Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

The government, the coalition, the Greens and the Independents are all in violent agreement that the establishment of a Parliamentary Budget Office is an important and necessary step to improve the quality of the management of our nation's finances. But it has to be a strong and effective Parliamentary Budget Office. It has to be a truly independent Parliamentary Budget Office. The bill before us, the Parliamentary Service Amendment (Parliamentary Budget Officer) Bill 2011, seeks to establish a Parliamentary Budget Office that falls well short of those very important aspirations.

The Minister for Finance and Deregulation, Minister Wong, came into this chamber trying to give the coalition a bit of a lecture on sound financial management. Let me just make this observation. The coalition does not have to take any lessons from the Labor Party when it comes to sound financial management. When it comes to sound financial management, Minister Wong is long on rhetoric and very short on delivery, because she is part of a government that has delivered four successive deficit budgets, including two of the largest deficit budgets in the history of the Commonwealth, both in dollar terms and as a share of GDP. Minister Wong is part of a party, the Labor Party, which has not delivered a single surplus budget in more than 20 years. People across Australia know that, when it comes to financial management, the Labor Party in government stuffs things up, and people across Australia know that it always comes down to the coalition to fix up the mess that was created by the Labor Party in government. This is a Labor government in the true tradition of past Labor governments, which spends too much and then has to go for one ad hoc tax grab after another to try and make up ground. Even as it is going through these multibillion-dollar tax grabs, it actually makes further promises, meaning that the budget ends up being even worse off than when the government started imposing a new tax.

I well remember sitting with Minister Wong in a Lateline interview during the budget, when Minister Wong was queried: 'Why is it that the government hasn't included the revenue from the carbon tax in its budget figures? Why is it that the government hasn't included the expenditure attached to the carbon tax in its budget figures?' This is a minister who wants to give us lessons on transparency when it comes to financial management, who wants to tell us about being transparent with the Australian people about budget estimates and budget information. The government produced a budget, when it knew that it wanted to impose a carbon tax, without even including any of the revenue estimates or any of the expenditure estimates, knowing that the employment figures in the budget were wrong, knowing that the CPI figures in the budget were wrong. That is the record of Senator Wong.

Do you know what Senator Wong's excuse was at the time? Senator Wong's excuse was: 'Don't you worry about that. It doesn't matter, because the carbon tax is going to be budget neutral. We're going to raise all these billions of dollars of revenue off businesses across Australia and we're going to introduce all of these additional expenses, but don't you worry; it is going to be budget neutral, so it won't matter.' Well, we now know what the definition of 'budget neutral' is in Senator Wong's language. The definition of 'budget neutral'—to the extent that Senator Wong and the government have fessed up to it so far—is an additional $4.3 billion hit on the federal budget that was not disclosed at budget time, back in May 2011. We know that, from the Mid-Year Economic and Fiscal Outlook in November 2010 to the budget just six months later, there was a massive deterioration in the budget bottom line—an $8½ billion deterioration in the budget bottom line for 2010-11 and another $10 billion deterioration in the budget bottom line for 2011-12. We know that that has got worse since then.

Let me just talk about transparency around the fiscal impact of government or opposition initiatives. This is a government that is not even transparent about the fiscal impact of its current initiatives. This is a government that proposes to introduce a massive new tax in the mining sector and attaches a whole series of promises to it, and it is not prepared to be transparent about the revenue estimates that are the foundation of the mining tax revenue. It is not prepared to be transparent even about the cost of all the measures that it has attached to it. It is not prepared to be transparent about the cost of the promises it has made as part of the mining tax package.

Here we have a minister who tries to give us all a lecture that is long on rhetoric, but, when it comes to actually delivering now, to being transparent now, she is nowhere to be found. This is a minister that is part of a government that treats this Senate with absolute contempt, which is why it is important for us to give the Parliamentary Budget Office appropriate powers in terms of accessing information, in terms of making its own economic and budget estimates forecasts independent from Treasury, independent from government. This is a government that has had in front of it, for three or four weeks, an order of the Senate to produce costings in relation to all the promises attached to the mining tax. This is a government that has ignored an order of the Senate with a deadline of 8 November—it did not respond to it at all. This is a government that has a terrible track record when it comes to financial management. This is a government that has yet again, in the bad old tradition of Labor governments in the past, made a complete mess of our public finances.

They now try to ratchet up the rhetoric; they now try to yell and scream the loudest to make people out there believe, somehow, that they might be bad but that others might be worse. Let me tell you this, Minister: people across Australia know that the coalition has a strong track record when it comes to sound financial management. People across Australia know that the Labor Party has a disastrous track record when it comes to financial management. I move opposition amendment (1) on sheet 7177:

(1)   Schedule 1, item 16, page 7 (line 29) to page 8 (line 10), omit subsections 64E(2) and (3), substitute:

  (2)   For the purposes of performing his or her functions under subsection (1), the Parliamentary Budget Officer may prepare, or have regard to, either or both of the following:

  (a)   economic forecasts;

  (b)   budget estimates (whether at the whole of government, agency or program level).

