Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Parliamentary Service Amendment (Parliamentary Budget Officer) Bill 2011. I think it is very interesting to look at the history of the idea of a parliamentary budget office bill. It was first brought to this parliament by the member for Wentworth after he studied what they had been doing in the United States and other places.

We took that to the election in 2010 as part of our policy. The policy was so good that the Independents, in their negotiations, thought it was a jolly good idea to have a parliamentary budget officer so that the parliament and members of the parliament could get a view of important policy that was backed by those minions in Treasury who can do the sums and can therefore be used in creating a more correct policy.

As a result of that we become party to the agreement to go ahead with the Parliamentary Services Amendment (Parliamentary Budget Officer) Bill, but after about 12 months of nothing happening the shadow Treasurer, the member for North Sydney, thought it was important enough that we should put it forward. And we did. Mr Hockey, the shadow Treasurer, introduced a private member's bill to establish a parliamentary budget office on behalf of the coalition on 22 August this year.

There must have been a flurry of activity in the Treasurer's office when he found out that he had been caught out in not bringing something forward. It should not take 12 months to bring something like this forward to the parliament. So, over the next two days, after a flurry of activity in the Treasurer's office—it is unfortunate that we have had to force this issue—the second reading of Mr Hockey's private member's bill happened this morning during private members' business. The coalition's Parliamentary Budget Office Bill of 2011 together with a Charter of Budget Honesty Amendment Bill 2011 will establish an independent PBO for the first time in Australia's history. This office will be a new body accountable to the parliament, not tied down to government departments.

The government decided it would introduce its own bill to establish a PBO and this happened on 24 August 2011, two days after the opposition introduced its own private member's bill, and now we have it here for debate today. So we have a situation where, two days after the coalition introduced their private member's bill to establish the PBO, the government have decided to put forward their own version of legislation to establish a parliamentary budget officer. Given the government has control of the timing in the House, the coalition now have to deal with the government's bill first, even though it was introduced second. We would obviously prefer to support the coalition's own private member's bill for the establishment of a PBO but, given the circumstances, we have put forward amendments to the government bill.

The coalition's private member's bill seeks to deal with the Charter of Budget Honesty legislation. The Charter of Budget Honesty was created by the Howard government. It was designed to ensure that a government could not mislead the public prior to an election about the state of the fiscal position. This was put in place following the misleading pre-election statements of the Keating government in 1996. The government's policy costing service under their PBO will be no different to that offered now under the Charter of Budget Honesty. I do remember that at the time that legislation was introduced to the parliament it was actually the Labor Party, then in opposition, who opposed it. How could any party oppose a charter of budget honesty?

The coalition's experience with the Charter of Budget Honesty has revealed some shortcomings. The service is not confidential—which we believe is extremely important—with requests for costings and costings of policies being published on the websites of Treasury and/or Finance as soon as they are received. Members of parliament have no control over the timing of the release of policies, and there is no scope for costings to be discussed or reviewed. For this reason, in its current form, the government's bill is inadequate. It does not address key issues and it is not in the best interests of the parliament.

This government has a poor track record with transparency: in 2007 and 2010 it released its full policy costings the day before the election. In 2010 the Treasurer did not even front the media after releasing a press release on the Friday afternoon before the election. Of course, in 2007 it gave no chance for those policies to be properly costed. Members opposite have been telling the House about the coalition's so called 'black hole' in costings during the 2010 election. The truth is that the coalition estimated the interest to be saved on the debt from not proceeding with the NBN by using, as we would consider normal practice, the Commonwealth 10-year bond rate as the discount rate. After the election it was revealed Treasury had used a different rate, a lower rate.

It is interesting that, later on, the NBN Implementation Study showed that the Commonwealth government bond rate was the appropriate rate to use for the cost of funds. So the government said that the Commonwealth bond rate was not the right rate when we costed it, but when they costed it it was the right rate. Go figure! The coalition was correct at the time and the government was wrong. This story unfortunately did not get the airtime that the 'black hole' story did.

There are a number of key differences between the government's legislation and the coalition's. I will go into some detail on those later but they centre around the functions, the powers and, most importantly, the confidentiality of the PBO.

As I previously said, the establishment of a PBO was a coalition election commitment. The establishment of a PBO was also a key element of the agreement between the government and the member for Lyne, the member for New England, the member for Denison and the Greens. There were several agreements between the Independents and the government which enabled the Prime Minister to form government, and this was one of them. This agreement formed part of the Agreement for a Better Parliament: Parliamentary Reform and stated that a PBO:

… be established, based in the Parliamentary Library, to provide independent costings, fiscal analysis and research to all members of parliament, especially non-government members …

The Agreement for a Better Parliament further stated that the:

… structure, resourcing and protocols for such an Office be the subject of a decision by a special committee of the Parliament which is truly representative of the Parliament.

On 23 March 2011, the government established a joint select committee on the proposed Parliamentary Budget Office, which subsequently recommended that a PBO be established. The funding for a PBO was provided for in the May 2011-12 budget. The amount was $24.9 million over four years. The government has chosen to amend existing acts in order to establish a parliamentary budget office

Schedule 1 amends the Parliamentary Service Act 1999. It establishes the PBO, including its purpose and functions and the PBO's access to information and oversight arrangements. It outlines employment conditions and arrangements for the Parliamentary Budget Officer and introduces a requirement for the Parliamentary Budget Officer to prepare an annual report, consistent with the Clerks of the Senate and House of Representatives and the Secretary of the Department of Parliamentary Services,

Schedule 2 amends the Charter of Budget Honesty Act 1998. This schedule amends the charter to clarify the processes associated with the provision of policy costings during a caretaker period, including requests made before polling day and requests made on or after polling day. It also amends the definition of 'caretaker period' within the charter so that it is consistent with the definition in the Guidance on Caretaker Conventions.

