Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

This is an amendment to the Charter of Budget Honesty Act to remove clauses which provide for the costing of election commitments for the federal opposition. These provisions will become redundant following the establishment of the Parliamentary Budget Office.

I will briefly review the background of the Charter of Budget Honesty Act 1998. This groundbreaking economic reform was introduced by the Howard coalition government. Its introduction was intended to prevent a repeat of the fiscal misrepresentation of the Keating government during the 1996 election campaign.

During the campaign the then government claimed the budget would be in deficit by only $590 million in 1996-97 and it claimed it would be in surplus by $2.7 billion in 1997-98. After winning the election, the new coalition government found out the claimed deficit of $590 million was actually a forecast deficit of $7.6 billion. It also found the claimed surplus of $2.7 billion in 1997 was actually forecast to be a deficit of $7.3 billion.

Former Treasurer Peter Costello proposed legislation now known as the Charter of Budget Honesty Act to prevent future governments going to an election with misleading information on the fiscal and economic outlook. The charter provides for the publication of regular updates to the state of the nation's finances as a complement to the annual budget.

One of these is an update on the state of the budget prior to elections. It must be released within 10 days of the issue of the writs for a general election. This update known as PEFO—Pre-Election Economic and Fiscal Outlook—is prepared by the departments of Treasury and finance. It is not prepared by the government of the day. This prevents any political massaging of the figures and ensures integrity in the reporting of the financial position.

Another requirement is for the Treasurer to publicly release and table a Mid-Year Economic and Fiscal Outlook report, which we know as MYEFO, by the end of January in each year or within six months after the last budget, whichever is the later. This provides updated information to allow the assessment of the government's fiscal performance against the fiscal strategy set out in the budget. We will have more to say about that in the next few days. The MYEFO updates key information contained in the most recent budget economic and fiscal outlook report and contains a detailed statement of tax expenditures, presenting disaggregated information on tax expenditures.

The charter also requires the government to produce an intergenerational report every five years, and this provides an assessment of the implications of demographic change for economic growth. It also assesses the financial implications of continuing current policies and trends over the next four decades.

The charter also requires the government to introduce an annual fiscal strategy statement which outlines a fiscal outlook on how the government has delivered on its fiscal strategy. In addition, the charter formalises the publication of a final budget outcome to be produced annually by the government of the day and this presents final fiscal outcomes for the preceding year. It deals with the general government sector budget aggregates, Australian government financial statements, Australian government general government sector financial statements and federal financial relations.

The final reform of the charter was to provide for equal access for the government and the opposition to the departments of the Treasury and finance for the costing of election commitments. This was to ensure that election policies announced by both the government and the opposition were equally rigorously costed. This was intended to ensure the voting public was better informed about the financial implications of election commitments.

The charter provides that the request for election costings can only be made during the caretaker period by the Prime Minister or the Leader of the Opposition. Requests by the Leader of the Opposition for policies to be costed must be through the office of the Prime Minister, so costings of submitted policies are publicly released by the relevant secretaries as soon as practicable after receiving a request.

Although the charter was introduced by the coalition, in recent years some shortcomings in the election policy costing process have emerged. The charter was intended to provide potential alternative governments with equal access to departmental costing of policies during the pre-election caretaker period consistent with the principle that governments should not have privileged access to the Public Service during that caretaker period.

The current arrangements prevent any dialogue in confidence between the opposition submitting the costing and the department carrying out the work. This prevents the discussion of issues or the challenging of departmental views. It closes off the opportunity for further analysis or reflection by the opposition. Costings are simply published by the relevant department as soon as the work is completed. So the charter fails to provide a facility for minor parties as well, or Independents, to access the departments of Treasury or finance for policy costings.

These shortcomings are addressed in my Parliamentary Budget Office Bill. The policy costing provisions in that bill provide for costings to be submitted by all non-government MPs and senators. They provide for policy costings to be submitted without the approval of the Prime Minister. They provide a policy costing service that is independent of the departments of Treasury and finance. They provide for policy costings to be confidential, with opportunity for dialogue and reassessment, which is hugely important. Costings are only made public with the permission of the relevant MP or senator. These provisions within the PBO Bill build on and improve the election costing provisions in the Charter of Budget Honesty. The passing of my PBO Bill will render superfluous the policy costing provisions in the Charter of Budget Honesty. The amendment I am introducing today will remove the redundant provisions of the charter. A related key point is that the introduction of a PBO will complement and enhance the fiscal reporting provisions of the charter through the requirement to publish regular reviews of the longer term implications for the budget of government policy decisions. This all adds to the integrity of the fiscal process.

The introduction of the PBO Bill today and the related amendment to the Charter of Budget Honesty Act represent another step in the coalition's reform program to ensure integrity and transparency in government finances. The establishment of a PBO was a key element of the agreement which underpins the 43rd Parliament. Funding has commenced, yet the PBO has not. The parliament should not have to wait any longer for this important reform. I commend this bill to the House.

Bill read a first time.

See this speech in context