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

We have before the House the government's bill to establish a parliamentary budget office. There is funding in this year's budget for the PBO, but here we are in the middle of September, 2½ months after the start of the financial year, and we are only now about to debate and vote on the necessary legislation. The parliament will be incredibly fortunate if the PBO is up and running by the end of the year. Like everything else this government does, implementation is clearly not its strength.

This bill has been a long time coming. I would suggest the government has only got to this point because the opposition introduced its own PBO bill. Establishing a PBO has been an objective of the coalition since 2007, when my colleague and friend the member for Wentworth announced coalition policy in this regard. In the last week of the winter sitting session, I flagged that I would introduce a private member's bill to establish the PBO and then followed up in the second week of the spring session by tabling my bill. That bill was debated in the House this morning after the second reading speech, but has yet to be brought to a vote, which will occur on Thursday. Therefore this place has two bills before it to establish a parliamentary budget office, but the two bills could not be more different.

To illuminate the difference between the bills we need first to revisit the impetus for the creation of the PBO. The PBO is a key reform in ensuring transparency and integrity of budget and fiscal processes. It provides services to all MPs and senators. In particular it evens up the playing field between government and non-government members in their ability to scrutinise government policy and the impacts on the budget. It also evens up the playing field in the ability to assess and accurately cost policies, both before and during elections. It should be a body which has the power and resources to provide analysis of the budgetary impacts of government policy over the forward estimates and over longer time frames.

To do this requires considerable powers to obtain information from government departments and agencies. It requires flexibility to perform whatever analysis it deems necessary. It also requires the resources to quickly assess and cost policies submitted by MPs and senators. Most importantly, it must be discrete; it must preserve the confidentiality of requests submitted by MPs and senators. It must allow requests on policies to be submitted, reviewed and, if necessary, resubmitted without going through an ongoing public debate. It must allow policies to be released at a time chosen by the relevant MP or senator. It must provide for policies not to be released at all if that is the decision of the relevant parliamentarian.

My private member's bill for the establishment of the PBO does all of these things. The government's bill before us does not. The functions of the PBO under the government's bill are severely constrained. The bill states that the PBO cannot prepare economic forecasts or budget estimates. This is an odd restriction of powers. How, then, does the government expect the PBO to prepare longer term analysis of the impact of government policies on the budget? This restriction seems to conflict with the stated purpose of the PBO which is 'to inform the parliament' through 'analysis of the budget cycle, fiscal policy and the financial implication of proposals'.

This bill also restricts the PBO to using 'the economic forecasts and fiscal estimates contained in the most recent relevant reports released under the Charter of Budget Honesty'. In other words, the PBO can only use the economic and fiscal forecasts prepared by the Treasury and the Department of Finance and Deregulation. That means it cannot use any third-party data or refer to that third-party data at crucial moments.

My private member's bill provided for much greater latitude for the PBO to do the research it needed to satisfy its mandate. Only then can it provide an effective perspective on the longer term ramifications of government policies on the fiscal position. Only then can it provide full and frank analysis of policy proposals put to it by members and senators.

The government's bill provides the PBO with very limited powers to gather information. The PBO must enter into an agreement with relevant departments to determine what information they can get and when they can get it. So let us have a little look at how this process would work. The PBO will have to negotiate an arrangement with every single government department and agency from which it requires information. These departments and agencies will not be compelled to make these arrangements. The PBO will have no leverage to compel these arrangements to be made.

It stands to reason that the arrangements which are finally made will be structured to be in the interests of the government departments and agencies, not in the interests of the PBO. So there will be no second-guessing. Therefore, if a department gets it wrong the PBO cannot dispute that because the PBO is not in a position to do its own independent analysis. For example, it is not in a position to analyse properly the information from the Reserve Bank about economic forecasts vis-a-vis the economic forecasts of the Treasury. How absurd is that!

Obviously, under the government proposal there is a significant risk that the PBO will find itself hobbled in its ability to obtain information and documents that it needs to do its job. This is obviously an unsatisfactory state of affairs for a body which requires all the relevant information to enable the full and rigorous analysis of the budgetary implications of policies.

My private member's bill provided the PBO with considerable powers to obtain information from these government departments and agencies. These powers are based on the powers of the Auditor-General. They provide protections so that information of national security importance or cabinet-in-confidence would be protected. These greater powers to obtain information would render the PBO a much more effective body.

An important function of the PBO will be to prepare costings of policies submitted by members and senators. This facility will be most beneficial to opposition MPs and senators, but also to the minor parties and Independents. I say to the minor parties and Independents: this is the chance to have a fully independent PBO available. We are providing that opportunity now. It may not come around again, but we are providing the opportunity to have an enduring, independent parliamentary budget office with guaranteed funding and guaranteed powers.

Of course, what we are offering will also be available to members of the government. This is crucially important. It may be rued, should we get into government. We may rue the day that we gave backbenchers the power to independently fully cost policies, but this is what our chambers should be doing and in my view this is appropriate policy. Backbenchers may choose to submit their ideas for costing well away from prying ministerial eyes. They may wish to get an idea costed to get more assurance of its validity before passing it up the line for consideration or releasing it to the general public within a particular policy framework. This function will be available during the normal course of the parliament and also, crucially, during the caretaker period and prior to a new government being formed.

A curious feature of the government's bill is that the policy costing facility during the caretaker period will differ to that which is available at all other times. There seems no valid reason for the difference. The standard policy costing function will be confidential unless otherwise indicated by the member or the senator outside of elections, but during election campaigns the function provided will be identical to that provided to the opposition under the existing Charter of Budget Honesty. The Charter of Budget Honesty was put in place by the coalition when it was in government.

While the charter was groundbreaking and excellent reform, I believe that the policy costing functions could be made even better. The current process provided under the charter is totally non-confidential. Requests for costings are immediately published on the websites of the Treasury and the Department of Finance and Deregulation, and the results of the costings exercise are also immediately published on the websites. This leads to a number of issues.

The first is that non-government parties cannot get costings done and then choose the time when policies will be released to the public. That is why, primarily, it was not used by Labor when they were in opposition. The second is that the non-government parties cannot change their minds and choose not to release policies without that reconsideration being public. There is no facility for testing the cost of a range of policies and then choosing which ones will be policy undertakings for public release. The third is that there is no right of consultation or review with the departments. There cannot be any discussion about the assumptions the departments are using. Their view is the final word. We know in government that it is not the final word. The assumption is that a political party will put forward policies on the basis that they will be able to implement them when in government.

My private member's bill provides for all requests to the PBO, for policy costing or other purposes, to be fully confidential at the request of the member or senator. This gives members and senators total control over the working-up of their policy ideas and the release to the general public. These issues should hit a bit of accord with the Labor Party and the Greens. During the Senate debate on the coalition government's Charter of Budget Honesty Bill 1996, Senator Nick Sherry, who was then Deputy Leader of the Opposition in the Senate, commented:

The pre-election costings regime is … deficient in a number of respects … Only costings of previously announced policies is allowed—that is, policy decisions would have to be made on the basis of incomplete information and be announced.

Yes, we agree. Senator Bob Brown commented:

I will be moving to amend the Democrat amendments so that all participants in elections can avail themselves of having their policies vetted.

I agree.

In 1997 the Senate passed 10 amendments to the charter which included: allowing the Leader of the Opposition to submit all opposition policies for costing, including those not publicly announced; requiring that information provided by the opposition to responsible departmental secretaries not to be released to third parties without the approval of the Leader of the Opposition; requiring policy costings to show what assumptions have been used in the costing process; and explaining the limitations of the process adopted in the assumptions employed.