Schedule 3 amends the Freedom of Information Act 1982, the Remuneration Tribunal Act 1973 and the Long Service Leave (Commonwealth Employees) Act 1976. This schedule exempts the Parliamentary Budget Officer and the PBO under the Freedom of Information Act 1982, amends the Remuneration Tribunal Act 1973 to ensure that this act encompasses the position of the Parliamentary Budget Officer, and amends the Long Service Leave (Commonwealth Employees) Act 1976 to ensure that this act encompasses the position of the officer. The key differences between the coalition's legislation and the government's are as follows. The coalition has made the conscious decision to ensure that the PBO be an independent body separate to that of the departments of Treasury and Finance. This means that the PBO will be an independent statutory body and the PBO will have strong powers to obtain information from government departments and agencies. Under this structure, the PBO will be able to provide analysis of economic forecasts and budget estimates. The government's bill deliberately ensures that the PBO functions as little more than an extension of the departments of Treasury and Finance by requiring the PBO to make an arrangement in writing to obtain information and documents and preventing the PBO from preparing economic forecasts and budget estimates.

The PBO established under the coalition would not be constrained by the MOUs put forward by government departments wishing to protect their positions or by agreements which stipulate what information the PBO may or may not have. The coalition's bill provides considerable information-gathering powers and secrecy for the PBO. The government's bill requires the PBO to make an arrangement in writing with the head, however described, of a Commonwealth body to obtain information and documents relevant to the Parliamentary Budget Officer's functions—in other words, to agree to a memorandum of understanding.

The third difference in the two pieces of legislation is that the coalition's PBO is able to provide objective and impartial advice on the Commonwealth budget and budget cycle, including the impact of major policy announcements, while the government's bill, in contrast, specifically prevents the PBO from preparing economic forecasts and budget estimates, whether at a whole-of-government, agency or program level. This point seems to be at odds with the government's explanatory memorandum, which says it is:

… the mandate of the PBO to inform the Parliament by providing independent and non-partisan analysis of the budget cycle, fiscal policy and the financial implications of proposals;

The last difference I would like to highlight relates to the confidentiality of policy costings. The coalition's PBO provides for complete confidentiality for all requests from MPs and senators. This allows non-government members and senators to engage in discussions with the PBO as well as allowing views to be challenged in a private domain. The PBO is not permitted to publish costings without the permission of the non-government member or senator. The policy costing options put forward in the government's PBO bill do not differ from what is currently available under the Charter of Budget Honesty Act 1998 during the caretaker period. The Parliamentary Budget Officer must publicly release any policy costing requests as soon possible after receiving the request during a caretaker period and on or after polling day.

The government has certainly made it a lot harder for oppositions. It is providing less information and, frankly, it is a sham compared to what the coalition is putting forward for a parliamentary budget officer. (Time expired)

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

The honourable member for Barker has made a comprehensive demolition of the government's legislation, so I will endeavour not to repeat too many of the points that he has made. But let me say right at the outset that the idea of having a parliamentary budget office—which, at least from the point of view of the coalition, was first proposed by me when I was Leader of the Opposition in the 2009 budget in reply—which is avowedly modelled on the United States Congressional Budget Office, was to address one of the very real weaknesses in our system of government. Nobody is suggesting—least of all me—that we should move to the American system. It has not been performing with great agility recently. But one of the weaknesses in the Westminster type of government is that the government by definition controls the lower house—sometimes more tenuously than others, as we see at the moment—and, because it is the government, has access to all of the massive resources of government in terms of economic analysis, financial information and so forth. And the opposition, which is meant to hold the government to account, is left with very little in the way of resources beyond the talents among its own ranks and perhaps the resources of the Parliamentary Library.

In the United States, where there is a clear distinction between the executive and the legislature—where the President is separately elected and then chooses all of the officials in the executive branch—the congress, which is completely separate, chose to establish the Congressional Budget Office may years ago. It is a very substantial institution with a budget of nearly $47 million a year, a staff of 250 people and an ability to provide a real counterweight in terms of economic and financial analysis to the work of the US Treasury and the various other economic departments on the executive side. That was seen as a critically important part of getting that balance of power right.

In our system, because the government by definition controls the House of Representatives and because the opposition is left with very little in the way of resources, all too often our ability to hold the government to account is very, very limited. Yes, we can ask questions through Senate estimates; we can also ask questions in the House. But, as somebody very wisely said, question time is called question time for a reason. It is not called answer time. The chances of getting an informative answer are not very great. The concept of a parliamentary budget office therefore is a very good one and it corrects an imbalance in our system of government. When I proposed this in 2009, the key motivation for my proposal, the immediate motivation, was the extraordinarily reckless spending of the then Rudd government, which in two years of panic reaction to the first and alleged inflation threat—remember there was a war against inflation—and then the global financial crisis had undone a decade of prudent fiscal management under the government of John Howard and Peter Costello as Treasurer. As I said at the time:

The alarming expansion of spending under Labor makes this—

a parliamentary budget office—

vitally important. Annual spending is projected to rise from $272 billion in 2007-08 to $342 billion in 2010-11, the largest three-year increase since the 1970s.

As we now know, the eventual expenditure figure for 2010-11 was even higher than forecast, at $350 billion.

That was the context in which I argued the case for a parliamentary budget office. But the case for it is now even stronger. We have seen the extraordinary spectacle of the NBN, the National Broadband Network, the largest and by far the most expensive infrastructure project in our country's history, being undertaken without any cost-benefit analysis and without any independent assessment of whether it is the fastest or most cost-effective way of delivering better broadband to all Australians. It is a gigantic project which will cost the taxpayer, were it to be completed, well over $50 billion, and was conceived not after rigorous financial analysis but conceived, so we understand, on the back of a napkin on a VIP flight between Sydney and Brisbane during the course of a conversation between the then Prime Minister, Mr Rudd, and the communications minister, Senator Conroy.

If we had a proper parliamentary budget office no doubt that would be a body that would be able to undertake an independent appraisal of this project and genuinely hold the government to account. Were a genuinely independent parliamentary budget office in existence, a government, before it undertook something as reckless as the NBN, would think twice because it would know that what it was proposing to do was likely to be assessed by that parliamentary budget office.

