Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to 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.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Is the motion seconded?

Andrew Robb (Goldstein, Liberal Party, Chairman of the Coalition Policy Development Committee) Share this | Link to this | Hansard source

I rise to second the motion on the Parliamentary Budget Office Bill 2011 and the Charter of Budget Honesty Amendment Bill 2011 introduced by my friend and colleague the member for North Sydney. These bills are about restoring credibility and integrity to the policy costings process which has been so grossly politicised and abused by the Gillard government following the 2010 federal election.

This was exposed by Jennifer Hewett in a front-page story in the Australian last September titled 'Coalition counts cost of Treasury's "political game"'. Jennifer Hewett wrote that meeting minutes revealed how the process was 'politicised and influenced by the opinions of the senior bureaucrats'. This was confirmed in the article written by Jennifer Hewett in the Australian. She said:

But the detailed Coalition rebuttal, also obtained by The Australian, demonstrates that the biggest dispute in money terms - $2.5bn over four years - was a more modest version of a similar $4.6bn change adopted by the Labor government in its own budget the previous year.

The opposition claimed $2.5bn in savings from adjusting what is known as the conservative bias allowance (CBA). This effectively meant that the opposition claimed it would be more efficient in delivering spending programs and could therefore reduce the small percentage buffer included to allow for programs going over budget.

There is no doubt that the record of the coalition government on sensible, commonsense and detailed economic management and program management far exceeds that of the Labor government. In just four short years this government has wasted tens of billions of dollars on the pink batts program, the NBN and the education revolution program. All of these things have resulted in tens of billions of dollars of overruns and yet Treasury refused, in this instance, to allow the coalition to exercise a discretion to lower the amount of money allowed for overruns.

Of course, the Treasury had a $5 billion allowance for overruns for this government. We chose to reduce that to $2½ billion because we would oversee these programs in a sensible and effective manner. In subsequent hearings the secretaries accepted that an incoming government might wish to do so as a policy measure. In other words, the same secretaries that sat with us for 3¼ hours in that politicised meeting after the federal election and before a government was formed—the secretaries who told us that they had made a decision and that that was the best they could do to justify taking $2½ billion as a so-called black hole—have subsequently, within weeks, admitted that we had that policy discretion.

This confirms, again and again, the deeply politicised nature. We have had to wear, ever since, what was a political decision by secretaries of departments who sat there and told us, 'We've made our decision,' without giving any justification. That was 25 per cent of the so-called black hole. We went through that process again and again as we challenged assumptions. My colleague mentioned one of those in relation to the interest charged on the debt coming from the NBN.

This bill aims to clear away the capacity of an incumbent government—particularly a Labor incumbent government, which is disposed to this sort of activity—to heavily politicise the nature of the bureaucratic involvement. This bill would set up an office very similar to the Congressional Budget Office in the United States, which is unequivocally independent. It is a model for budget offices around the world. It removes the opportunity for the government of the day to politicise a costing process, as this government did so comprehensively in the last election. It probably delivered them government. The way in which they politicised the process made a significant contribution and gave some of the Independents the excuse they were looking for.

These bills provide for a far more superior model for a parliamentary budget office than that proposed by the government. The government have panicked—they have introduced their own bill two days after we introduced the private member's bill in a panicked move to head off this initiative. They want to go into the next election with every possible advantage, including politicising the Public Service once again. These bills will stop that process. They will ensure that there is an independent group that will take our material—and potentially take the government's material and that of the Greens and the Independents—and will independently assess it. We will have the opportunity to look at the assumptions they make and to amend our proposals accordingly, if that is necessary. It will give this independent office access, without FOIs, which are an interminable process and are included in the government's bill to frustrate this very process.

They have decided not to have a parliamentary budget office. The government's bill, which we will debate later today, is for a politicised budget office. That is what they are looking to create. They are looking to throttle the very vehicle that has been designed to overcome the politicisation of this process. Wouldn't it be good to go into the next election and debate policy without finding ourselves on a daily basis seeking to justify leaks out of the Treasurer's office about our costing process? We spent three weeks of the campaign trying to deal with a politicised leak out of the Treasurer's office in the last campaign, until the point that we gave up any faith in that process and stopped submitting our material.

Wouldn't it be sensible, wouldn't it be the process that the community would wish to see, to go into an election after 33 days of campaigning with all of our policies having been independently and authoritatively costed by this independent parliamentary budget office, and not having to run the gauntlet of a politicised bureaucracy, a government having played tricks the whole way through the campaign? Wouldn't it be far better to go in there and debate policy? They do not want to debate policy; that is their problem. They want to frustrate and politicise the process. In doing so, they are short-changing the community.

