The federal government's Commission of Audit report will be released publicly within days. Treasurer Joe Hockey will use a speech in Sydney on Wednesday night to lay out the timetable for revealing the commission's potentially explosive recommendations.
The report, among the most closely guarded secrets within any federal government in living memory, has been shown only to a select group of senior ministers, and is expected to advocate politically unpalatable options to drive a rapid return to surplus.
Its recommendations will advocate changes to vast areas of federal government expenditure with some to be be trimmed, cut substantially or in some cases, scrapped.
After repeatedly warning of a budget emergency from the opposition benches, Mr Hockey is applying the final touches to the May 13 budget with big-spending programs in welfare slated to be cut.
The age pension is among the items being considered with a graduated move in the eligibility age to 70, regarded as all but inevitable.
There has also been widespread speculation that the rate of growth of education spending will be checked despite promises before the election that the Coalition was on a "unity ticket" with Labor on schools funding.
The introduction of a $6 Medicare co-payment for GP visits aimed at raising $750 million over four years has also been reported in recent days.
That would be designed to act as a disincentive to those suspected of over-using GP services because they are free.
However, the government is not likely to accept all recommendations. Options to wind back Prime Minister Tony Abbott's "gold-plated" paid parental leave scheme, which will pay six months' pay to parents earning up to $150,000 a year, are set to be ignored.
Mr Hockey has been drawn into debate about the Reserve Bank’s stance on interest rates by a report in Tuesday’s Australian Financial Review saying the bank had been informed of his “displeasure” about its neutral stance. The bank is no longer signalling a cut in rates but is also not signalling an increase. The report said the switch from its previous so-called easing bias may be putting upward pressure on the dollar.
Former Reserve Bank board member Warwick McKibbin said it would be “dangerous” for the bank to accede to pressure to state an easing bias.
“Talking about the need for a lower dollar or saying it has an easing bias is not going to have a sustained impact on the dollar,” Mr McKibbin said. “It can have a daily or weekly impact but when you look at what they would have to do to get the exchange rate down to where they would want it to be, it’s impossible _ apart from mismanagement.
“People repeatedly come up to me overseas and ask me about investing in Australia, people with multi-billion dollar portfolios in Korea and parts of Asia and Europe. The amount of money out there looking for somewhere that gives you a real rate of return is unbelievable. That’s where the pressure on the dollar is coming from.”
If the bank said it had an easing bias when it did not it would lose credibility.
