Budget razor gang begins next stage of billion-dollar audit: Gallagher

Finance Minister Katy Gallagher has revealed that the budget razor gang has already locked in the next stage of the government’s spending audit as it prepares to find billions of dollars in more savings ahead of the next budget in May.

Gallagher also confirmed that a new process for government grants would be finalised in the coming months, which would force ministers to be more transparent when they override the advice of their departments.

Katy Gallagher says the next stage of the spending audit has already been locked in.Credit:Rhett Wyman

Describing the $22 billion worth of savings and redirection of spending in last week’s budget as a “reasonable start”, Gallagher confirmed the “waste and rorts audit” will now continue on an ongoing basis.

But she said the government would start calling it the “spending audit” as it will tackle a broader range of discretionary spending over the coming budgets.

She said the spending audit has already identified “some areas” to cut back in the next budget in May, which has been approved by the expenditure review committee of cabinet.

“We have developed a work program for a second stage, and that will feed into May, and then I hope that there will be another stage that feeds into the following year,” she said.

“I think it’s just going to have to be part and parcel of normal standard government budgeting practice.”

In last week’s budget the government primarily went after what it viewed as rorts, waste, duplication and “zombie” measures. The next stage of cuts will likely be more contentious and require greater consideration of how it will affect various services and stakeholders.

Gallagher said it would be difficult to find another $22 billion in savings every year, but the government would also look for “structural saves” and wide-scale changes to the NDIS.

“The scheme, as it exists now, is quite different to the scheme that was originally envisaged,” she said.

“And you see that in the cost of the scheme … a scheme that was meant to be $25 billion … and we’re heading to over the medium term a scheme that’s hitting closer to $100 billion.”

“Trust in politics is shaky at best, and so we are mindful of that in all of the decisions we take – but we can’t sugarcoat the problems facing this budget.”

She said the government could no longer ignore the spiralling costs of the NDIS, aged care, defence and the interest on debt, adding the budget wasn’t a “magic pudding”.

“There hasn’t been a political appetite to be honest and be upfront about what is coming our way,” she said.

Labor was heavily critical of the former government over a suite of grant schemes such as the car park construction fund and the “sports rorts” affair.

Gallagher confirmed that a new process for government grants would be finalised in the coming months, which would result in better reporting and transparency when ministers override the advice of their departments.

“Sunshine is a very good way of ensuring that processes are followed,” she said.

“Plus, I have a lot of confidence in my ministerial colleagues, mindful of the criticism we’ve made of the previous government that that’s not the way grants are going to be dealt with… we’re not going to have these big buckets of money that are topped up just before election campaigns.”

The government flirted with changing the $254 billion stage three tax cuts in the lead-up to the budget, but decided it would be too politically risky to break an election promise.

Asked whether this meant the government wouldn’t revisit the tax cuts at some stage, Gallagher conceded that “promises matter in politics” but she also thought “being upfront and honest with people about what you know and the challenges that are coming is important”.

“Trust in politics is shaky at best, and so we are mindful of that in all of the decisions we take – but we can’t sugarcoat the problems facing this budget,” she said.

“I think that’s happened for too long. I think people have thought: ‘Nothing to see here, everything is fine, we can chuck a bit of cash here, we can borrow a bit of money there, and we’re making it all work’ – that’s coming all unstuck.”

Of the $22 billion in savings in last week’s budget, roughly $10 billion was cuts and $12 billion was redirecting money to other services.

This included more than $200 million which was cut from programs to help small businesses in last week’s budget, with Labor saying the money was either never allocated or a duplication of other services.

Budget papers show the government cut $197.7 million over four years from the Entrepreneurs Program, which was established in 2014 with a particular focus on advising small businesses on how to apply for government grants.

A spokesperson for Industry Minister Ed Husic said none of the “current elements” being delivered by the program were being cut, but confirmed the entire program was now under review.

The cut comes on top of the $8 million which was taken away from the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) and redirected to mental health and debt counselling services.

Funding has also been cut from the Ombudsman’s “Concierge Service”, which provides free legal advice to small businesses when the Australian Tax Office is targeting them to pay more tax.

Liberal deputy leader and spokeswoman for small business, Sussan Ley, said Labor had “shown their true colours to the small businesses of Australia, ripping tens of millions of dollars away from key supports in the Budget”.

“Labor have cut money from the voice for small business in government, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) and are looking to rip money away from the Entrepreneurs’ Program – this could not come at a worse time,” she said.

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said it was “disappointing that funding has been reduced for the Entrepreneurs’ Program”, but his organisation was “glad to see that the government has decided to continue this important scheme”.

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