I was delighted that my successor as Leader of the Opposition, the member for Warringah, stuck with this policy proposal for a parliamentary budget office and took it as a commitment to the 2010 election. As we all know, that election resulted in a hung parliament and, in the wake of that poll, there were several controversies about the costing of various policies put forward by both sides. In that context, the establishment of an independent and properly funded parliamentary budget office became a key element of the agreement between the government and the member for Lyne, the member for New England and the member for Denison as well as the Greens.

On 23 March the government established a joint select committee to enquire into the proposed Parliamentary Budget Office, which subsequently recommended that a parliamentary budget office be established. Funding for the Parliamentary Budget Office was provided for in the budget, $25 million over four years, but a deafening silence and masterly inactivity then ensued. In the absence of any action from the government, on 22 August 2011 the shadow Treasurer introduced his own bill for the establishment of a parliamentary budget office. And then, as though struck by lightening, the government quickly responded and introduced its own bill into the parliament two days later. So there are two bills before the House to establish a parliamentary budget office. One of them establishes a parliamentary budget office which is genuinely independent and will genuinely provide the type of assistance that the policy objective requires. It is really to the difference between those two proposals that I will now turn.

The Parliamentary Budget Office established under the government's bill sets up the Parliamentary Budget Officer as an officer of the parliament, but it makes it, in practical terms, not much more than an extension or a branch of the departments of Treasury and Finance. I note that, in order to obtain any financial information, the Parliamentary Budget Office, as conceived by the government, will have to enter into memorandums of understanding with the various departments. One can imagine how difficult that process will be and how utterly uncooperative and unhelpful those departments will be because they will, naturally, resent any trespassing on their turf. They will do everything they can, and they would do this whether it was a coalition government or a Labor government or any other party's government—they will not want to assist somebody second-guessing their work, even though that is their job. They will provide the same enthusiastic cooperation that many departments provide when they are confronted with parliamentary committees.

Our approach, the shadow Treasurer's approach, is very different. Firstly, our bill would establish the Parliamentary Budget Office as an independent statutory body. Secondly, it will have essentially the same powers as the Australian National Audit Office to obtain information from government departments. It will not have to enter into a memorandum of understanding—though it may choose to do so—but a department will know that if it is not cooperative the Parliamentary Budget Office will be able to haul those officers of the department in and demand documents and answers and actually be able to get the financial raw material that enables it to do its job.

One of the curiosities of the government's legislation—and I think it underlines the haste in which it was put together—is that it says on the first page of the explanatory memorandum that the mandate of the Parliamentary Budget Office is:

... to inform the Parliament by providing independent and non-partisan analysis of the budget cycle, fiscal policy and the financial implications of proposals;

That all sounds fine until you actually get to the legislation and you see that the Parliamentary Budget Officer's functions, according to the government's bill, do not include preparing economic forecasts or preparing budget estimates. In other words, it has to accept the estimates and forecasts that are provided to it by the Treasury. That is absurd. The Parliamentary Budget Office should be entitled to form its own views. I gather from the record of the parliamentary committee that the government was concerned that it might be embarrassing if they came to different opinions. With great respect, that is ridiculous. If you give two economic forecasters the task of forming a view on any economic matter, they might come up with the same conclusion but they are very likely to come up with differing conclusions—but we are all used to that. We deal with many different assessments and forecasts and we are able to assess them all and take them all into account in forming our own view.

Providing a second opinion is enormously valuable. What we ought to be doing here as a parliament is moving the balance back in favour of the parliament as against the executive. That is what this is all about. In our system of government, as I said at the outset, the balance is overwhelmingly with the government—the executive—because the executive by definition controls at least half the parliament. This gives the parliament some real ammunition, or at least the ability to form some ammunition and resources, that enables it to match, albeit in a very small way, the efforts of the government.

Another issue that I know the shadow Treasurer spoke about earlier today at great length—at appropriately great length, I might say, but I shall be brief—is the question of confidentiality. It is very important that members and senators who deal with the Parliamentary Budget Office be able to do so confidentially. That is provided for in the legislation other than in respect of the election period—in the so-called caretaker period. In effect, exactly the same provisions that apply to the costings done by the department of finance and the Treasury under the Charter of Budget Honesty Act are provided for with respect to this new office. That is simply not appropriate. It is important that an opposition or a minor party be able to go to the Parliamentary Budget Office with a policy, have it costed confidentially—in effect, have a dialogue with the Parliamentary Budget Office—and be able to thereby become better informed themselves and perhaps come to the conclusion that a particular proposal was not a good idea after all and maybe a different way to deal with it could be adopted. Ultimately, the consequence of not having your policies costed is that the public form a judgment on that. But it is simply unnecessary and inappropriate to say that there can be no confidential discussions had or assessments made in the lead-up to an election.

After all, the objective here is not political game playing; the objective here is to give greater financial and economic resources to the parliament, which in large measure means the opposition, Independents and minor parties, so that the parliament can do a better job of holding the government to account. This is a vital reform to our democracy and what the government is proposing is simply not good enough. (Time expired)

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

As I rise tonight, can I say that it is an honour to follow the member for Wentworth in the debate on the Parliamentary Service Amendment (Parliamentary Budget Officer) Bill 2011. As he has so well articulated, it was his idea, dating back to 2009, to call for the establishment of a parliamentary budget office to be modelled on that of the US Congressional Budget Office. For those of us who have had the honour and privilege to visit the United States under any of various schemes—I was honoured to go under their young political leaders scheme, where I witnessed the full gamut of everything that the congress has to offer and was briefed on their budgetary office—you could not get a better model. The model which the US congress operates under has two key ingredients: it is confidential in its service and it is also independent in its service. They are the two key ingredients that we should have in Australia when we set up our Parliamentary Budget Office.

It is a shame that, after the member for Wentworth introduced the idea of a parliamentary budget office, it has taken until now for us to be debating this issue and also that the shadow Treasurer has had to introduce a bill calling for a parliamentary budget office for the Treasurer to follow suit and present us with his bill. The worrying aspect of it all, of course, is that in Wayne's world—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The member will refer to people by their appropriate titles.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

In the Treasurer's world, the two key ingredients that you need in a parliamentary budget office, confidentiality and independence, are not there. But they are in the bill that the shadow Treasurer has introduced, and he is to be commended for the excellent work that he has done in this regard.