I trust that the Labor Party and the Greens hold the same view today as they did then—but, of course, they do not. They have a different view today. Of course, the coalition had a different view then—it was under the Charter of Budget Honesty. That is why the proper format, which we have identified, is a parliamentary budget office for this process. The then Treasurer, Peter Costello, was right to say in the debate that Treasury and the department of finance are not research arms for the opposition; they are in fact there to serve the government. That is exactly our point: they are there to serve the government of the day.

Immediately after the last election campaign, when they did their analysis on our proposed policies, they were serving the government of the day in that context, and that is absolutely appropriate and right. MPs who are not part of the government are at this stage only the coalition. The Greens and the Independents have these regular meetings with Treasury, and Treasury actually serve their interests in undertaking policy analysis and costings at their request. The Treasury are serving the Independents and the Greens but they are not serving the interests of the rest of the parliament. They are serving their masters, the government. That was the same under us, and that is entirely appropriate.

So we are saying, 'Hang on, if you want to have a parliamentary budget office, it has to quack like a duck and behave like a duck,' and in many ways the Parliamentary Budget Office fulfils the key functions to the Treasury and the department of finance in relation to fiscal policy, in providing advice to the rest of parliament. I would think if Labor went into opposition one day they would rue the day that they did not support our bill ahead of their own. They will rue that day.

So there are a number of issues at play. I indicated this morning in this place that the provision of a confidential service for costing policies is a crucial and non-negotiable element of my bill. I will propose amendments to this government bill to put in place an equivalent confidential costing service. The failure to achieve such a facility will render the Parliamentary Budget Office useless. The policy costing service will be no different under that scenario to that now offered under the Charter of Budget Honesty. Accordingly, should my amendments 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 Parliamentary Budget Office prior to the election. We will ask the Australian people to form a view on our policies as they stand.

It is curious that the government's bill maintains the policy costing provisions of the Charter of Budget Honesty while creating a comparable facility under the Parliamentary Budget Office—they are just duplicating it. This leads us to a situation where there are two essentially identical avenues for costing policies during the caretaker period available to non-government parties and Independents. I recognise that this is consistent with the recommendations of the Joint Select Committee on the Parliamentary Budget Office, which envisaged the caretaker period costing services would run in parallel. However, on reflection, I and my coalition colleagues believe that the members of the committee would see the potential for duplication and unnecessary cost.

The government's bill specifically prevents double-dipping—that is, getting the same policies costed both through the PBO and through the charter. This is not the best resolution for this duplication. It would be better to focus public sector resources on just one avenue for costing policies during the caretaker period. The government uses the Treasury and the department of finance, and the opposition, together with other members of parliament, uses the Parliamentary Budget Office.

This range of issues leave the government's bill deeply flawed. The coalition believes the bill before the House today is inadequate. Our preference is to oppose this bill and to seek to have our own bill passed in its place. However, naturally enough, we do not control the timing of the votes on legislation; that is the government's prerogative. The government has brought its bill to the House for a vote before ours, even though it introduced its bill to this House after ours. I will propose a series of amendments during the consideration in detail stage to address the flaws and to create a PBO that will better meet the requirements of the parliament. I ask that the government and the Independents consider these amendments in good faith. I also ask that the government and the Independents consider the merits of the two alternative bills. I really do believe that my private member's bill better reflects the needs of the parliament with respect to the establishment of a PBO and that it represents a more far-reaching improvement in the management of the government's finances.

The establishment and management of a PBO is a key step in the enhancement of the quality of fiscal management and discussion. It is important that we get it right. The government's bill misses the mark in establishing a truly independent PBO which would have the powers that it needs to do its job. We are offering this House the chance to have truly landmark legislation in relation to a parliamentary budget office. Members should not assume that this will be a continuing, ongoing commitment. We offer this in good faith. Should the government, in partnership with the Independents, reject our submission, then I say again: we will not be party to a process that does not allow for a fair-dinkum discussion in relation to fiscal management. Should we be elected into government, we reserve our right to take a different approach to the Parliamentary Budget Office. Under our bill, the Parliamentary Budget Office would be powerful, it would be critical of governments—and, should we go into government, it would be critical of us. We are not afraid of economic scrutiny, we are not afraid of fiscal scrutiny and we are not afraid of criticism. But we are not going to set up a white elephant that simply duplicates the existing unsatisfactory arrangements. Therefore, this is a unique opportunity to get it right. I hope the Independents understand that and support our bill in preference to that of the government.

Gai Brodtmann (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

It is with great pleasure that I rise today to speak on this bill that will greatly enhance the transparency and accountability of this parliament and its members. This bill does hit the mark. It best reflects the needs of the parliament and it best serves the needs of the Australian people. The Parliamentary Service Amendment (Parliamentary Budget Officer) Bill 2011 will establish the Parliamentary Budget Office as a fourth parliamentary department and will establish the Parliamentary Budget Officer as an independent office of the parliament. It will mandate that the PBO will inform parliament by providing independent and non-partisan analysis of the budgetary cycle, fiscal policy and the financial implications of proposals; it will establish the function by which the PBO will respond to policy costing requests from members and senators in a confidential manner—and I will come to more of that later—outside of the caretaker period and in a manner consistent with the Charter of Budget Honesty during that period; and it will enable the officer to make arrangements for access to information from other government agencies.

This bill amends other acts to enable the establishment of the office. It follows the report of the inquiry of the Joint Select Committee on the Parliamentary Budget Office. The government has agreed to all 28 recommendations of the inquiry, the first of which is that the government establish such an office. The purpose of this office will be to provide independent analysis of the budget cycle, fiscal policy and the financial implications of proposals. The committee's report states:

In attempting to deal with these issues—

in terms of budget cycles—

many countries have found that existing parliamentary institutions have limited resources to undertake a high level of analysis on fiscal matters. To satisfy a need for greater support, many parliaments have established specialist research and analytical units such as Parliamentary Budget Offices (PBOs) which are independent from government to varying degrees and which assist parliamentarians in their consideration of government finances and expenditure.

It goes on to say:

The Organisation for Economic Co-operation and Development (OECD) has observed that in recent years, there is an international trend in establishing specialist budget research units. The OECD stated:

The growth of bodies to assist the legislature in budgetary matters is a strong trend in OECD countries. They take a variety of forms but their raison d’être is the same: Parliaments need specialised resources in order to carry out their constitutional responsibilities vis-à-vis the budget. The functions of such bodies include economic forecasts, baseline estimates, cost estimation, analysis of the Executive’s budget proposals and medium-term analysis. As such, they have the potential to improve transparency and enhance the credibility of the Government’s Budget and public finances in general.

The office will respond to requests from senators and members of this House to ensure that all have access to high-quality information and analysis. I am particularly heartened that this bill will amend the Charter of Budget Honesty so that all parties with at least five members will be able to request election costings from Treasury and Finance under the charter. Currently this service is afforded only to the government and the opposition. Access to this information by members will give an incredible degree of transparency and accountability for the Australian public . It is a matter of key importance.