[functions of Parliamentary Budget Officer]

This amendment will help to establish a Parliamentary Budget Office that is truly independent and will ensure that we have a Parliamentary Budget Office that can actually pursue its own economic forecasts and its own preparation of budget estimates. The amendment relates to the functions of the Parliamentary Budget Officer. Currently, schedule 1, item 16, section 64E(2) prevents the Parliamentary Budget Officer from preparing economic forecasts or preparing budget estimates. Proposed section 64E(3) states:

... the Parliamentary Budget Officer must use the economic forecasts and parameters and fiscal estimates contained in the most recent relevant reports ...

That is a completely inappropriate constraint on the Parliamentary Budget Office. To use only the official economic and budget forecasts in its work is an inappropriate constraint from undertaking independent assessments or analysis of the economic or fiscal impacts of policy proposals.

These subsections also seem to be at odds with the purpose of the Parliamentary Budget Office outlined in proposed section 64B, which states that the purpose of the Parliamentary Budget Office is to provide:

... independent ... analysis of the budget cycle, fiscal policy and the financial implications of proposals.

The way the legislation is currently drafted would seem to prevent the Parliamentary Budget Office from preparing longer run economic or budgetary projections beyond the period of the forward estimates.

Let me just quickly reflect on this whole issue of making assessments of the period beyond the forward estimates. Again, I say to people across Australia: do not listen to what this minister says; watch what this minister does. Do not listen to what the Gillard government says; watch what the Gillard government does. Here the minister was talking about transparency and the importance of integrity in the way you present your information around the fiscal impact of various initiatives. Let us look at how the government goes about this. When it comes to the carbon tax, we were told by the government that they could not possibly provide us estimates of the fiscal impact beyond the current forward estimates. In fact, we were told that longer term fiscal costings have a low reliability and are therefore misleading. That is what we were told by the government. But former Prime Minister Rudd was pursuing the Carbon Pollution Reduction Scheme, he published a 10-year forecast for the fiscal impact of the Carbon Pollution Reduction Scheme in his budget papers. That was Prime Minister Rudd. Obviously, we had issues with former Prime Minister Rudd's proposals for a carbon pollution reduction scheme, but at least he was open and transparent enough to present information in his budget papers about the fiscal impact over a 10-year period.

Under the Gillard government, which was supposed to be a new era of openness and transparency, that has gone. We are now told: 'No, you can't do that. You can't possibly do that.' The opposition cannot do it in relation to the government; but of course the government can do it in relation to the opposition. This is the hypocrisy of it all. This government is all about politics and not about delivering good policy. It is a completely different rule for us. It is one rule for them and another rule for us. Everybody in this chamber would remember—and I am sure Senator Macdonald and Senator Cash and Senator Adams would well remember—when the Gillard government used the so-called department of climate change figures to assess the fiscal impact of the coalition's policy through to 2020. That is five years beyond the forward estimates. That was after they had told us: 'No, no, no, we can't give you the figures about the fiscal impact of our carbon tax beyond the current forward estimates because longer term fiscal costings have a low reliability and are therefore misleading.' As soon as they said that, to justify hiding information about the impact of their policy out they went on a political attack, just running the rhetoric, as this minister and the government always do. Here they go—they put out a press release in which they say:

The economically irresponsible Direct Action policy would necessitate the Coalition needing to spend $5.2 billion on international permits in 2020 to meet the bipartisan target of minus 5 per cent.

That is supposedly in addition to the $2 billion that direct action would spend on domestic abatement.

The Prime Minister repeated that again yesterday, but the department of climate change has since conceded that its figuring on coalition direct action is a little rubbery. Answering a question on notice about those numbers a couple of days ago, this is what Minister Combet now says:

The Department agrees with the Treasury that longer-term fiscal costings have a lower reliability than those over the forward estimates. The Department agrees with the Treasury that the fiscal estimate of climate change policies can only be prepared to budget quality over the forward estimates period.

The reason I read this out is that it demonstrates the importance of having a parliamentary budget office that is independent from government because we have a government now, and we might well have a Labor government in the future, that politicises the Public Service, that uses Treasury, that uses the department of climate change inappropriately and that compromises hardworking public servants. This is a government that politicises, that has a track record of politicising, the federal Public Service. Of course, they have verballed the Public Service. They give them directions that are inappropriate and of course they run spin after spin after spin. The minister comes out here again today perpetuating this lie out of context that, somehow, we have a $70 billion black hole. It is just not true. What the minister does is add in all of the revenue from all of its new and increased taxes, assuming that somehow we will lose all of that revenue without losing any of the related expenditure. That of course is completely wrong. The record already shows that on getting rid of the carbon tax and associated measures or on getting rid of the mining tax and associated measures, even when you do not rescind the increase in compulsory superannuation contributions, the budget is actually better off. The budget is better off by scrapping the mining tax package even if we do not rescind the increase in compulsory superannuation. These are all important matters. They demonstrate the importance of the Parliamentary Budget Office having an independent capacity—independent from government, from Treasury and from other departments that are part of government—to come up with credible independent economic forecasts and budget estimates.

This is why I, on behalf of the coalition, have moved the amendment, which would see sections 64E(2) and 64E(3) omitted. I have moved that they be replaced with proposed section 64E(2), which gives the Parliamentary Budget Office the powers to prepare its own economic forecasts and budget estimates or to have regard for existing economic forecasts or budget estimates as it sees fit. This would allow the Parliamentary Budget Office to fully meet its objective of providing truly independent analysis of fiscal policy and the financial implications of proposals. If the government were serious about having a strong, effective, independent Parliamentary Budget Office they would support this very sensible amendment.