We have to have a bill which creates an independent parliamentary budget office. Our bill, the bill introduced by the member for North Sydney, does that. It ensures that this independent office can access information and provide independent advice, with suitably qualified people running the office who look at both our work and the government's work. We will not then see the frustration arising from the nonsense that has gone on in the last 12 months or two years in terms of Treasury's spotty forecasting ability. It has been all over the place, and yet we are expected to tug the forelock and accept every word they say, even when we can demonstrate in private that their assumptions are demonstrably wrong.

There is something fundamentally wrong with this process. We need a parliamentary budget office. We introduced this notion some three years ago, under the former leader, the member for Wentworth. This process has been proven in the United States. This process was adopted by the Greens and the Independents. The government only agreed to it, in the end, to placate the Independents and the Greens—again, to get into office. They got into office, and what have they done? They have presented their own bill—and we will go through this chapter and verse later today—which totally frustrates the intention of this bill. It removes the objective and unbiased approach in the bill. What it does—you will see this bill this afternoon—is make the office just another arm of the bureaucracy, three chairs in the corner of the Parliamentary Library. It is an abuse of the process. We need a bill which establishes a well-resourced, fully independent and confidential parliamentary budget office. I commend this bill to the House.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

I remind the member for Fraser—I did not want to pull up the member for Goldstein during his speech—to refer comments through the chair and not directly address the person involved.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Charter of Budget Honesty Amendment Bill 2011 and the cognate bill. What an extraordinary attack we just heard from the member for Goldstein. The political party that once believed in an impartial Public Service doing the great work of the Australian people has now got that service in its sights. That is what the modern day Liberal Party thinks—that the Treasury boffins who have devoted their working lives to understanding the Australian economy, providing careful, impartial advice on where the Australian economy is going to go, are mere political footballs. Those opposite are willing to extend their attacks any way they can.

Frankly, it is not that surprising that those opposite are looking for targets in the bureaucracy as well as on this side of the House, because they know, as all Australians do, that when it comes to many of the big issues—whether you are talking about fiscal stimulus, climate change or the minerals resource rent tax—the vast bulk of Australian economists line up with the position of the Gillard government. So, of course, when you have an opposition who is led by a man who has described economics as a bit of a bore, when you have an opposition who is on record as saying that when you disagree with Australian economists you should just attack the profession, then, yes, they are going to extend their attacks to the Australian Treasury, extend their attacks to the Australian Treasurer's economic forecasting. The member for Goldstein is right when he says that forecasts are not always perfect, but the notion that the Australian Treasury's forecasts are somehow politicised is a notion that I immediately reject. Those who work in the Australian Treasury are hardworking public servants, like the many public servants in my electorate of Fraser who get up every morning thinking: 'How can I improve Australia? How can I put better ideas on the table to build a better country?'

During the last election we saw the opposition providing any possible excuse for not submitting its policies for costings. The excuse they were running on—the 'excuse du jour'—was that Treasury was going to leak their policies. This was a pretty extraordinary claim, given that this was the same opposition that had, a few short months earlier, been making hay out of leaks from Godwin Grech, but that was their claim. Of course, we discovered after the election why the opposition had been so keen to keep their costings away from the public eye; it turned out that the opposition costings were a cool $11 billion short. A series of assumptions made by those opposite were simply unfounded. The opposition's costings did not stack up.

Since then, the opposition have clearly decided that $11 billion is not good enough. They are going to go for the record, and they are now up to a $70 billion black hole. We know this thanks to leaks from the opposition's policy budget group, and we have had it confirmed by the member for Goldstein. In contrast, the member for North Sydney is still arguing that the $70 billion figure does not characterise their shortfall. I think he would like to imagine that the opposition's shortfall is maybe just $50 billion or $60 billion, but it has been confirmed by the member for Goldstein and other members of the coalition's front bench that the opposition's costings are in deep, deep trouble. There are good reasons for that, because every time they stare a hard policy choice in the face those opposite take the easy road. They want to promise everything to everyone and they are unwilling to stand up for reasonable tax savings. They are unwilling to means-test the private healthcare rebate and they are unwilling to support the fuel tax reforms that were introduced into this place by then Treasurer Peter Costello in 2003. The opposition are running from the hard policy choices.