Quite rightly, the issue of good financial management has become a central issue in the public policy debates of this country. As the inquiry noted, in the rationale for the establishment of the Parliamentary Budget Office, 'in Australia and internationally there has been a growing trend in examining and questioning the adequacy of fiscal management'. I believe it is appropriate that this examination continue and be enhanced through good and accurate fiscal and budgetary analysis. It is appropriate that the government of the day, its alternative on the opposition benches and those on the crossbenches have access to the best information to inform their proposals and that they be held to account for the financial impacts of those proposals. Over the last few decades there has been an unstoppable trend of reform in this area. We have seen the establishment of the National Commission of Audit and the enactment of the Charter of Budget Honesty in 1988. There have also been the reforms under the government's Operation Starlight agenda to improve the transparency of public sector budgeting. These have been landmark reforms to ensure that there is transparency in the budget and the fiscal decisions of government. It has meant an increase in the ability of the Australian public to examine the economic management of its government and to have confidence that they know how their money is being spent. However, there is more that can and should be done, and there remains a need to further enhance the ability of senators and members and, through them, the Australian people to get advice on budgetary matters. As the inquiry noted:

Despite the reforms to Budget reporting and the detail of information published in the Budget Papers and other statements and reports, submissions have raised concerns about the ability of Parliament to effectively discharge its responsibilities in relation to the Budget and other financial matters.

This legislation will be another step in addressing the concerns of the inquiry and in enhancing the transparency of financial information.

Perhaps the most significant area that this bill will amend will be to ensure that opposition members and crossbenchers will have the ability to have their policy proposals costed by this office, the PBO. Under this bill, election policy costings can be provided by either the PBO or Treasury and Finance. As is appropriate for election costings and proposals, they will be released publicly to ensure that the Australian people are appropriately and comprehensively informed about the true costs of policy agendas and the proposals being made by all members of this parliament.

This would have been particularly useful and informative during the last election, where we saw those opposite campaign on their supposed strong economic credentials while at the same time hoping to avoid the questions about where they would get the money for their proposals. They refused to have their promises costed and they refused to reveal their assumptions or any details when they had an accounting firm cost them. It was not until the conclusion of the election, at the request of members of the crossbenches, that the true nature of the opposition's policies was revealed. Only then was it revealed that their election commitments had an $11 billion black hole. Since then it has blown out to a $70 billion black hole, with no end in sight and no clear goal of how they will fix this massive gap in their spending. That is the equivalent of stopping Medicare payments for four years or stopping the age pension for two years.

The only statements that we get from the alternative Treasurer, the member for North Sydney, is for this country to obliterate entire government departments and to sack thousands of my constituents. As I have said time and again in this House, the coalition have form on this. In 1996, the Howard government sacked 12,000 public servants in Canberra and 30,000 nationwide. That sent Canberra into a recession when the rest of Australia was growing. Perhaps with the establishment of this office he can receive the advice he needs to understand that the Public Service has not grown by over 20,000 but has grown by less than half that and is the same size it was 20 years ago. Maybe then he will stop the attacks on the Public Service. Perhaps then he would not need to front the media and openly, outrageously and irresponsibly declare that he would love to sack 12,000 public servants, many of them Canberrans, and fail to provide any further detail of how this would occur. Perhaps then the people of this country could have faith that those opposite would have access to information that meant that they could understand the budget and understand the economy and not need to resort to scaremongering and just plain falsehoods to sell their message.

Their bill this morning was more of the same. While they came into this place and talked the talk about the need for transparency, openness and accountability, they failed to walk the walk. They sought to replace the openness of Treasury costings during elections with a closed process—enshrining into legislation the secrecy for which they became known during the last election. And to justify this change, they continue with their outrageous attack on the expertise and professionalism of the Australian Public Service, in particular Finance and Treasury.

There are two elements that I would like to pick up that the member for North Sydney mentioned in terms of his proposals for amendments. The first was this notion of confidentiality. I just want to clarify that the government bill already provides for confidentiality of non-election costings. It distinguishes between policy costings during elections and those done outside the caretaker period for a general election. It ensures that the election costing service of the PBO will be fully transparent and consistent with similar processes under the Charter of Budget Honesty Act. So, in terms of confidentiality, I cannot understand the concerns of the member for North Sydney.

He also raised concerns about access to information. The government bill does allow the PBO to access information from Australian government agencies through a negotiated MOU in circumstances where the release of information is consistent with other legislative requirements. The committee talked about this during the inquiry. This access to information approach is consistent with the recommendations of the committee. The committee favoured an MOU over compulsion to provide information, on the grounds that it would facilitate more productive working relations between the office and government agencies. The approach that we have proposed in this bill is for a cooperative approach, as opposed to the adversarial approach that is being proposed by those opposite. The government considers it crucial that the PBO's relationships with government agencies should be cooperative, cohesive, productive and constructive.

This bill does enhance the transparency and accountability of parliament. It does best reflect the needs of parliament. It does best reflect the needs of the Australian people. It does best serve the needs of the Australian people. It gives every member of this chamber and of the Senate access to appropriate analysis to ensure that everyone is properly informed and can debate the issues of this country correctly and truthfully. I commend the bill to the House.

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

I rise to speak today on the Parliamentary Services Amendment (Parliamentary Budget Officer) Bill 2011. This bill seeks to amend the Parliamentary Services Act 1999 to establish a Parliamentary Budget Office and position of Parliamentary Budget Officer. This was a commitment made by the government to help woo the Independents and the Greens. It is a concept—a concept, I say, in particular: not necessarily a structure, but a concept—lifted straight from coalition policy which was first canvassed in May 2009, when the member for Wentworth called for the creation of a parliamentary budget office in keeping with the US Congressional Budget Office.

The entity that would be created by this bill, sadly, ain't no Congressional Budget Office. In fact, the government would save a lot of time and effort by simply supporting the bills introduced by the member for North Sydney. Those amendments provide for a responsive and flexible parliamentary budget office that will perform a range of important functions as required, including, of course, costing policy. Perhaps most importantly, the services provided under the coalition model would be totally discreet and confidential. Instead, this bill before the House has all the look of a token effort, with many restrictions and shortcomings, perhaps intentionally so. It is, in fact, hard to believe that it has taken the government more than 12 months to get the Parliamentary Budget Office to this stage.

I cannot stress enough how critical the establishment of a proper parliamentary budget office is. We saw the highly unfortunate charade and preoccupation by this government at the last election of misrepresentation of so much of what we put before the public. We all remember the grubby way this government grossly politicised and abused the costings process during and after the 2010 election. We all remember the pathetic leak during the campaign of supposedly confidential Treasury analysis of the coalition's $2.4 billion savings measure associated with scrapping the NBN. We all remember how the Australian Federal Police were called in to investigate that leak, which so obviously had that lightweight embarrassment of a Treasurer's fingerprints all over it.

The leak was bad enough, but what made it worse was the way in which inaccurate, and later totally discredited, Treasury assumptions were used to discredit our savings measure. The coalition got fitted up with a $900 million black hole that simply did not exist—and the government knows it. Treasury used a flawed assumption to calculate the savings on cancelled borrowings. We used an interest rate of 5.5 per cent; Treasury, inexplicably, used a rate of just 4.9 per cent and refused to say how it arrived at that figure. In 3½ hours of private discussion, the best we got was, 'We've made a decision.' That was the rationale.

Of course, they were wrong and we were right, but the damage was done, with the newspaper headlines in mid-August based on the leaked material. Yet here is what the Australian Financial Review headline was on 9 September—of course, some weeks after the event: 'Analysts back Coalition's base rate assumption'. I quote from the article:

… several bond market estimates backed the Coalition assumption of a 5.5 per cent rate based on the 10-year bond rate. 'The current 10-year bond rate is as fair as anything else,' said UBS market strategist Matthew Johnson.

Meanwhile, the Managing Director of Citi Investment Research and Analysis, Paul Brennan, said of Treasury's assumption: '4.9 per cent looks on the low side to me.' Furthermore in a separate briefing note Treasury cited the government commissioned NBN implementation study as the basis for estimating that the NBN could be built for $42.8 billion. The problem for Treasury is that that study was underpinned by an interest rate of—you guessed it!—5.5 per cent, the rate that we had used earlier in our other costings document.