I hope that the Treasurer takes some time to reflect on the error of his ways, look closely at the coalition's bill and support it. The coalition has been proactive. It has put forward a very sensible, practical approach to how a parliamentary budget office should be set up. It has done so with an air of cooperation. We all know that the Treasurer has been floundering in his role, so the shadow Treasurer has really shown him the way, lent him a helping hand and said, 'Treasurer, we understand that you are a bit of a weak link in this government and that the backbench is talking about your role, so here is a proposal going forward that will help you.' That is what the shadow Treasurer has done. He has come up with a model that shows the Treasurer what a parliamentary budget office should really look like. As has been mentioned before, one of the two key ingredients that it shows is that the model that the shadow Treasurer has introduced is confidential. All services that the Parliamentary Budget Office would provide, whether it be to Independent members, members of the Greens or members of the coalition—in this case, when we are in opposition—would be confidential. It is very important that this service provided is confidential in nature. We all know that the resources that you have in opposition are a lot scarcer than those you have in government. You have the whole backing of a bureaucracy when you are in government. In opposition you do not—you have limited staffing resources, you can call on the services of the Parliamentary Library and you can call on the good graces of those outside the parliament to lend a hand. These bills, if implemented in the correct way, can address that imbalance.

Sadly, if you do not have proper confidentiality in providing the services of a parliamentary budget office, all this will be undone. In many ways, you are just setting up another branch in the Treasury or the department of finance, and this is not what we need for a parliamentary budget office. What we need is an office which is independent and which can provide confidential material, confidential advice and confidential facts, including on economic forecasts.

The importance of this confidentiality was seen in the debate leading up to the 2010 election over the coalition's costings, especially when it came to the NBN. We put to the Treasury our costings and they unfortunately set a lower quantum of savings that would come from our commitment to cancel the NBN, but they would not say why. Of course, the government jumped on this in one of the great scare campaigns and said our costings lacked rigour and that they had a black hole. We all know, as the secretaries of Treasury and Finance made clear afterwards, that they did not want to be in a position to cost the coalition's policies. They did not want to be in a position to have to detail why they used a different interest rate to that which the coalition had assumed, which was the 10-year bond rate. They did not want to be involved in the politics of the government's approach in calling the coalition's election commitments not properly researched and not properly financed—in fact, having a black hole.

It is necessary to avoid this form of politics and to get Treasury and Finance out of the game so they can do the much needed roles that they play. We need this Parliamentary Budget Office, but it has to be done in a confidential way so that if the coalition wants to have some of its policies costed it can approach the Parliamentary Budget Office knowing that it is not going to the executive arm of government to get those costings and knowing that it is not putting the executive arm of government in an invidious position. We will be enabling the parliament to have access to economic costings. As I have said before, it is not only the coalition in opposition that could benefit from this but also the Independents and the Greens, so it is a very sensible approach.

The Parliamentary Budget Office should be independent. If it is not independent, it places the bureaucracy in a difficult situation. The legislation as it currently stands, as the member for Wentworth pointed out, shows that the Parliamentary Budget Office would have to enter into memorandums of understanding with Treasury, the department of finance and any other departments that it wanted to get costings from. One of the great difficulties with this is that these memorandums of understanding could take a long time to be negotiated.

In the six months leading up to an election, when an opposition is looking to have the majority of its policies costed, you could find that the Parliamentary Budget Office is stuck in a huge discussion, debate or conflict with the two key finance departments on the memorandum of understanding. I think we would all agree that this is an unacceptable circumstance. Rather than having the government's model, which calls for this regulatory approach, this negotiation of memorandums of understanding, the Treasurer should just admit that once again he has it wrong, that the shadow Treasurer has come along and given him a helping hand, and just say, 'Okay, we do need full independence.' Our bill would give full independence because, importantly, it would give the Parliamentary Budget Office the same powers as the Australian National Audit Office. Those powers are quite significant. It would enable the Parliamentary Budget Office to be able to demand documents, it would enable them to demand answers, it would enable them to say, 'Challenge some of the costings,' and it would provide a real alternative to the departments of Treasury and Finance.

One of the worries about the bills that the government is putting forward is that in many ways, sadly, it represents the weakness of our current Treasurer. If he were truly an independent Treasurer—if he had his own ideas and the ability to drive the government's economic agenda—I think he would have come up with our bill. But he is so sadly beholden to his department and so sadly bereft of economic leadership that when putting this bill together he has literally gone along with what Treasury and the department of finance have told him.

We cannot blame Treasury and finance for putting the government bill together the way they have, because no federal bureaucracy wants to give power to another organisation or wants to have material it produces double-checked. In a fully functioning parliamentary budget office we would have a fully functioning ability to provide a second opinion to what Treasury and finance were putting forward. I can understand their reticence with this. They have great pride in the work they do and in the work they submit to the parliament, but we should never walk away from increased transparency, especially when it comes to government and the use of taxpayers' money. As has been highlighted before, in the NBN we have a project which will amount to an expenditure of over $50 billion; yet the opposition has no ability as it currently stands to get a cost-benefit analysis of this enormous expenditure of taxpayers' money. If we had a proper parliamentary budget office which offered a confidential service and an independent service we would be able to get this work done.

I make one last point before concluding. Sadly, the Charter of Budget Honesty has probably come to the end of its use-by date if the government is going to continue to use it in the way that it has. In both 2007 and 2010 the Australian Labor Party released their costings on the day before the election, which meant that there could be no scrutiny and no independent analysis of those costings. That is not what the Charter of Budget Honesty was set up for. We need to move on from that, and that is what the Parliamentary Budget Office would do. The member for Wentworth was in many ways visionary in 2008 when he put forward this idea. He was incredibly worried about expenditure that was going to take place under the Rudd and then the Gillard government. That has proved to be correct. In the last budget we saw a budget deficit of over $40 billion. We have seen net debt hit $110 billion. This is expenditure the likes of which Australia has never before seen.

