NO AREAS of Commonwealth spending should be "off limits" from the Abbott Government's Commission of Audit, a major industry group says.
In a submission to the commission, manufacturing lobby Australian Industry Group says the audit must ensure "best practice" is applied to all government spending.
The submission highlighted a need for more effective, targeted government spending, "especially during periods of scarce resources and competing budgetary demands".
"No areas of agencies of government expenditure should be considered 'off limits' to these principles, including the large-cost areas of health, welfare, defence and education expenditure," the submission reads.
The group, which highlighted environment and market regulations as two key areas where red tape should be cut, also urged the government to ensure spending was fiscally sustainable and transparent.
In its submission, it showed that any government spending should be stable and "wholesale changes to spending measures should be avoided".
As the audit begins going through the federal budget, the AIG also urged the Commonwealth to avoid duplicating regulation with the states.
"The resulting dual responsibilities are difficult for the electorate and commentators to disentangle and they diminish the transparency required to monitor the efficiency of public sector performance," the submission reads.
The submission also backed key issues that are likely to come under the spotlight - co-operative research centres and innovation funding.
It backed the research models, some of which are facing likely funding cuts, as having "broader benefits" across the community.