This is one example of why major reform in the costings process is so critical, especially when you have a desperate government that has no qualms in politicising the process. We need a truly independent parliamentary budget office that is not simply a subsidiary of Treasury and Finance. The critical need for this was starkly highlighted in a front-page story in the Australian on 7 September last year by highly respected national affairs correspondent Jennifer Hewett. The article was headed: 'Coalition counts cost of Treasury's "political game"'. Hewett reports straight out:

THE lengthy September 1 meeting between Canberra's top bureaucrats and the three independents was supposed to be crucial in influencing whether Labor or the Liberals would form government.

But previously secret minutes of that meeting … reveal how much it was politicised and influenced by the opinions of the senior bureaucrats, while some of their conclusions didn't take market impact into account.

At the same time, Michael Stutchbury from the Australian said:

… there is no $11 billion "black hole" in the Coalition's projected budget surplus … Ken Henry has found a few potholes that can be repaired without too much trouble.

The government used the work done by its Treasury to claim we had a $10.6 billion black hole. This supposed black hole came down to differences of opinion in relation to assumptions used. In a couple of the examples I have already cited, the Treasury officials could not even give a reason for the difference in assumptions, yet the marketplace accepted our assumptions and Treasury had used our numbers in other related material. The NBN example I cited earlier is a key example.

I will give you another, and it relates to something called the conservative bias allowance. Here is what Jennifer Hewett had to say about this:

… 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.

Treasury and Finance secretaries decided that, because they advised against a downward adjustment of the conservative bias allowance with regard to the current government, they could not book it as a saving from opposition. But the official notes from the meeting the departmental secretaries had with the Independents, dated 1 September 2010, read:

The Secretaries indicated that they accepted that it was an option open to governments to prepare their budget papers on the basis of a lower CBA—

conservative bias allowance—

as the budget papers are prepared on the authority of Ministers.

Moreover, the Secretaries also accepted that an incoming government may wish to report this as a policy measure.

This is unbelievable given the 3½ hours of debate that we had with these secretaries who told us to our faces that they had made a decision and that this was immutable, yet there they were in a meeting a few days later with the Independents—a meeting that was structured to inform them about who was best placed to take government—saying that it was in fact a policy measure that was possible for any incoming government. This process was heavily politicised. With my colleague's amendments to the bill that was presented by the Treasurer, this afternoon we have an opportunity to remove the prospect of politicising this process.

Here is a final example of why the Parliamentary Budget Office has to be set up properly and well in advance of the next election. We identified at the last election $3.3 billion in investment expenditure to be redirected from the Health and Hospitals Fund, the Education Investment Fund and the Building Australia Fund. Before the election we asked the government for the list: 'Tell us, out of those funds, what have you already contracted? What commitments have you already made?' Surprise, surprise: we were ignored. When we made some decisions, took a conservative figure that we thought would not be contracted out of those funds, the secretaries decided we could not book them because we could not identify specific Labor programs to be paid for from these funds that we would cancel prior to the election. We had asked the government for this information and we were ignored. As it turned out, the problem was that all the projects were on a secret list. I said, 'Give me a copy of the list now and I will tell you which projects we will get rid of.' Finance and Treasury could not even identify all the projects funded and contracted out of these three funds. The accounting used within the Department of Infrastructure and Transport did not allow for a quick stocktake.

Here is the clinker: the secretaries did confirm that there was more than enough uncontracted money in the various infrastructure funds to meet the spending priorities that we had identified. Our projects were called a black hole, yet the money was there on a secret list that the government would not provide and Treasury officials knew that there was still enough uncontracted money within the funds. There was no black hole. This was a politicised black hole. This was something fabricated with the use of Treasury officials to give the government a political advantage. If the PBO had been up and running it could have requested the government's project list and we would not have had the problem. One thing the Treasury secretary and the Finance secretary did verify was that under a coalition government net debt would have been reduced by at least $23 billion compared to a Labor government.

It is a bit hard to swallow claims of black holes coming from that lot opposite. I remind those opposite of what the Financial Review said in its editorial of 6 September last year about its black hole claim. I quote:

It can't necessarily be taken at face value given Treasury's own spotty forecasting record, not to mention gross errors in recent Labor policies such as the mining tax and the school halls, rooftop solar, green loans and roof insulation scandals.

It will probably pale beside blow-outs in big government Labor policies such as the $43 billion national broadband network, and the pork-barrelling demanded by the independents.

I also remind those opposite of MYEFO, which estimated a budget deficit of $41.5 billion. What was it just six months later, in this year's budget? It was $49.3 billion. That is right—a $7.8 billion blow-out in just six months, not over four years. And what about the carbon tax? There is a $4.3 billion revenue shortfall in that. That is okay in 'Wayne's World', the planet the Treasurer and Senator Wong are on. It all adds up to broadly budget neutral, they said. They are a joke. They are also dangerous. It is little wonder that the top CEOs of this country rate this government at 2.6 out of 10. I have not been to a boardroom meeting yet, out of 63 since March before this year, where they have not said that they have not seen the Treasurer or, if they have, he was underwhelming in the extreme.

Today it is revealed that they have plans to raid the Future Fund to the tune of several hundred million dollars. They have been exposed, despite Senator Wong's denials. Senator Wong's own department confirmed that in a question taken on notice, and now she is ducking for cover, in damage control. A statement said it was 'completely incorrect'. It went on to say that the government 'is not making withdrawals from the Future Fund. The Future Fund is simply making a small change to the types of assets it holds'. It does that every day! They have just sold a poultice of Telstra shares. Have they gone to the government? No, they have not. They are back in the fund. That was an asset they sold. They have brought other assets.

This is $250 million, or whatever it is—a serious sum of money—and it is the thin edge of the wedge. If the PBO as structured in the opposition's bill, or as amended in this bill according to our amendments, were up and running, there would be a 'please explain'. Under this proposed PBO the office would not dare contradict the government of the day. This is structured to intimidate and politicise the process. It will effectively be an arm of Treasury unless the amendments that we have put up are accepted by the government. This bill is deeply flawed. It will perpetuate the political process. It needs to be amended or else we will not present our material at the next election. (Time expired)

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

Over 100 years ago, Alfred Deakin could have been describing the Labor vision when he said:

We look forward to social and unemployment insurances, to improved health services, to a wise control of our economy ...

Providing support for those in need, making sure that every Australian has access to health care and the responsible management of our economy continue to be foremost for the Gillard Labor government. It is in the words, 'wise control of the economy' that I believe Deakin would have approved of the establishment of a Parliamentary Budget Office—an independent institution will bring greater accountability and transparency to the policy costing process and strengthen Australia's fiscal and budget frameworks. It will be an institution that stops parties avoiding scrutiny of their election policy costings as the coalition did at the last election.

We are not the first nation to establish such an institution. In the United States they have the Congressional Budget Office. Operating since 1975, the Congressional Budget Office provides congress with: objective, non-partisan and economic analysis; information and estimates for the budget process; and assistance in economic and budgetary decisions. The Congressional Budget Office also advises congress in relation to: budget, microeconomic and taxation analysis; health and human services; management and business; and national security. When in opposition, the Conservative Party in the United Kingdom made plans for an office for budget responsibility. With their victory last year the Cameron government have established the Office for Budget Responsibility. Now operational, the UK office provides economic forecasting that is independent of government.