Before the House today we have two proposals for a parliamentary budget office. We have a government bill that would allow the Parliamentary Budget Office to access information from Australian government agencies through a negotiated memorandum of understanding in circumstances where the release of information is consistent with other legislative requirements, including being guided by the principles established under the Freedom of Information Act. This is consistent with the unanimous recommendations of the Joint Select Committee on the Parliamentary Budget Office. The committee favoured an MOU over compulsion to provide information, on the grounds that it would facilitate more productive working relationships between the Parliamentary Budget Office and government agencies. In contrast, the coalition's proposal would give the Parliamentary Budget Officer power to direct agencies to provide information. In its unanimous report, the committee flagged concerns with providing these powers to the Parliamentary Budget Officer, including the potential for this to inhibit productive working relationships with government agencies. Under the coalition's approach, the Parliamentary Budget Officer would have power to access information despite any other law and there would be no controls over the officer then disclosing information to members and senators if it relates to their request. The joint committee said at page 76 of its report:

The committee considers that the PBO’s relationships with Government agencies will be crucial to its success. Not only will the PBO require information and data held by Government agencies, it may also need the assistance of agencies in making the best use of that information and data.

The committee went on to say:

Further, there may be instances where, by working together on the kinds of information required, the agencies can better understand the ongoing needs of the PBO. The relationships between the PBO and Government agencies might also evolve over time, possibly leading to greater efficiencies and enhanced products for Senators, Members and committees.

Essentially the opposition's approach is to create an adversarial, legislative relationship backed by criminal sanctions. By contrast, the government's approach is based on comprehensive understandings between the PBO and government agencies. Our approach will ensure that information is exchanged quickly and appropriately, in keeping with the unanimous recommendations of the joint select committee.

The confidentiality of policy costings in the opposition's bill is unnecessary. The government's bill already provides for confidentiality of non-election costings. But the opposition's agenda is clear: they want to hide costings from the public at election time. We can understand why they would want to do this. Put yourself in their shoes, Mr Deputy Speaker. If at the last election you were out $11 billion, and currently you are behind $70 billion, why would you want to put more information about costings out into the public arena?

The government bill distinguishes between policy costings during elections and those outside of the caretaker period for a general election. It will ensure that the election costing service of the PBO is transparent and consistent with similar processes under the Charter of Budget Honesty Act, with all costings, including details of the request, released publicly. This is a critical part of the election policy costing process. The public is entitled to know the cost of a party's policies. Talk should be cheap, but election costings are sometimes pretty expensive. Those who are putting forward ideas about where the country should go, those who are proposing changes in the tax system, should be subject to an independent and rigorous evaluation as to whether those costings really stack up.

As the PBO function would fully replace the current option for the opposition to submit their costings to Treasury or the Department of Finance and Deregulation, the opposition bill effectively replaces a transparent process where costings are required to be public during an election, with a non-transparent process where costings can remain confidential. This is a step back in terms of accountability, scrutiny and transparency. It unwinds a core component of the principles of the Charter of Budget Honesty.

In terms of the functions of the PBO, the joint select committee seriously considered this and unanimously recommended against it. This is about how the PBO can best serve members. The committee considered it and felt that it was not the best use of Parliamentary Budget Office resources and that it could detract from its ability to meet requests to members in terms of analysis, costings and providing information. The government bill provides the Parliamentary Budget Office with the capacity to rely on the economic and fiscal forecasts prepared by Treasury and Finance. The role for the two agencies is a longstanding and critical role. It is a role which many of us in this House respect—though not, apparently, the member for Goldstein. It provides important framing for the annual budget and related documents prepared under the Charter of Budget Honesty. The Treasury and Finance submission noted the significant resources and expertise required to undertake forecasting and questioned the need for duplication of the task. The bill before us that the opposition is proposing is a non-transparent, black hole. (Time expired)

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

I am speaking against the bill that the honourable member for North Sydney has put forward, the Charter of Budget Honesty Amendment Bill 2011. In doing so, I will speak in some way in support of the Parliamentary Service Amendment (Parliamentary Budget Officer) Bill 2011—not directly, as it will be dealt with later, but in broad terms to address the whole framework—as to speak against the Charter of Budget Honesty Amendment Bill it is necessary to compare and contrast the two in some way. The only reason that I can see for the Charter of Budget Honesty Amendment Bill to be before the parliament now is to try to scuttle the PBO and the parliamentary budget officer bill. It seems to me that it is a bit reckless and that, worryingly, it looks as though it is more about hiding costings in election time than it is about budget honesty.

There is government legislation in relation to the Parliamentary Budget Office, and the government has gone about establishing the Parliamentary Budget Office in a methodical way. A joint committee of the parliament was tasked to advise on the functions and resourcing of the Parliamentary Budget Office, and the recommendations that came from that committee were unanimous. When a parliamentary committee works through the processes, the tensions, the competing issues, the ideologies and the policy directions and comes to unanimous recommendations, we know that we have something that is able to be taken up by all. The government therefore accepted all the recommendations, as reflected in its legislation.

