Original article from the Australian Financial Review:
The Shepherd Review, led by former Business Council of Australia president Tony Shepherd rightly casts the net more widely than the ill-fated 2014 National Commission of Audit he chaired for the Abbott government. The audit commission focused on the scope and efficiency of the federal government as part of its plan to get on top Labor's legacy of budget deficits. In contrast, the Shepherd Review is cast as a statement of national challenges around the core principle that a strong economy is the basis of a fair society. It is a reaction to the political failure of the "unfair" 2014 Abbott-Hockey budget, leading to the proposition that government is so broken that it threatens the prosperity that Australians have become entitled to. As The Australian Financial Review has argued, this political failure is one of the most damaging deficits to come out of Australia's biggest-ever resources boom.
Perhaps, as the Financial Review also has argued, the 2014 budget crashed because Mr Abbott's office locked up Mr Shepherd's politically bracing audit commission report until just before Mr Hockey rose to deliver his first budget speech. But it also failed because much more work was needed to till the public ground on the need for such strong but necessary measures. The first in a series of reports from the Shepherd Review – published by the Menzies Research Centre – belatedly begins that process.
The budget is still central because confidence in Australia's economic growth prospects will not return while government piles up debt to fund recurrent expenditure. As the Financial Review editorialised in December when the mid-year budget update was released, "the federal government's finances are going backwards and no one is prepared to stop that happening". Since Wayne Swan's "temporary deficit" in 2009, Canberra has borrowed $410 billion as a broken political culture has failed to reverse the Keynesian stimulus of the global financial crisis. The immature and increasingly populist debate refuses to accept anyone losing any budget entitlement while being quick to increase the tax burden on the nation's most productive wealth creators. As the Shepherd Review's first report continues, the unsustainable level of government spending is resting on a narrow and volatile tax base. The need for a capital-importing economy to compete in the global race for capital is routinely ignored or misunderstood. We are struggling even to keep the lights on. And between now and the Shepherd Review's policy recommendations in September, Australia could lose our AAA sovereign credit rating.