We need a parliamentary budget office to hold this government's rapid expenditure to account. That is what we have proposed in the bill that we have put forward. It is a better bill because of its confidential and independent nature. I would ask the Treasurer to eat humble pie and do what is in the best interests of the Australian nation by going for the type of parliamentary budget office that we have put forward, which will be confidential and independent in nature.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Immigration and Citizenship) Share this | Link to this | Hansard source

I rise to speak on the Parliamentary Service Amendment (Parliamentary Budget Officer) Bill 2011 and particularly on the merits of and need for the creation of a parliamentary budget office. As someone who has spent a great deal of time around election campaigns both in my capacity in this place and in the party organisation, I know that it is genuinely time to end the circus around budget costings at election time. It is important that the Australian public have access to positions that are put forward by the parties at elections and that those parties have available to them proper resources and independent advice to assist them to put forward their positions. Otherwise the circus will continue and the public debate that centres around these matters at election time will distract from the opportunity to focus on the substance of the policies that are being put forward.

I strongly commend the initiative to have a parliamentary budget office, but it has to be fair dinkum: it has to provide the opportunity for all members of this House and the other place to access independent costings. This will aid policy development. It will aid not only the debates that we have in this place but also the debates we have outside this place in our efforts to frame, consider and develop positive and constructive policy. The benefits of having a parliamentary budget office will accrue only if it is a genuinely independent office that enables a confidential and even an iterative process to occur. It is important that any member can have confidence to determine that, when any information they are seeking to be costed is released, they can have confidence in the process in which they engage in to obtain those costings.

The government's bill is yet another attempt to compromise an important and independent process. Just last week I had the unfortunate experience of watching this government abuse yet another important, independent process when officials from the Department of Immigration and Citizenship came to brief the Leader of the Opposition, the shadow Attorney-General and me. This is an important, independent process that members in this House rely on—the provision of briefings from government officials and government agencies. What did we learn? We learnt that the government had used the officials to brief the media before briefing the opposition, which was their purpose. I am sure the minister's old boss, the former minister in New South Wales, would have been quite proud to see public officials used and abused. We saw this process happen in New South Wales year in and year out. It led to an undermining of public confidence in the way that that government was run. That is what is at stake here—the opportunity to have a genuine, independent parliamentary budget office that can assist the workings of this place, the workings of proper policy debate and the development of very sound policy. The Parliamentary Budget Office is supposed to be one of the innovations of this parliament. While the failure of the minority government that has formed has meant that this parliament has been disappointing, there is an opportunity to get at least something right. I do not believe the government is acting as a willing partner in this exercise in the way they brought this bill to this House. That is why the coalition is seeking to restore that opportunity with the amendments that have been circulated by the member for North Sydney, the shadow Treasurer.

As a consequence of the aspiration to form a parliamentary budget office, the Joint Select Committee on the Parliamentary Budget Office was formed to inquire into the matter and found in its final report, handed down earlier this year, that there was a significant shortfall in the way the government and, indeed, the parliament approaches matters of fiscal importance. The final report observed:

There is currently no independent body in Australia that specialises in high quality research and analysis on fiscal policy for the Parliament.

The ideal solution advocated by this committee was the creation of the Parliamentary Budget Office to fill the void and assume this role as a vigorously independent arbitrator. This was first flagged by the member for Wentworth. It was an initiative that he put forward for the reasons already outlined in this place by other members.

The ideal solution advocated by the committee was the creation of this budget office. The committee recommended the establishment of a budget office 'dedicated to serving the Australian parliament'. Let us focus for a moment on those words: an office 'dedicated to serving the Australian parliament'. They do not say that the office should be dedicated to serving the government of the day or that it should be abused in some sort of political process and power game by the government; they say that the office is supposed to serve the members of this parliament. I think that is a telling choice of words. The office is supposed to serve the interests of the people and the broader democratic function of this parliament, not the interests of any one political party or the executive wing. The committee made the considered recommendation that the mandate of the Parliamentary Budget Office be:

… to inform the Parliament by providing independent, non-partisan and policy neutral analysis on the full Budget cycle, fiscal policy and the financial implications of proposals.

Again the emphasis is on the word 'independent'. This position must serve as more than simply a megaphone projecting or regurgitating existing partisan politics. If members wish to outline particular policy proposals and put them in the public domain, they will choose to do so. Their proposals should not be released into the public domain as an automatic consequence of their seeking to have robust and independent analysis put in place. That would mean the withdrawal of the genuine opportunity to go through an iterative process of policy development.

This entity must be separate and it must be equipped with access to documentation and information in order to make authoritative analyses on matters that have undoubtable consequences for the Australian hip pocket and family budget. The joint committee recommended that the main function was:

… to respond to requests of Senators, Members and parliamentary committees, formally contribute to committee inquiries, publish self-initiated work, and prepare costings of election commitments.

The committee found that the election costings provisions of the Charter of Budget Honesty Act 1998—

which was so flagrantly abused by the government during the last election, particularly—

… in enabling the electorate to be better informed about the financial implications of election commitments.

The report made the shrewd observation that the voting public was not able to engage with quality political debate without an independent and potentially very valuable source of information.

The committee recommended incentives for parties to use a costings process in order to enhance transparency and bolster accountability. Importantly, the committee found that in order for this position to correlate with proven international best practice the position of a parliamentary budget officer would have to be created as an independent office of the parliament, not of the executive, which the government seems to have attempted to do de facto in the way they have framed this bill. However, if it were set up in the way that the committee recommended, the office could more clearly serve the ongoing information and scrutiny needs of the parliament as a whole, therefore improving fiscal transparency and executive accountability, which is a notion that seems foreign to this government.

The report made a number of recommendations to further strengthen and consolidate the ability of the office to supply this robust and independent analysis. They included making provision for the office to be able to access information held by government departments as well as allowing for a mechanism by which the Joint Committee of Public Accounts and Audit could oversee the Parliamentary Budget Office position. But it is clear that the creation of this office must go towards the consolidation of an independent entity capable of exercising analytical judgment without interference or influence from either the government or the opposition.

The work of the Joint Select Committee on the Parliamentary Budget Office argues very clearly that, in the interests of open and informed political debate and in order to best give the opportunity for our democracy to continue to flourish as it ought, there is clearly a need for an independent authority in the arena—especially at election time, when the clamour of political promises is at its peak.

