06/02/2008 - 13:32

Tanner announces $642 million spending cuts

06/02/2008 - 13:32

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The federal government will save $642 million over four years by scrapping many of the Howard government's last-minute announcements, finance minister Lindsay Tanner says.

Tanner announces $642 million spending cuts

The federal government will save $642 million over four years by scrapping many of the Howard government's last-minute announcements, finance minister Lindsay Tanner says.

Mr Tanner said the new government's razor gang had a two-stage plan to cut government spending.

The first stage was spending cuts in the 2008 budget to start relieving the pressure on inflation and interest rates.

"And next week I'll be delivering a modest initial instalment when I introduce the additional estimates bills in the parliament," he said.

"Some of the former Liberal government's last-minute spending commitments will be revised or abandoned.

"This irresponsible spending will be cut to reduce outlays by $642 million over four years, including $243 (million) in the current financial year."

"This is a $642 million modest downpayment on the task ahead, the bigger cuts that we will announce on budget night," Mr Tanner told the National Press Club.

Mr Tanner said the government would not proceed with the former government's innovation ambassadors program.

It would reverse the decision to fund Flemington Racecourse's alternative water strategy.

Money allocated to a range of advertising programs including the simplified superannuation initiative would not be spent, he said.

"We will not be funding the proposed fishing hall of fame, or the Australian national rugby academy," he said.

"The growing regions program will be abolished, and the estimated cost of re-establishment assistance for farmers affected by the drought will be revised down to reflect lower than expected rates of takeup."

Mr Tanner said that during the election campaign Labor had identified $10 billion in savings.

But he said the budget would mark just the start of the razor gang's work.

"Stage two of the razor gang will be part of a wider reform agenda.

"We intend to radically increase efficiency, transparency and accountability in government."

Mr Tanner said Labor was seeking a transformation in the way government works, how much it costs and how much financial information it publishes.

"The second stage of the razor gang will be an extensive program-by-program, agency-by-agency review of government spending and tax concessions to be completed before the 2008-09 mid-year economic and fiscal outlook is released."

He said the second stage would deliver savings and improve the equality of expenditure.

Mr Tanner said the procurement of goods and services by the government would also be overhauled.

The previous coalition government had treated the government as a collection of private companies, he said.

"The trouble is this radical decentralisation of government has created widespread inefficiency."

Mr Tanner said the new government would ensure a more coordinated system.

"We're not going to the other extreme because excessive centralisation would be just as bad," he said.

"We don't want to have some kind of central bureaucratic administration of paperclip purchasing across every agency in government, but we will drive tax dollars further through greater coordination."

Disciplined processes were the essential foundation to strong budget management, he said.

"The strategic budget committee will meet at the beginning of each budget cycle to set the strategic direction for future budgets.

"All expenditure decisions will be taken through the annual budget process unless there is a genuine and urgent need for consideration outside that at another time."

He said this process would ensure the highest priorities were identified.

"We also intend to have the expenditure review committee meet throughout the year, not just for a few weeks during the budget process."

 

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