Today we have the opposition, the coalition, ignoring the key recommendations of the committee. From everything I have read, it seems the opposition signed up to those recommendations only five months ago, and they are now walking away from them. It seems rather odd that they would do that. The member for North Sydney's private member's bill seeks to undermine what is an important institution, the Parliamentary Budget Office. The bill will weaken the government's arrangements, which seems a really odd thing to do. In establishing the Parliamentary Budget Office, we want to make sure that the governance framework and structure are as strong as they need to be. Introducing a bill that seeks to weaken that cannot be about anything to do with parliamentary budget honesty.

The bill will make the Parliamentary Budget Office accountable to ministers and not the parliament. As parliamentarians and as people who come to this place with a whole range of views, one of the things we seek to do is have decisions accountable to the parliament. That is a good thing and it is a good for democracy. The honourable member for North Sydney's bill would also weaken the resourcing of the Parliamentary Budget Office—which also seems an odd approach—and would, critically, reduce transparency and public accountability.

If the bill introduced by the honourable member for North Sydney seeks to weaken the government's arrangements, by changing the accountability mechanisms and making the PBO accountable to ministers and not the parliament, weaken the resourcing and, critically, reduce transparency and public accountability, I have to question what the bill is about. Again, I cannot get away from the idea that it is about trying to hide, trying to bury, election policy costings. We saw that happen at the last election. That was what the honourable member for North Sydney sought to do.

Under the bill proposed by the honourable member for North Sydney, the election policy costings can remain confidential and hidden from public view. This would be a major retreat from transparency. When we put our best foot forward and go out to win elections, we do not put out costings on policies and say, 'I'm sorry; they are confidential and the public doesn't have a right to know them.' That is not a good way to approach the electorates when seeking to get support. If you want to put up a policy, you cost it and then you make sure that those costings are sound and that you are happy to have them tested. That is why we come into this place—to have policies tested.

This bill would unwind the Charter of Budget Honesty, and I cannot for the life of me think why the honourable member for North Sydney would want to do that unless it comes back to the election costings. Consistent with the recommendations of the joint committee, the government's bill proposes that the election costing process will be fully transparent and that all requests and costings made during a caretaker period are to be publicly released, as they should be and as is the case under the charter process. Members can of course seek confidential costings outside of the caretaker period for a general election. I note that the honourable member for North Sydney said something about that, but it is clear that that can happen now and that confidential costings can be sought outside the caretaker period for a general election.

The bill that the honourable member for North Sydney has put forward does not distinguish between costings during caretaker and non-caretaker periods. In both periods, Parliamentary Budget Office costings could be entirely confidential. The Parliamentary Budget Office function would fully replace the current option for the opposition to submit their costings to Treasury or Finance under the charter—replacing a transparent process where costings are required to be public with a non-transparent process where costings can remain confidential. That is a massive backward step in terms of the transparency, scrutiny and accountability of policy costings during elections. Again, it unwinds the core component of the charter principles.

When in government, the coalition itself argued for the importance of transparency and accountability when it brought in the Charter of Budget Honesty. In December 1996, the then Treasurer stated in the second reading speech to the Charter of Budget Honesty Bill:

This is the kind of reform which, when enacted, will be a permanent feature, making sure that Australia's economic policy is run better, making sure that the public is kept better informed, making sure that there is transparency in economic policy in this country.

Furthermore, the charter:

… provides for more equal access to Treasury and Finance costings of election commitments by the government and the opposition during the caretaker period. This will allow the electorate to be better informed of the financial implications of election commitments.

That was said by the then Treasurer when the coalition were in government. Yet the bill that the honourable member for North Sydney has put before us seeks to unwind all of that. It will unwind the process of the parliament itself through the joint committee and the very sound recommendations that were accepted by all, including the government, and reflected in the legislation.

The only conclusion I can come to is that this bill, the Charter of Budget Honesty Amendment Bill 2011, is designed so that election policy costings can be kept secret, as they were by the opposition during the election. It is contrary to the Charter of Budget Honesty, which everyone has signed up to, and to the system that was introduced by the coalition when in government, based on transparency, accountability and scrutiny. We now have some of the same members of the coalition, now in opposition, wanting to reverse this and have secrecy. I have to ask: why does the honourable member for North Sydney want secrecy? Is it because he knows his figures just do not add up? That has been demonstrated over and over. If the honourable member for North Sydney had confidence in his costings, why wouldn't he stick with the charter principles?

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Order! The time allocated for this debate has expired. The debate is adjourned and the resumption of the debate will be made in order of the day for a later hour of this day.