The committee recommended that wherever possible the work of the office be made publicly available; but, again, that would be initiated by the member, as we have proposed in our amendments. The coalition has always felt very strongly on the issue, and I remind the House that the establishment of this office was a coalition election commitment. While we agree with the government on the need for the position, our concern with the government's bill before us is, as I have noted, that it take deliberate steps to ensure that the office functions as little more than an extension or peripheral arm of the Treasury and the Department of Finance and Deregulation.

This bill requires that the office make an arrangement in writing to seek information and documents and prevents the office from preparing economic forecasts and budget estimates. Heaven help the government if they were ever subject to that sort of scrutiny! What use is an independent fiscal voice if it is openly silenced and gagged and so prevented from passing analytical judgment and constructive comment on such fundamental political functions as the budget that this House is asked to consider every May? The coalition has conscientiously strived to ensure that the office is an entirely independent entity: an independent statutory body with strong powers to obtain information from government agencies and departments and supply independent analysis of economic forecasts, including the budget. The government bill requires the PBO, or Parliamentary Budget Officer, to make an arrangement in writing, as I have said. I think this is a form of censorship that hardly correlates with the concept the government would have us believe it is proposing: an unbiased and independent umpire. The bill put forward by my colleague the member for North Sydney is in stark contrast with what the government is proposing, and his bill should be commended to the House. If the government truly believe in the need for an open, impartial voice of economic reason, they would alter their bill to provide for this truly objective source of advice and information to be made available to members of this place and the other. This means that the office must have broad scope and access to the documentation they need and the ability to exercise their informed and independent judgment in the security of the workings of the government's budget, regardless of which side of the chamber these sums are derived from. Interestingly, the joint select committee referred to international best practice.

For this office to operate effectively and with credibility and integrity, it deserves to, I think, follow the model of the United States through the Congressional Budget Office, which other members have referred to in their remarks. For the budget office to have integrity, it must mirror that working model. The Congressional Budget Office mandate is to supply congress with objective, non-partisan and timely analysis to aid in economic and budgetary decisions on the wide array of programs covered by the budget and the information estimates required for congressional budget processes. The coalition's primary objection is that the model before us in its current form falls significantly short of this best-practice model.

Each year at the end of January, the Congressional Budget Office reports on the economic and budget outlook. It includes estimates on spending and revenue levels for the next decade and becomes a budget baseline which is then used by members of congress as a neutral benchmark to measure the effect of proposed bills and legislation. The baseline is constructed according to specific laws which instruct the budget office to assume that current spending and revenue laws continue without change. It is not a prediction of future budget outcomes; however, it does reflect the office's best judgment about the way the economy and other factors will influence federal revenues and spending under existing laws. The Congressional Budget Office is a useful, practical tool that serves the purpose of that legislature providing credible advice.

The American Congressional Budget Office employs about 250 people. It operates as an agency comprised of predominantly economists and policy analysts. Three out of four staff hold advanced degrees, the majority in economics or public policy. In the 2010 financial year, the budget office in the United States issued 33 studies and reports, 12 briefs, 12 Monthly Budget Reviews, 35 letters, 14 presentations and two background papers, in addition to two other publications and a vast array of supplemental data. The Congressional Budget Office testified before congress 14 times on a range of issues. In the 2010 calendar year, the budget office completed 650 federal cost estimates as well as 475 estimates on the impact of legislation on state and local governments. The Congressional Budget Office provides up-to-date and easily accessible data on its website, including current budget and economic projections and appropriations. Importantly, the Congressional Budget Office assists the House and Senate budget committees of the United States and, more generally, congress by putting together reports and analyses. In accordance with its mandate, the Congressional Budget Office reports contain no policy recommendations but are objective and impartial.

It is true that Australia's democratic traditions and history have taken a different path to those of the United States, but quite clearly the Congressional Budget Office provides the benchmark which we would seek to emulate, and that is what the coalition's amendments are geared towards. So I would implore the government to get serious about having a fair dinkum parliamentary budget office and not go along with this corruption of the process, which they seem to wallow in on so many occasions, and so happily, to avoid the transparency and scrutiny that is proper for a democracy of our standing. I urge the government to reconsider and live up to at least one expectation of this parliament and deliver a fair dinkum, independent Commonwealth parliamentary budget office.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Parliamentary Service Amendment (Parliamentary Budget Officer) Bill 2011. This bill provides for the establishment of a parliamentary budget office. In considering this bill, it is both interesting and important to look at the history of this parliament's past efforts to establish a parliamentary budget office.

The need for this parliament to have a parliamentary budget office has been raised at various times since the 1980s, with the suggestion that Australia should have a budget office similar to the Congressional Budget Office of the United States of America. But very little happened through the eighties and nineties. Then we fast forward to the infamous 2020 Summit. Who would forget the warm inner glow that many in government felt when the Prime Minister of the day was swanning around with actors and actresses, a range of minor celebrities and a self-proclaimed group of our best and brightest in the complete and utter farce of the 2020 Summit! That was just over three years ago—how time flies. However, one thing that did come out of the 2020 Summit was the identification that there was a need for a well-resourced and financed parliamentary budget office. But, as has become a trademark of this government in getting every decision wrong, in its response to the 2020 Summit the government put the view that a parliamentary budget office was not needed and advised that a service to members was already available through the Parliamentary Library.

So it was left up to the coalition when, in May 2009, the then Leader of the Opposition, in his budget reply speech called for the establishment of a parliamentary budget office which was to be modelled on the US Congressional Budget Office. The coalition's proposal in May 2009 was that the Parliamentary Budget Office would be responsible to the Australian parliament and chartered to provide independent, objective analysis of fiscal policy, including long-term projections of the impacts of various measures on the economy. But, yet again, this suggestion was rejected by this government. Then, in June 2010, the coalition yet again led the way when the Leader of the Opposition renewed the call for the creation of a parliamentary budget office, and the establishment of such an office formed part of the federal coalition's 2010 election policy platform. But again this policy was not supported by the government.