If only those opposite displayed the foresight and economic responsibility of their conservative cousins in the UK; instead what they have to offer is a $70 billion hole from a swathe of uncosted and untested policy thought bubbles and an unwillingness to support sensible revenue measures like the fuel tax reforms, first brought into parliament by Peter Costello in 2003, and the perfectly reasonable move to means test the private health insurance rebate. This is, of course, the very same coalition that tried to conceal an $11 billion policy costing shortfall at the last election. Given that the Leader of the Opposition has been trying since that last election for a rerun of that election, it is no surprise that the member for Goldstein walked into this place deciding to refight the costings debate. The member for Goldstein just told this chamber that the work Treasury did in assessing the coalition's costings and coming up with their $11 billion hole was fabricated. That is right—when they do not like Treasury boffins, they just say, 'Their work is fabricated; they are politicised.' They do not provide a sense of respect for Treasury, which traditionally has been what conservatives have done in Australia; they attack the bureaucrats and say that they are politicising everything.

The Parliamentary Budget Office will shine a spotlight into the coalition's costings which even they will not be able to hide from. It will make sure the Australian community is better informed about the budget impacts of policy proposals and impose greater budget accountability. The Parliamentary Budget Office will prepare election policy costings upon the request of authorised party representatives and the Independent members of parliament, who played a critical role in bringing the PBO into being. It will be able to prepare policy costings outside of the caretaker period. It will prepare responses to budget-related, non-policy costing requests of individual senators and members of parliament. It will initiate its own work program with regard to research and analysis of budget and fiscal policy settings. It will provide formal contributions on request to relevant parliamentary committees. It will provide non-partisan and policy neutral analysis of the budget cycle, fiscal policy and the financial implications of policy proposals. It will also help ensure the Australian public can be better informed about the budget impacts of policies proposed by members of parliament. In short, the Parliamentary Budget Office will have a busy agenda.

The Parliamentary Budget Office will promote greater understanding in the community about the budget process and fiscal policy. Accountability and transparency are at the heart of democracy and at the heart of a government's relationship with the public. This is something the United States and the United Kingdom have realised in establishing their independent budgetary offices. Accountability and transparency were the very values that the Joint Select Committee on the Parliamentary Budget Office spoke of in formulating their recommendations for a parliamentary budget office. The committee recommended that the office have mechanisms that could ensure transparency of process, equality of access to its services and maintain the separation of the parliament and the executive. Currently there is no independent body that specialises in high quality research and analysis on fiscal policy for the parliament. That is the critical role the Parliamentary Budget Office will fill.

The joint committee also found that the election costing provisions of the Charter of Budget Honesty Act had significant shortcomings. As it stands, the act does not enable the electorate to be better informed about the financial implications of election commitments. We in this place owe it to voters to provide them with independent information that gives everyone in Australia more information about policy proposals during an election campaign. That is why the joint committee unanimously recommended measures to provide incentives for parties to use a costings process—a costings process that better informs the wider public and enhances accountability and transparency. With the Parliamentary Budget Office and the independent costing of election policies we will avoid the farcical situation the coalition found themselves in at the last election.

Rather than follow the provisions of the Charter of Budget Honesty Act ,the political party that had been relying on leaks from Treasury decided that Treasury could not be trusted. The shadow Treasurer infamously claimed: 'The coalition's numbers are exactly right.' That was despite the $11 billion discrepancy between what was being promised and how it was going to be paid. This kind of dishonesty and disregard for proper costings processes should not continue. The Australian public deserves better than having to make a judgment on the responsible management of the country's budgetary and fiscal frameworks according to figures provided by private accounting firms. That is not good enough for the Australian people; they deserve a proper, transparent and accountable parliamentary budget office.

Under this bill the election costings function of the Parliamentary Budget Office will complement that of Treasury and the Department of Finance and Deregulation. The costings service will be fully transparent and consistent with similar processes under the Charter of Budget Honesty Act. The bill also amends the Charter of Budget Honesty Act so that parties with at least five members in the parliament will be able to request election costings from Treasury and Finance. Previously only the government and the opposition were able to access this service. ,Independent members of Parliament and political parties with less than five members in the Parliament will also be able to have their policies costed by the Parliamentary Budget Office. To ensure independence from the executive the appointment of a parliamentary budget officer will be made by the presiding officers following approval by the Joint Committee of Public Accounts and Audit. This way the Parliamentary Budget Officer will be accountable to the parliament via the presiding officers rather than to the executive.

In respect of its annual work plan, draft budget estimates and annual report, the Parliamentary Budget Office and officer will be overseen by the Joint Standing Committee on Public Accounts and Audit. This was the model for a parliamentary budget office and officer that was unanimously recommended by the Joint Select Committee on the Parliamentary Budget Office. Compare this to the kind of budget office the coalition wants. I spoke earlier today in this place about the private member's motion moved by the member for North Sydney, and I noted there that that model would undermine the office by making it accountable to ministers, not the parliament. It would reduce the level of transparency and public accountability that a parliamentary budget office brings to the election costings process. Under the proposal put forward by the member for North Sydney, election policy costings can remain confidential and hidden from the public. This is not the right thing to do.

This government is committed to increasing transparency and accountability, but the coalition cannot seem to kick the habit of poorly-thought-through policies—a habit that showed itself at the last election, with their $11 billion black hole, and a policy that shows itself at the moment with the coalition's $70 billion costings hole.

I also want to use this opportunity to note an additional issue which goes to the mechanics of the costings process—an issue which has not been raised in the debate so far. It is the issue of dynamic scoring. Dynamic scoring has been politically controversial in the United States, where the issue of how to analyse the cost of tax policy changes has arisen. Essentially what is behind dynamic scoring is predicting the impact of tax changes by looking at the effects of individuals' reactions to policy. It is an adaptation of static scoring, which is the traditional method for analysing policy changes. The problem with dynamic scoring is that there is little agreement about how to model long-run economic growth and the effect of tax cuts on the economy. We have some reasonable estimates of multipliers as a result of fiscal policy such as the fiscal stimulus put in place by the Rudd-Gillard governments in 2008-2009, but the impact of taxation changes is highly controversial.

I draw the House's attention to the 2003 report by the Congressional Budget Office commissioned under Douglas Holz-Eakin, who worked for the Bush White House and then went on to run the Congressional Budget Office. The study that the CBO did under his direction estimated the impact of a reduction in personal taxes and the claim that some in the Republican Party were making that such a tax cut would pay for itself. The CBO concluded that the free-lunch mantra—the so-called Laffer effect, which has been around for many years—is just plain wrong. The most optimistic assumptions the Congressional Budget Office could come up with were that tax cuts might stimulate enough economic growth to replace 22 per cent of lost revenue in the first five years and 32 per cent in the second five. But the CBO noted that that was the most optimistic case and, on pessimistic assumptions, the growth effects of tax cuts did nothing to offset revenue loss.

My point is that, if this legislation is enacted and a parliamentary budget office is set up, I would strongly urge that office to steer clear of dynamic scoring, to be pessimistic in their assessments of the impact of taxation changes on economic growth and not to get into the free-lunch mantra—the idea that tax cuts can pay for themselves. We have little evidence for that, and it is particularly dangerous because it sets up the potential for a government to simply suggest we can cut taxes and get the revenue back. That is not what careful economic studies have found. We have to be vigilant to the potential politicisation of the Parliamentary Budget Office in this way and in others. Its independence and its non-partisan character is paramount. By having an independent agent providing the costing and analytical services for policy proposals, I hope we can take away some of the embarrassment that the coalition currently finds themselves in with their $70 billion black hole.

