1 - What is this audit about and why is it needed now?

1.1 Introduction

Responsible government is a reasonable expectation in a civilised, democratic and prosperous society.

At the third session of the 1898 Federation Conference a delegate, who became our first Prime Minister, Edmund Barton proposed:

this Constitution is to be worked under a system of responsible government, a system which can only be applied where the power of the purse is in the Parliament.... but there is more than this in the Bill to ensure government by responsible Ministers.... that the power of the purse given to the Parliament is the guarantee of the retention of the people themselves of their sovereign right. It is the people who make these Houses; it is the people whose money is dealt with; it is the people who speak when a Ministry is turned out of office.... it is their voice also which says ... you should not have any more of our money to spend on reckless government.

The National Commission of Audit was established to examine the scope and efficiency of the Commonwealth Government, comment on the state of its finances and to advise on steps to ensure Australia’s long-term fiscal strategy is responsible and sustainable.

There is a substantial budgetary challenge. Australia’s budget situation is weaker than it should be and the outlook is ominous.

This Audit identifies actions that can be taken now to ensure that Commonwealth spending is placed on a more sustainable long-term footing. It recognises the unfairness of saddling today’s children with our debts. With an ageing population there will be fewer people of working age to look after the retired. They should not inherit our debt as well as the burden of looking after us.

Securing the nation’s finances includes issues extending far beyond the normal budget period. It is a long-term project for our whole society.

The extent of what is required over the next 10 years and beyond needs to be better understood by everybody. Politicians, commentators and the media generally have a role to play in ensuring that they understand and shape the debate in an informative way for Australians.

More importantly, we need to reconsider spending Australia cannot afford and be open to governments changing spending commitments as our national priorities change. Above all, governments must avoid promises that simply cannot be afforded over the long-term. Households understand they must live within their means. Governments must be no different.