CANBERRA, May 1 (Reuters) - A much-anticipated audit of the Australian economy released on Thursday recommended broad structural changes aimed at stemming what the government warns is a looming “fiscal crisis”, setting the stage for a tough Federal budget later this month.
The Report on the National Commission of Audit made 86 key recommendations for changes to the 15 largest and fastest growing areas of federal spending, which it says could save A$60 billion-A$70 billion ($55 billion-$65 billion) a year within a decade and return the budget to surplus.
Among the controversial proposals were changes to the pension system and federal healthcare insurance, a raft of privatisations, the devolution of power to state governments and the abolition, sale or merger of 99 government bodies.
Australia’s A$1.5 trillion economy sailed through the global financial crisis, but a slump in mining investment and a sluggish response to record low interest rates has hit government tax income as expenditure continues to grow.
The Federal budget, to be handed down on May 13, is expected to include a temporary “deficit levy” on high income earners as well as other tough measures to tackle deficits forecast at A$47 billion this year and totalling A$123 billion over the next four years. (Reporting by Matt Siegel; Editing by Lincoln Feast and Richard Pullin)