However, when it came to the current Prime Minister's negotiations with the Independents in an attempt to form government—in what could be the script for another episode of At Home with Juliaall of a sudden, after three times previously rejecting the need for a parliamentary budget office, the government changed its mind. Therefore, it has been pleasing to hear members of this government at least acknowledge the need for a parliamentary budget office, even if what they are proposing is a deeply flawed bill and a deeply flawed model which will result in a lame duck and an all but useless parliamentary budget office.

We need to appreciate the importance of a parliamentary budget office, given the current state of the budget and the debt that this government has racked up. In just four short years this government will have run up combined deficits of close to $150 billion. While the Treasurer talks about returning the budget to surplus—which, if achieved, would be the first Labor surplus in over 20 years—he is talking about the surplus of $3 billion, compared to the combined deficits of close to $150 billion racked up in just four years. Even if the Treasurer is able to defer enough expenditure to crack it for a $3 billion surplus, to get us back to square one and to get this nation back into the position it was when the Howard-Costello government left office, we would need to repeat the Treasurer's planned $3 billion surplus year after year for the next 50 years to pay back the debt this government has racked up in just four years. Therefore, in the years ahead, we are going to have growing demands on our budget, but our resources, as always, will be scarce and limited.

No future Australian government will have the luxury of affording the appalling waste, mismanagement and cost overruns that have been the trademark of this government. The misguided and poorly thought through programs we have seen from this government, such as GroceryWatch and the pink batts fiasco—only two from a list too long to mention—must be a thing of the past. The need for a parliamentary budget office to be established and to provide independent costings, fiscal analysis and research to all members of parliament, especially non-government members, has never been more critical.

Given that the government is getting on board with the coalition's call for a parliamentary budget office, the debate is no longer about whether a parliamentary budget office is needed but about the form it should take, not just for this parliament but for all future parliaments. The debate is about what model the parliamentary budget office should take. This parliament currently has two separate models before it, but we must not be foolish enough to consider that these two models will produce the same outcome. While the coalition's model has been developed and thought through over a long period, Labor's model in contrast has been rushed through in response to the coalition's bill—and dragged there by the Independents and Greens under a desperate deal for power, which explains the sloppy legislation we are now debating. In fact, the best thing the government could do is simply withdraw the bill in its entirety and support the coalition's bill.

The main flaw in the government's proposal is that the service to be provided under its model for a parliamentary budget office will not be confidential. The failure to achieve such a facility will render a parliamentary budget office pointless. The policy costing service will be no different to that now offered under the Charter of Budget Honesty. Policy cannot be developed in a vacuum without considering the costs, like we have seen with Labor's policies on the NBN and border protection. When considering policy, every member of parliament must be able to put a proposed policy for costing to the Parliamentary Budget Office and be assured of confidentiality. Members must have the prerogative to adjust or finetune a policy or even dump it altogether if the costing turns out to be substantially different from what was expected. But, under the government's proposal for a parliamentary budget office, requests for costings by members would be published on the websites of the Treasury and/or the Department of Finance and Deregulation as soon as they are received. Members of parliament will not have control over the timing of the release of policies they submit for costing, there is no ability for the costing to be discussed or reviewed and there is no ability for a member to discuss the underlying assumptions behind the policy initiative. Treasury and Finance are not even required to release any assumptions underlying the costing, simply the costing itself.

How can anyone stand here in this chamber and argue for such a flawed scheme? This is why the government's proposal is deeply flawed and why the coalition will not be supporting it without amendments. If the government is fair dinkum about creating a parliamentary budget office—and this is not just another stunt—it must provide a model that delivers a confidential service for costing policy proposals for all MPs and senators, including the opposition, minor parties, Independents and backbench government MPs.

Confidentiality is the crucial and non-negotiable element of the coalition's bill and the amendments we seek. It is worth noting that the US Congressional Budget Office, the scheme on which we seek to model our parliamentary budget office, does honour confidentiality. Likewise, members and senators in this parliament must be able to enter into confidential and private discussions with a parliamentary budget office about the costs of policies.

Members and senators also must be able to question and discuss any underlying assumptions, such as costings, with a parliamentary budget office, and members and senators must have the ability to control the timing of the release of policies and their costings. To do so would enable this parliament to function at a higher level, to the benefit of the Australian nation. The coalition's bill and the amendments we seek for this bill shall achieve this goal.

The amendments proposed by the coalition will, firstly, strengthen the functions of the Parliamentary Budget Office by broadening the functions of the office to include preparation of economic forecasts and budget estimates. Secondly, the amendments proposed will improve information-gathering powers and secrecy by deleting the arrangements within the bill for obtaining information from Commonwealth bodies and inserting the information-gathering powers from the coalition's bill, which are based on those of the Auditor-General. Thirdly, and most importantly, the amendments will restore confidentiality to costing of policies during the caretaker period by deleting the sections within the government's bill which relate to the immediate public release of policy documentation submitted by non-government members and senators during the caretaker period, and the period on or after polling day, until the time when the government is formed. This will enable costings to be truly confidential, unless otherwise instructed, and they will provide an opportunity for views to be challenged in the private domain before costings are released to the public. We on this side of the House are not afraid of scrutiny. Unlike those opposite, we have delivered a budget surplus in the past 20 years. In fact, previous coalition governments have delivered budget surplus after budget surplus. It is fast becoming the case that few Australians can even remember the last time Labor delivered a budget surplus. Imagine if the Australian people had the information with a proper analysis of policy costings prior to an election; this is what the coalition's plan will deliver.

The coalition's model is in line with global moves towards greater transparency in government and fiscal policies that governments will undertake. We are seeking to move forward with a robust, independent umpire advising on policy costings. The only way to create a workable model is to create a fiercely bold and truly independent parliamentary budget office, not one reliant on government departments—and this is exactly what the proposed, far superior private member's bill of the coalition will do.

