aged care 'reforms'
Older people are undoubtedly in the sights of the authors in relation to the general recommendations for health services changes. They are part of the "10% of the population [consuming] around half of all health services", but it doesn't stop there. In a recommendation on aged care reforms, the report suggests:
- a phased introduction of means-linked user charges and entry contributions for the aged residential sector;
- "budget holders" — people designated to arrange the purchase of a financially limited package of health services — for older people; Carmen Lawrence already raised this in her coordinated care plan;
- subsidies for nursing home or hostel beds to be attached to the older person rather than the bed, and be a part of the packet of money they can spend on health services.
All of these suggestions are intended to tighten the government limits on what it will spend on aged care — there's an upper limit but no lower limit per person — and also to open the aged care field far more to the private sector. With an ageing population, aged care is of course big business. n