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

My private member's Parliamentary Budget Office Bill 2011 and the Charter of Budget Honesty Amendment Bill 2011 will establish for the first time in Australia's history a parliamentary budget office. The office will be a new body accountable to the parliament and will have two key functions. The first and, I believe, most important function will be to provide a confidential service for costing policy proposals for all MPs and senators, including the opposition, minor parties, the Independents and backbench government members. The provision of a confidential service for costing policies is a crucial and non-negotiable element of my bill. The failure to achieve such a facility will render the PBO pointless. The policy costing service will be no different to that now offered under the Charter of Budget Honesty. Accordingly, should these bills fail to pass and the government's poor imitation of a costing service pass this place, the coalition will not submit its policy costings to either the Treasury or the PBO prior to the election. We will ask the Australian people to form a view on our policies as they stand.

The Charter of Budget Honesty was a creation of the Howard coalition government. Its primary task was 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 policy costing service offered to the opposition was intended as an option. It was never intended to be a consultative service and it only applies to already announced policies. In opposition the Labor Party barely used the facility and when they did they were hardly serious about it. In government they have been even less transparent. In 2007 and 2010 they released their full policy costings the day before the election. During the last election it was a Friday afternoon press release and the Treasurer did not even bother to front the media.

The coalition's experience with the policy costing service under the Charter of Budget Honesty has revealed some shortcomings. The service is not confidential. Requests for costings are published on the websites of Treasury and/or Finance as soon as they are received. The costings of the policies are also immediately published on their websites. Members of parliament have no control over the timing of the release of policies; they have no prerogative to change a policy if the costing turns out to be substantially different to what was expected. There is no scope for the costing to be discussed or reviewed. There is no way of discussing or altering underlying assumptions for policy initiatives. The opinion of Treasury and Finance is final: the departments are not required to release their assumptions underlying the costing, but simply the costing itself.

Herein lies the difficulty. Treasury and Finance have access to information that most MPs and senators do not. For example, at the last election the opposition had estimated the interest to be saved on the debt from not proceeding with the NBN by using the Commonwealth 10-year bond rate as the discount rate. In discussion after the election it turned out the Treasury had used a different, lower interest rate, but initially in discussion they would not tell us what it was. This led Treasury to estimate a lower quantum of savings for the coalition proposal to cancel the NBN even though they would not tell us why. It was interesting that later the NBN implementation study showed that the Commonwealth government bond rate was the appropriate rate to use for the cost of funds. The coalition methodology was correct, but of course the so-called budget black hole story had already run. In post-election discussions the secretaries of Treasury and Finance made it clear to the opposition that they did not want to be in a position to cost our policies. They know that there can be legitimate bases for a difference of views and that it is impossible to arrive at accurate and agreed costings if these differences cannot be discussed.

The policy costing function under the charter was intended to level the playing field, but it appears that a new anomaly has arisen. Under the arrangements between Labor and the Greens for the hung parliament the non-Labor members who have pledged their support for the government already have access to the public sector to get their policies costed. I note, for example, that in April Senator Bob Brown produced Treasury costings that showed reductions in FBT concessions on company cars could save a billion dollars over four years. The policy was later adopted by the government in the May budget. Clearly, the Greens have access to a facility for costing policies not afforded to the coalition. This, of course, will not last. Perhaps the Greens should reflect carefully on that when they support the government's PBO bill as they have signalled they will.

My bill before the House today will address this anomaly. The confidential service for costing policies to all members and senators will allow discussion to occur and views to be challenged. Importantly, it will allow the member or senator to control the timing of the release of the policy costing as the Greens did with their FBT proposal. No longer will requests for policy costings and the costings themselves be published as soon as they are received and prepared by the departments of Treasury and Finance. My bill will ensure that the costing service for policies is not just provided to the opposition, as it is currently under the charter; under my bill the policy costing service will be available to all—Independents, minor parties, and government members and senators as well. There will be no discrimination. All members and senators will, for the first time, have equal access to quality election policy costing services during and outside election periods. I note that some of these issues were raised by the then Labor opposition and the Greens in the 1997 debate on the Charter of Budget Honesty Bill.

The second function of the PBO will be to provide objective and impartial advice on, and analysis of, the Commonwealth budget and fiscal cycle, including the impact of major policy announcements. It introduces another layer of integrity and transparency in the settings of forecasts of government finances. For this to be effective the PBO needs to have effective information-gathering powers. It must be able properly to evaluate the financial implications and decisions. My bill gives these powers to the PBO. With this power comes a heavy duty of confidentiality, and there are consequences for those who breach this trust.

Another key feature of my bill is that the PBO is guaranteed adequate resources. This has been achieved by allocating minimum funding to the PBO as a percentage of departmental appropriations for Treasury. This ensures the operations of the PBO cannot be compromised by inadequate funding. Finally, my bill provides for the PBO to be located within Parliament House, where all members and senators will be able to access it at their convenience. It will, however, remain independent of the Parliamentary Library.

We are committed to this important economic reform. We are not going to be half-hearted about it. We are not going to set up a service that does not work and is not embraced by all members of parliament. An independent body which provides assessment of the budget and fiscal cycle and of the financial impacts of policies will provide an additional layer of integrity to Australia's fiscal framework. A confidential service for costing policies available to all MPs and senators, all year round, and which allows for discussion and refining of policies will strengthen the quality of policy work and make the public discourse about fiscal policy more meaningful. I therefore commend these bills to the House.

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