Alternative 2015-16 budget

More than $30 billion of annual savings could be achieved through annual appropriation bills. This would deliver a surplus in the next financial year based on currently available numbers. (If falling commodity prices cause significant damage to next year's finances, cuts of more than $30 billion would at least reduce the budget deficit to single figures.)

But delivering $30 billion of annual savings through appropriation bills is not straightforward, because only about a third of the Commonwealth Government's spending is authorised in these bills. In a scandalous disregard for accountability and democracy, most spending enjoys an enduring authority granted by parliaments of the distant past and can only be halted with new legislation. These enduring authorities cover welfare payments, Medicare rebates, university subsidies and the transfer of GST revenue to the States. Labor, the Greens and many of the crossbench would block any attempt to undo these enduring authorities.

So my plan is to cut more than $30 billion out of annual appropriation bills, which usually authorise around $140 billion in spending. This would apply across the breadth of the public service, as indicated in the table.

To begin with, I would not allow any spending on new policies or capital equipment (other than defence equipment) in the annual appropriation bills. Typically, more than $5 billion of such spending is unveiled each year. New policies should be thought of as a luxury only available to governments that can live within their means. We don't have such a government. And capital spending, other than on defence equipment, ought to be the responsibility of State and local government anyway.

I would then cut various existing programs that are not protected by an enduring appropriation.

A good number of these may actually be unconstitutional, given the Commonwealth has no explicit authority in section 51 of the Constitution. In recent times, whenever the High Court has had to rule on the constitutionality of such a program, it has struck it down. But many continue because it is difficult to get the High Court to consider each one and Governments have been content to preserve them in the meantime.

A long line of programs should face the chop

I would cut foreign aid. Aid is a poor diplomatic tool, as indicated by Indonesia's rejection of Australian Government pleas for clemency for the Bali 9 ringleaders. Apart from the commitment of military and public health resources in response to natural disasters, the Government does not need to be philanthropic on our behalf. Individual Australians who care about conditions in other countries can and should be encouraged to make donations from their own wallets.

I would cut Commonwealth spending on the health bureaucracy, because healthcare is a State responsibility and government support is best provided directly to individuals rather than to health departments and institutions.

I would also cut spending that promotes healthy lifestyles, as how we live is none of the government's business. I would nonetheless retain spending on immunisation, which provides benefits beyond the individuals who receive the vaccine.

I would cut industry assistance, including for exporters, agriculture, the sports industry, the arts industry, and that part of the broadcasting industry we call the ABC and SBS. This is just corporate welfare for the favoured few.

I would cut government spending on research. It crowds out philanthropic and business support, which would provide greater discipline to the direction of research.