By Julian Bajkowski

Initial details of the highly anticipated National Commission of Audit promised by the Abbott government have been released in Canberra by Treasurer Joe Hockey and Finance Minister Senator Matthias Cormann.

The sweeping review of government functions, activities and spending will be chaired by Business Council of Australia president Tony Shephard. It will, as expected, reside within the Department of Finance.

Privatisations and Commonwealth asset sales are clearly set for examination, even though Finance Minister Matthias Cormann refused to speculate what these may be until the Commission’s report is handed to the government.

In a separate but related announcement, government will also boost the nation’s debt ceiling to $500 billion as it seeks to reduce expenditure.

In an ambitious timetable, the Commission of Audit’s report will come in two tranches in just six months.

The deadline for the Phase 1 document has been set for the end of January 2014 to be delivered to the government.

That initial sweep will cover the roles and responsibilities, the efficiency and effectiveness of government expenditure and medium term fiscal sustainability, Senator Cormann said.

The following Phase 2 document is due to be handed in by the end of March in time to feed into the 2014/2015 Budget. It will focus on “public sector performance and accountability” Senator Cormann said.

According to the Commission of Audit’s Terms of Reference the probe will specifically look at the “scope of government.”

The Terms of Reference say the Commission will be asked to will consider such scope “in relation to activities performed by the Commonwealth, the Commission is asked to identify: whether there remains a compelling case for the activity to continue to be undertaken; and – if so, whether there is a strong case for continued direct involvement of government, or whether the activity could be undertaken more efficiently by the private sector, the not-for-profit sector, the States, or local government.”

In an indication of just how wide and free the probe will be allowed to roam, the Commission has been asked to “identify areas of unnecessary duplication between the activities of the Commonwealth and other levels of government.”

It has also been asked to “identify areas or programs where Commonwealth involvement is inappropriate, no longer needed, or blurs lines of accountability.”

The identification of “inappropriate” Commonwealth involvement is likely to generate robust input from parts of private industry.

Some businesses have become increasingly unhappy with the commercial activities of government-owned assets like Australia Post that are seen to be encroaching on parts of the retail sector’s turf – ranging from financial services to newsagents.

At press conference to announce the Commission, Senator Corman said that the government did not have “at present” a policy to sell off “any other Commonwealth assets other than Medibank Private.

However the government is clearly keeping an open mind pending the Commission’s recommendations.

Although declining to speculate on “what the Commission of Audit may or may not recommend,” Senator Cormann left the door firmly ajar at a press conference after being pushed on the question of whether or not Australia Post was on the block for a potential sell off.

Australia Post on Friday delivered its 2013 annual report which revealed a group profit of $312 million after tax – up 10.9 per cent on the previous year.

However within that figure Post cautioned that volume declines and “the absence of a stamp price increase for the last three years” had caused traditional mail revenue to fall by another 4.5 per cent in 2012/13.

That produced in losses in the domestic mail business of $218.4 million, a revenue hole that has deepened by almost 60 per cent and is not going away.

"If unchanged, the widening losses in our traditional letter services will eventually stifle positive developments in our parcels business,” Australia Post chief executive Ahmed Fahour said in the annual report.

“These negative volume trends in letters will continue and the cost to deliver on our Community Service Obligations will also continue to grow constraining our ability to continue to deliver an efficient and cost-effective service for Australian consumers and businesses.”

Whether or not that post-digital predicament will generate sympathy for an Australian icon or prompt a UK style privatisation will be up to some of the public and private sector’s hardest heads that have been handpicked to deliver the influential tome.

Aside from Mr Shephard, appointments to the role of Commissioner for the big audit include: former Howard government Immigration and Education minister (and now broadcaster) Amanda Vanstone;  ex-federal Treasury head Tony Cole; New South Wales government pricing watchdog and former federal departmental head Dr Peter Boxall; and former Western Australian senior public servant Robert Fisher.

The selection of Mr Shephard largely confirm widespread anticipation that the Abbott government would look to the private sector for ideas on how to drive efficiencies in service delivery and reduce the overall burden of administration to help stimulate economic activity.

At the press conference Mr Hockey flatly rejected any suggestion that there was a potential conflict arising from the head of leading business group overseeing the government review.

Notably, the calls to bring private sector expertise into government to get it working better and smarter has not been restricted to frustrated politicians and industry.

Former federal public service chiefs, including Kevin Rudd’s pick of Terry Moran have for some time advocated that frontline services in social and welfare policy areas need to take greater advantage of existing specialised skills in the not-for-profit and private sectors.

During his time as public service head under Prime Minister John Howard, Dr Peter Shergold, also publicly articulated the need for government agencies to move with mainstream innovations in terms of automating and streamlining transactions with the government in the same way that banks and other businesses had moved their services online.

That push has been fresh impetus with the Commission asked to look into the “adoption of new technologies in service delivery and within government.”

There is also a strong hint that the various agencies that provide oversight of the government’s various functions could also be recast.

The government similarly wants the Commission of Audit to “identify options for strengthening Commonwealth budgeting arrangements by including “increasing independent and credible scrutiny” and “examining the role of the Parliamentary Budget Office, the Australian National Audit Office and the Intergenerational Report.”

It has also asked for the “way risk expenditures are accounted for” to be reviewed.