It is a lot to hope for. Only last week the shadow Treasurer was telling 2GB listeners the number was not $70 billion, but at the same time the shadow finance minister was confirming that $70 billion was not a furphy. That was the gap that the coalition had to make up. This inconsistency and uncertainty does not befit a team that would like to have themselves regarded as the alternative economic policymakers in Australia. The accountability and transparency of the Parliamentary Budget Office will bring to an end this kind of deception—these kinds of attempts to claim that parties have closed the gap when, in fact, their costings simply do not add up.

A parliamentary budget office will be an important new institution. It will bring greater accountability and greater transparency to the policy costings process during election periods. I hope it will continue to draw on the academic expertise in Australia in public finance. This is an area to which I made a small contribution when I worked at the Australian National University, but, frankly, when you look at Australian economics overall, we have traditionally been stronger in macroeconomics and labour economics than we have in public finance. And the Parliamentary Budget Office will make an important contribution there. I hope they will engage thoroughly and deeply with Australian academic economists on this, as this government is seeking to do, for example, through the tax forum that will take place in early October.

The Australian people put their trust in us. They expect us to be honest with them about the policies we intend to implement that impact on their lives. Our respect for them means they deserve nothing less than a government that is accountable and transparent in presenting what Alfred Deakin called 'its wise control of the economy'. (Time expired)

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Link to this | Hansard source

It is a pleasure to rise to speak in this debate and to really focus a spotlight—that seems to be the word of the day—on what this debate is actually about. We have heard very wide-ranging contributions from Labor members, no doubt shackled to the talking points that they have been given by the machine that sits behind this government to make sure all Labor MPs say exactly what they are told to say. It is their dysfunctional machine, but one thing you can be certain of is that, whilst the government is viewed as incompetent and incapable of guiding this nation, the machine can keep its members on a very tight rein to say precisely what is being asked of them in this place even if it adds nothing to the debate that is before the chamber.

We have heard some discussions about the Parliamentary Budget Office. We have heard opposition members describe what it should be: an Australian equivalent of the Congressional Budget Office in the United States, where the spotlight is not held by the government of the day and the government does not decide upon which topic it will shine but which is actually in the interests of the good governance of the nation, not in what is good for the government that is in power at the time.

Frankly, the member for Fraser belled the cat. He said—and I quote—that this bill 'aims to shine a spotlight on coalition costings'. I thank the member for Fraser for his candour, because that is exactly what the government is trying to turn this Parliamentary Budget Office into rather than something that advances the national interest and which better informs public policy debate and contributes to the battle of ideas and our hopes for a better, more prosperous and peaceful nation. It is trying to turn it into another arm of the Labor Party machinery in Canberra which it can manipulate and direct, utilise and distort to its advantage and not to the advantage of the Australian public and the good governance of Australia.

I say to the member of for Fraser: thank you for being so frank. Thank you for outlining that in the eyes of the government this bill is about shining a spotlight on coalition costings and not much else. What the bill should be about is what is in the interest of the Australian public—what will advance the good governance of Australia—not what is in the self-interest of this hopeless Labor government we have here in Canberra and not what it thinks will improve its tactical position to combat the alternative agenda that is put forward by the opposition.

That is the contest that is really being debated out here. Occasionally—and the member for Fraser did this—you will hear a reference made to the good work of the Congressional Budget Office. But he would not go further and say that in the Australian context the Congressional Budget Office could not actually do the good work he was describing. So he sought to ascribe the virtues of the Congressional Budget Office in the United States to the Parliamentary Budget Office that has been so nobbled, hollowed out and turned into yet another tool of political advantage for a Labor government that he cannot draw those parallels and expect they will not be challenged.

What we are debating today is not what the coalition proposed; today we are debating the government's efforts to do what I call its 'post-it note politics'. It wants a post-it note that it can stick on the wall and say: 'Look! There is a Parliamentary Budget Office!' Do not go any deeper than that; just use the label and the slogan and hope that people will arrive at some conclusion that the Labor government hopes they will arrive at: that it is a good thing and that it represents what was taken by the opposition to the last election.

This is an important issue. The government is not doing setting up the office because it wants to; it is setting it up because as far back as May 2009 the then Leader of the Opposition pointed to the advantages of having an Australian equivalent to the Congressional Budget Office here in Australia, and in the last election campaign there was another clear, very succinct and well understood commitment by the coalition to establish a Parliamentary Budget Office. Those two commitments from the coalition were not supported by Labor; in fact, they were ridiculed. But when it came time to negotiate with the crossbenchers and found that they saw virtue in having a parliamentary budget office, Labor came kicking and screaming to a realisation that it actually needs one. In the only area of least-touch regulation you have ever seen in Australia, it is aiming to apply the least-touch effort to its own efforts. It will not develop a parliamentary budget office with all the credibility, strength, analytical horsepower and potential to contribute to the good governance of Australia of the Congressional Budget Office, which is what the coalition proposed. Instead Labor has dreamed up and brought forward a hollowed out facsimile.

When the member for Page was challenging the opposition's vision for a parliamentary budget office in the private members' debate earlier today, one of the weaknesses she sought to identify about the coalition's proposal was that it would not be controlled by the government. But that is the whole point of it! The government has control over so many of the organs of governance in Australia—the nature of its work, the nature of its analysis and the timing of its public declarations. It can use, manipulate and misuse the release of some of that information to its political advantage and to the detriment of the nation, and that is the way the Labor government likes it.

A number of Labor members in this place have talked about the costings problem that they believe the coalition had before the last election: during the campaign and in the negotiations that followed. That is yet another grotesque misrepresentation of what took place. The coalition was up-front about the interest rate impacts on this ballooning Labor government debt; yet the government tried to talk that down and then claim that the difference of opinion amounted to a black hole. More sober analysis after the Labor Party formed government again revealed the coalition's position to be absolutely correct. But that did not stop the Labor Party then, as it does not stop it now, misrepresenting the work that may have had its original analysis undertaken by Treasury.

Then there was the conservative bias allowance issue, a key element of the budget savings that the coalition brought forward, something so horrendous that it had to go into the black hole argument only to see the Labor government go and use that same approach to achieve some of its budget savings. It was very interesting!

Then there was the issue of secondary effects, where the coalition has a very credible campaign and policy framework for bringing more people into the workforce. This would enable and support their participation, recognising that it will cost money to make that investment in people currently not able to participate but that it will generate savings down the track because those individuals will be contributing to the workforce and not receiving benefits. But the government came out and said, 'We will count the cost and we will count the investment, but we will just be completely blind to the impact and the beneficial consequences on the budget down the track as more people are able to participate.'

The context in which this debate should occur is appalling form from Labor, with grotesque examples of misusing the current processes and an effort to try to mimic the coalition's commitment to a parliamentary budget office only to bring forward a poor facsimile—a diluted version. 'PBO lite' is what we have here, and the key thing is that it is not shining a light on policies and on good governance but, as the member for Fraser said, shining a spotlight on coalition costings. So the whole ambition about better informing the public policy debate in Australia, about the virtues of the Congressional Budget Office in the United States and about the proposal brought forward time and time again by the opposition to support, nourish and inform better public policy debate and a better contest of ideas has been reduced, as it always is by Labor, down to a base political motive that suits its self-interest. That is where we have got to today.