I call on members of the government and the Independents to look beyond the next election. Rather than think about short-term political objectives, think about what is best for the future of this country and this parliament. Do that by either supporting the coalition's alternative bill or at least supporting the amendments, as these are the only ways we can ensure that this parliament has a truly independent and effective parliamentary budget office.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank members who have contributed to this debate on the Parliamentary Service Amendment (Parliamentary Budget Officer) Bill 2011. The establishment of an independent parliamentary budget office is very significant. It is a permanent reform that will build on Australia's already very strong fiscal frameworks. It will ensure greater accountability and transparency in policy making. It will promote greater understanding in the community about fiscal policy and it will ensure that the Australian public are kept better informed about the fiscal impact of policy proposals, particularly during election periods.

These reforms will allow all parliamentary parties and Independent members to have their policies costed by the Parliamentary Budget Office. Members and senators will be able to request confidential policy costings from the PBO outside of the caretaker period of a general election. During general elections, the election policy costing service will be fully transparent, with costings made available to the public. This transparency requirement is fundamental—I stress 'fundamental'—to ensure the Australian public can be fully informed about the fiscal impacts of election policies before they cast their vote. The Parliamentary Budget Office will help ensure that the Australian people are never again—I stress 'never again'—subjected, as they were at the last election, to the opposition attempting to hide an $11 billion black hole in their costings. That is what occurred in the last election campaign. The opposition spent the last election trying to avoid public scrutiny of their election policy costings under the Charter of Budget Honesty Act. Today we have seen that they are already creating new excuses to hide from public scrutiny at the next election. It is unbelievable. They are slowly crab-walking away from the independent model for the Parliamentary Budget Office that they signed up to just five months ago. The opposition are clearly still grossly embarrassed about the $11 billion black hole at the last election. We saw that reflected in the extraordinary attack in this parliament today on the Public Service by the shadow finance minister. It was a simply disgraceful speech that was made to camouflage his own gross incompetence.

We have to be very clear about this. This bill will provide the opposition with an advantage that no other opposition has ever had before. It provides for access to a confidential costing service outside of a general election period, which has never been available before, and it provides for a fully transparent costing service during a general election. The opposition will have two options when it comes to election policy costings: they can elect to have Treasury and Finance cost their election policies or they can elect to have the Parliamentary Budget Office do it. They will have absolutely no excuse. They will not be able to try to hide their election policy costings from public scrutiny.

The government's bill is based on the model which was recommended by the Joint Select Committee on the Parliamentary Budget Office. Everybody on that committee supported the model that the government is putting forward. The Liberal Party signed up to that model in March this year. There was broad parliamentary representation on the committee. It included members of the Liberal Party, the National Party, the Labor Party and the Australian Greens, and an Independent member of parliament. It included two shadow ministers, the member for Sturt as deputy chair, and Senator Joyce as well as the member for Higgins. It is hard to imagine a more important issue on which bipartisan support is warranted. That is why it is so deeply disappointing to see the opposition walk away from supporting the model which was recommended by the joint select committee. The joint select committee from all parties in this House agreed to it in total, yet it is being walked away from in this parliament today. It is deeply disappointing.

It was deeply disappointing to hear the shadow Treasurer this morning declare that, if this bill were passed, the opposition would not submit its policies for costings by either the Parliamentary Budget Office or the Treasury. Could you think of anything more arrogant and anything less accountable than that action of the shadow Treasurer in this House today? He declared that the Liberal Party will keep the Australian people in the dark at the next election when it comes to policy costings, just like he did in the last election campaign. That is the team that got $9 out every $10 in net savings wrong at the last election. They are now asking the Australian people to let them do it again so they can hide their incompetence from the Australian people. It is not surprising that they have got a budget black hole, or crater now, of $70 billion in their budget bottom line. They have a Leader of the Opposition who is wandering around the country telling anybody what they want to hear anytime, irrespective of cost. Therefore, it is not surprising that they should come into this House and resist the scrutiny of the Parliamentary Budget Office during an election campaign, given that incredibly irresponsible record that they have set for themselves.

The PBO model proposed by the shadow Treasurer would, firstly, undermine its resourcing, making it hostage to future funding by the Treasury department. Secondly, it would weaken governance arrangements by making the PBO accountable to ministers, not to the parliament, and reduce the transparency and public accountability around election policy costings. The opposition want to replace a completely transparent costing process, one where the costings are made available to the public, with a non-transparent process. We know why that is the case—because they simply can never get it right. Given their track record, they can simply never, ever get it right.

The shadow Treasurer wants to put in place a confidential election costing process so that when he does not agree with the costing outcome he can hide it and refuse to release it to the Australian people. This is extraordinary. Is there nothing they will not do or say to achieve a political advantage? All this demonstrates that they have so little faith in their own ability that they want some sort of escape clause in the PBO legislation. Given this abysmal record, it is not surprising that they are doing everything they possibly can to run away from public accountability and, really of course, to run away from the fundamental tenets of the Charter of Budget Honesty Act. This is what the then Treasurer, Mr Costello, had to say when the Charter of Budget Honesty was put forward: 'By requiring the costings to be made publicly available, there is limited scope for the results of the costings to be misrepresented.' Very accurate.

The opposition's amendments are inconsistent with the recommendations of the parliamentary joint select committee and inconsistent with the central thrust of the Charter of Budget Honesty. The committee spent many months considering the appropriate functions of the Parliamentary Budget Office costing processes and access to information, and considered something like 21 submissions. The committee determined that information-sharing arrangements governed by a memorandum of understanding between the PBO and government agencies would be more effective than legislating powers to compel. The opposition's proposed amendments provide for unfettered access to highly confidential taxpayer and national security information that is clearly not required for the PBO to fulfil its functions. The opposition's approach is to create an adversarial legislative relationship backed by criminal sanctions.

The government's approach favours the development of a comprehensive understanding between the PBO and agencies. This is designed to ensure that information can be exchanged quickly and appropriately, in keeping with the recommendations of the joint select committee. If the opposition were serious about budget accountability and transparency, they would support the model put forward by the joint select committee in the government's legislation. The Parliamentary Budget Office is an important new institution that will strengthen Australia's budget frameworks and it should not be undermined by those opposite. Their approach to this bill demonstrates yet again why they are unfit for high office.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

The question is that this bill be now read a second time. A division being called for, in accordance with standing order 133(b) the division is deferred until 8.00 pm.

Debate adjourned.