Audit commissions - a review

In March 2012, Tony Abbott, then leader of the Liberal-National Party federal Opposition, promised that if elected his government would establish an audit commission:

Today, I announce a further commitment to reduce the cost and complexity of government through the swift establishment of a commission of audit that will examine the detail of what the Commonwealth government does and whether it could be done better and more cost-effectively.

He reiterated that promise in his May 2013 Budget reply speech and described the proposed commission of audit as a "once-in-a-generation" opportunity. The commission of audit will, according to Abbott, "identify savings and efficiencies in all areas of government" and deliver "better value for money and sustainable budget surpluses into the future." The proposed commission was part of the Coalition's election promises, so it can be argued that the Abbott Government now has a mandate for appointing such a body.

Accordingly, on 22 October 2013, six weeks after being elected, the Treasurer, Joe Hockey, and the Minister of Finance, Senator Mathias Cormann, jointly announced the appointment of a National Commission of Audit. The Commission is due to deliver its first report by the end of January 2014 and a second report at the end of March 2014. Clearly, the Commission's findings are expected to feed into the first Abbott Government's budget in May 2014, when the final report will also be made public.

The purpose of this article is to outline the history and roles of audit commissions and to suggest where they fit in the architecture of Australian government.

Definition, origin and history

Audit commissions are ad hoc, temporary bodies appointed by executive government with expert members from outside of government, predominantly from business, academia and sometimes former treasury officials, to review government budgetary systems, finances and programs. They sometimes seek submissions from the public and/or key stakeholders and in most cases their final reports are made public. Hence, they partially resemble other advisory mechanisms like public inquiries and to a lesser extent other advisory bodies such as the Productivity commissions processes are often not as detailed as the Productivity Commission or many public inquiries.

Audit commissions are a relatively new and very Australian phenomenon with the first one appointed by the incoming Greiner Coalition Government in 1988. Since then, including the latest one established by the Abbott Government, some 14 audit commissions have been appointed. All but one of these, the 2009 South Australian, Sustainable Budget Commission, have been established by non-Labor governments across all states and the Northern Territory and now two at the Commonwealth level.

However, although the Greiner Government established the first audit commission as we have come to know them there were other precedents.

There was the Royal Commission on Public Expenditure of the Commonwealth of Australia with a View to Effecting Economies headed by Sir Robert Gibson which sought budget savings. In 1973, the new Whitlam Labor Government, which had been out of office for 23 years, appointed Dr H.C. Coombs, former senior public servant and Governor of the Reserve Bank of Australia, to head the Taskforce to Review Continuing Expenditure of the Previous Government,which "recommended cuts in some expenditure programmes to make room for the new government's plans" (Spann 1979: 446). Then there was the Fraser Coalition Government's Administrative Review Committee appointed in December 1975 under Sir Henry Bland, a former senior state and Commonwealth public servant, to identify areas to "effect economies" and to avoid "unnecessary duplication." Its report was never released at the time and its impact appears to have been minimal (Wettenhall and Gourley 2009). In 1980 the Fraser Government established the Review of Commonwealth Functions ("Razor Gang") chaired by senior minister, Sir Phillip Lynch, to cut spending and restore functions to the states. It was seen as being too partisan, lacking a rigorous methodology and having little impact. Of these two bodies, Bland's committee is much more akin to the modern audit commissions that have been operating since 1988.

New audit commissions cometh

However, the new type of audit commissions pioneered by the Greiner Government were more public, released large reports and, from the way governments used those reports to justify cuts to government spending, corporatisation and later privatisation of public enterprises, increased outsourcing of government and a host of other managerial type changes to the public services, had more impact. This agenda, which was common to almost all the subsequent audit commissions, reflected what has been called the new public management (NPM).