So that is the background; that is why we are here; that is why there is a need for this extra facility to be available to the Parliament of Australia; and that is why the coalition has been advocating a genuinely resourced, properly tasked, objective and independent parliamentary budget office, while Labor wants one that it can control, manipulate and influence—and it is seeking to do that in a number of ways. My friend and colleague the shadow Treasurer has outlined where we think this hollowed-out proposal needs to be filled and needs to be remedied for it to achieve any of the ambitions of a parliamentary budget office. We have indicated that our question is: if the government is disinclined to do those things, why on earth should the opposition and the Australian public have any more confidence in a parliamentary budget office still subject to the same manipulation, control and misuse that the current machinery has? The current machinery has been used and manipulated in that way by the Labor government.

I think that is a perfectly reasonable point, and I will be very interested to hear if the government takes on board some of the very positive proposals that the coalition has brought forward, particularly when the best thing it could do is to go back to where this idea originally started—that is, with the coalition. The smart thing for the government to do would be to set aside the effort it has made to hollow out the proposal; so far it has merely come up with something it can stick a label on that sounds as if it might be a parliamentary budget office. The best thing the government could do would be go back to the coalition's own private member's bill, which picks up all of those positive characteristics and the strengths of the international models that we should be inspired and guided by, rather than to implement the stripped-down, manipulated model it has come up with. That is the challenge for the government: is it fair dinkum or is it just trying to make this parliamentary budget office another Labor plaything?

We recall that, during our last election campaign, when our material was submitted to the government, there were miraculous leaks that had the fingerprints of the Treasurer all over them. Why would you think that? Well, where else would they have come from? That is where all the material went. Then there was this dance of trying to create in the public's mind complete falsehoods about what the coalition was on about. That is the current process we have been trying to improve. There is not much hope of that, because Labor likes it just the way it is, and when there is an opportunity to do something worthwhile in a different framework it wants to nobble this as well.

There are some key differences between what the opposition is proposing and what the government is proposing. Our view is that the independence of the Parliamentary Budget Office is crucial and that it should be an independent statutory body. It should have very strong powers to obtain information from government departments and agencies even when they are not so keen to provide it, and it should be able to provide an analysis of economic forecasts and budget estimates. Otherwise, what are you actually asking it to do? If you cannot ask the Parliamentary Budget Office to have a look at the macro-economic and financial settings, is it limited to only looking at our economy and policy options through a straw so that the only thing it can look at is the little particular circle that comes through in response to a request from a member?

Is the government trying to nobble the parliamentary budget office into requiring an agreement with government departments on how, when and on what terms they can get information and documents? This has not even been teased out. There is talk in the explanatory memorandum of a memorandum of understanding that will then control, nobble, influence and restrain the activities of the PBO into some sort of agreement with the very departments it is seeking to get material from and, in some cases, challenge the analysis of. So it is rather a remarkable nobbling in the first instance. Who is to know? That memorandum of understanding from a department to the PBO—or the 'PBO lite' that the government is proposing—might well say, stripped down: 'We'll provide you with material so long as you don't criticise or challenge any of it. We'll provide you with this, but it has to stand as the gospel truth. Otherwise we reserve our right not to provide you with more material.' We have not even got any explanation of what this MOU is going to look like, but given the form of this government I am sure it will not be designed to assist the independent activity and robust work of the PBO; it will be about containing the PBO's role so that the government and government departments do not have 'please explains' or challenges to their assumptions.

There are even some issues around the work that can be carried out. The irony here is that during the election period any requests for information will be responded to by the answer being released to all and sundry. It is quite extraordinary that elsewhere in this bill there is a requirement that the parliamentary budget office push off from the annual government reporting documents that the government has produced and is happy with. The PBO cannot start anywhere else; it has to use that material. The point that is most fascinating is that it has to use the Pre-Election Economic and Fiscal Outlook report, a document that is released in the second week of an election campaign. So you have to use that report, and if you have had some work carried out well before an election on a policy proposal then you have to take it back to get those numbers updated on the basis of PEEFO, the Pre-Election Economic and Fiscal Outlook report. In getting it updated to that latest report that the parliamentary budget office is obliged to use under the government's construction, all of a sudden you are seeking a confirmation during the election period which means that all of that work is just going to be thrown open to the general public whether or not you are going to exercise that material, act on its conclusions or go forward with the policy proposal that is in it. It is out there for all and sundry. Why? Because then the government can have a crack at it. So the opportunity for considered and sober analysis is denied the opposition while the government has complete control over the machinery and the arrangements that are in place.

I think this is a great idea turned into a mess and a sham by an incompetent government—and haven't we seen that before? The best thing this parliament can do is make sure it has a genuine parliamentary budget office modelled on the successful and universally acclaimed Congressional Budget Office, with all the powers and opportunities to contribute to the good governance of the country, not a nobbled-down parliamentary budget office that is only there for the best interests and good governance of a bad Labor government. (Time expired)

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

I rise in support of the Gillard Labor government's Parliamentary Service Amendment (Parliamentary Budget Officer) Bill 2011. This bill will provide for the establishment of a parliamentary budget office and the appointment and functions of an independent parliamentary budget officer. There is no better time than this to introduce and pass this bill. Time after time we have seen the Liberal Party's lack of economic legitimacy, credibility and responsibility, such as in their $11 billion black hole during the election period and more recently and more alarmingly the $70 billion black hole they have created since. I do not think the Australian parliament or the people have ever needed a parliamentary budget office as much as we do now, with the current Leader of the Opposition and his shadow Treasurer. Of course, the opposition oppose the measures in these bills. It suits their self interest and shows their economic weakness—of which they have plenty. The bill exposes them as the economically illiterate party that they are.

The Gillard government will provide $24.9 million over four years to establish this independent—and I will keep highlighting that word—parliamentary budget office. This is based on the unanimous recommendations of the Joint Select Committee on the Parliamentary Budget Office. The parliamentary budget office will be independent and dedicated to serving this parliament. The committee that made the recommendations included members of the Labor Party, the Liberal Party, the National Party, the Greens and Independents. The government has accepted all of these recommendations, but now the opposition are undermining the recommendations of the committee and its own members—the work of the member for Sturt, the work of the member for Higgins and the work of Senator Barnaby Joyce, although for the last one that is quite understandable. I am sure that the members on the other side who have put in the hard work to get to this position are quietly fuming that the Leader of the Opposition and the shadow Treasurer have thrown away this report and basically kicked all of their hard work into the dirt.

The Liberal Party are so afraid of economics that they want to hide their weaknesses under a rug and hope that no-one will notice them as they will reduce the transparency and public accountability of the election costings process. This would mean that the costings would remain confidential and hidden from the Australian public. We know why the Leader of the Opposition wants to keep those costings hidden. We have seen why on numerous occasions. Their paid parental scheme is a prime example as it alone had a half-billion-dollar gap in it. There was a failure to count the basic numbers, which is terrible. We saw an $11 billion costings blunder during the election and now, as I said, there is a $70 billion black hole. The Leader of the Opposition is not only mindlessly negative but has also admitted that economics is a bore. That is why, I guess, under the 13 years of the Liberal-led government he was never trusted with responsibility for the economy. But we know what he was trusted with—the Liberal Party seem to acknowledge that he is good with cuts and good with slashing funding for hospitals. His recklessness with the budget, jobs and household budgets shows that he does not have the judgment to manage Australia's $1.4 trillion economy. This bill further strengthens this argument because he does not have a clue. He finds it easy to dig these billion-dollar holes, but he can never seem to find his way out of them. It seems he is content to sit and try to bluff the Australian public. The Leader of the Opposition quite seriously could not even manage monopoly money, let alone our economy.

The most recent black hole, probably one of the biggest economic blunders in Australia's political history, is a $70 billion hole that the Leader of the Opposition has dug for himself. How would they pay for this black hole? They would have to manage savage cuts to services and payments on which families and older Australians depend, such as the equivalent of no Medicare for four years which would force Australians to pay for a doctor whenever they are sick and need medical attention most.

Andrew Southcott (Boothby, Liberal Party, Shadow Parliamentary Secretary for Primary Healthcare) Share this | Link to this | Hansard source

On a point of order, Mr Deputy Speaker, the member for McEwen's speech is now entering the realms of fantasy. I ask you to draw the member back to the subject of the bill.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

The long title of the bill states that it is for a parliamentary budget officer, the establishment of a parliamentary budget office and for related purposes. That does allow for a degree of travelling from the core subject matter of the bill. However, I do draw to the attention of the honourable member for McEwen his obligations to observe the standing orders.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

Again, the opposition try to hide when we start talking about facts in relation to budgets, the economy and spending taxpayers' money. How would they pay for this budgetary black hole? They would have to stop assistance to people with disabilities for three years or cut family tax benefit payments. If all these different things were put in place, a parliamentary budget office would find that their numbers quite simply do not add up. That shows the importance of having a parliamentary budget officer established as an independent officer of the parliament.

Recently the shadow finance spokesperson, Andrew Robb, said that 'the $70 billion is an estimate of the sort of challenge that we will have'. The shadow Treasurer contradicted this when he told 2GB, 'Well I can say to you the number is not $70 billion'. If we had a parliamentary budget office to go through the figures we could get confirmation of what happens. That is the intent of having a parliamentary budget office—to ensure that when we had off-the-cuff comments made by the people supposedly responsible for the Australian budget if a Liberal government came to power—God forbid that that should happen—we would have some credibility of the costings for what was being done. What we continually have now is one contradicting the other. We have looked at the best possible ways of ensuring that Australian taxpayer dollars, particularly during election campaigns when we hear a lot of promises that will not be kept, will be looked after. We looked at how to make sure that money that is spent is not putting at risk every Australian family's future. We looked at how to ensure that when the spending is done we can tell that we have received the benefit of it. We looked at the stimulus package and how, if we had not had that stimulus package, there would have been greater costs to Australian taxpayers because we would have had some 200,000 extra people claiming benefits.

How do we ensure that this $11 billion black hole in the Liberal Party budget never happens again? How do we ensure that there is no risk to basic services which ordinary families rely upon in a whole range of areas such as trade training centres, super clinics or the National Broadband Network?

How do we ensure that these things are properly costed and funded so that we can get the best benefit for Australian families across the nation? How do we ensure that we do not have a risk to our cost of living through financial recklessness that would add to the price pressures on the economy—for example, average families paying some $1,300 more a year to support big polluters? We do this by establishing a parliamentary budget office that would ensure the government's framework and the staff of the PBO would be provided under the act and that the peak officer is appointed by the Presiding Officers following approval from the JCPAA. I think a four-year term with an option for one more is more than fair and reasonable to ensure open, transparent and independent advice that goes to all parties and to ensure that Australian taxpayer dollars are spent in the best interests.

While those opposite continue to dig their holes, the Gillard Labor government is getting on with the job in an economically responsible manner, working in the national interest to get things done for our country and its future. We have created almost 750,000 jobs since we were first elected, with another 500,000-odd to be created in the next two years. We have many more Australians employed today than 12 months ago. Because of the work we do in ensuring that we are financially responsible, we have created a strong economy. Among the world's largest economies we have the lowest debt. We have stayed out of recession and our economic future is very strong under this government.

We are delivering affordable, high-speed broadband that will increase the productivity of this nation. Australian businesses will certainly benefit through the National Broadband Network, no matter where they live. It will mean better education, better health care, better access for Australian businesses to the biggest marketplace in human history. We are delivering on our healthcare agreements, which mean many more doctors, nurses and hospital beds, but less waiting time and less waste. We are putting a price on carbon and making big polluters pay for the pollution they dump in our atmosphere, which in turn will cut pollution, cut taxes and increase pensions. It will create clean energy jobs and industries. We are making sure that we are giving Australians a fair share of the mining boom, as the member for Goldstein mentioned earlier. We are giving every Australian a boost to their retirement savings, tax breaks for small businesses and breaks in company tax. These things are important for the future, both for our nation and for the generations to come.

We have doubled our investments in school education, upgraded facilities at every school and provided more information for parents than ever before. We have created 130,000 training places and we have given a historic increase to the pension, because we know that for many years pensioners were not looked after. In fact under the former government, they went backwards. More and more pensioners found themselves on struggle street, but it was this Labor government that did its costings properly and delivered these pension increases. We have recorded investments of more than $37 billion in 44,000 projects across the country, infrastructure that was so severely lacking under the previous government. We are catching up and getting in front of where we should be, but we know there is a long way to go and we know that we have to keep delivering more infrastructure for people across the country.

That is why it is important to ensure that we are fiscally responsible. That is why it is important that we continue to deliver good budgets to ensure people benefit, no matter where they live. We are a lucky country, we are doing extremely well and we should ensure we pass on that wealth and growth to make life better for all Australians. We have delivered, through tough savings and the flood levy, to provide some $5.8 billion to support the flood-affected regions in Queensland, Victoria and WA. Having gone through the Black Saturday fires, I can tell you that these things are so important in getting people back to normality as soon as possible. Getting the infrastructure in place so that people can have their jobs, their homes and their kids at school are things that can never be underestimated for the health and well-being of communities. We have also laid the foundations for the nation's first disability insurance scheme. This is something I would have thought people would unanimously agree was of vital importance and should have been done a long, long time ago, but it is this government that is getting on with the job and delivering it.

We have put more than 185 bills through this place—more than the previous government could ever have managed. All of these Gillard Labor government achievements, policies and plans have been fully costed, unlike those of the opposite side, who are now running scared of any independent scrutiny of their financial management. Plagued with self-interest, the Leader of the Opposition is a risk to all Australians and a risk to the Liberal Party. No-one can take him seriously; no-one ever will take him seriously. That is why it is important this bill has a speedy passage so that by the next election those opposite will be forced to stand up and account for all the dollars they commit in their promises.

Andrew Laming (Bowman, Liberal Party, Shadow Parliamentary Secretary for Regional Health Services and Indigenous Health) Share this | Link to this | Hansard source

In the time allowed I want to firmly put my support behind the coalition's proposal for a PBO, the very proposal that has led this scurrying government to follow up with a poorly thought out plan of their own, which effectively changes very little from what is already available in this parliament at the moment—that is, to hand over documents to Treasury and have them publicly released, as we effectively found out at the last federal election. What the coalition is talking about is based an international model of a fully independent PBO, which will allow economic forecasting to be performed. We need this budgetary analysis to be performed by an adequately resourced agency that is not present at the moment. We need something independent of Treasury and never was that more obvious than what we saw during the estimations and modelling done by TRIM in Treasury of the potential fiscal hole that was subsequent to the GFC. The Treasury's estimates were so far off it obviously led us into the spending and the GFC reaction that we saw from the then Rudd Labor government. Of course, Treasury then scurried around in the MYEFO and tried to clean it up, but it was way too late then. What we needed was a parliamentary budget office that could have looked at some of these proposals and given us another opportunity to get those estimates right. We do not need a PBO that has to go cap in hand and fill out MOUs with government agencies where those agencies have the ability to sign off on what they want and the power to distract or move away from areas where they chose. We certainly do not want to see a situation where everything is publicly released after the first tranche and there is no chance to improve these policies. We want something that suits both government and opposition—a PBO as the coalition has proposed.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Order! It being 1.45, the debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour.