Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Joint Committee of Public Accounts and Audit, I present Report No. 446: Review of the operations of the Parliamentary Budget Officeand seek leave to incorporate the tabling statement in Hansard.

Leave granted.

The report read as follows—

This is the first report of the Joint Committee of Public Accounts and Audit on the operations of the Parliamentary Budget Office.

The PBO commenced operation in July 2012.

The inquiry is part of the committee's ongoing oversight role, which has enabled us to review the progress of the PBO after only two years of operation.

The PBO is also subject to external audit by the Australian National Audit Office, which tabled a favourable report on the administration of the PBO, in June 2014.

I commend Mr Phil Bowen, the inaugural Parliamentary Budget Officer, for his clear sighted leadership of this important new parliamentary body.

It is a significant achievement to build a new organisation from scratch and prepare for a general election at the same time.

It is fair to say, the PBO quickly gained the confidence of members and senators and built a reputation for professionalism, independence and expertise.

May I particularly compliment Mr Bowen and officials from the PBO on their very professional appearance at Senate Estimates—it is a personal highlight of the Finance and Public Administration Legislation Committee.

The main work of the PBO is providing confidential policy costings to parliamentarians.

In the lead-up to a general election, the PBO's role shifts to a more public one.

Senators will recall that the 2013 federal election was the first time all parliamentary parties and independents were able to get their election commitments costed.

Immediately following the election, the PBO also produced the first ever post-election report—an assessment of the budget impact of election commitments of the main parties, including the Australian Greens.

The PBO also launched a self-initiated research program. These are considerable achievements.

The committee's review was an early opportunity to examine the framework and operations of the PBO and consider international best practice.

The Australian PBO is one of 10 such bodies in the OECD, and 29 around the world.

The success of the Australian PBO is due in no small measure to the existence of a clear legislative mandate, statutory independence, adequate resources, and qualified staff.

But these alone would not be sufficient without the co-operation built up between the Parliamentary Budget Officer and the Heads of Commonwealth agencies under a non-binding Memorandum of Understanding.

To build on this success the Committee has made eight recommendations that fall into two categories—Access to Information and the PBO's Mandate.

Access to Information

It goes without saying that access to information is essential if the PBO is to fully discharge its mandate and provide high quality support to members and senators.

To this end the committee has recommended that the Parliamentary Budget Officer's right to free and timely access to Executive information should be clearly specified in the Parliamentary Service Act 1999.

Such an amendment will bring the PBO into line with international best practice and allow the parties to the MoU to act with confidence.

It is also prudent to adopt a legal safeguard against any possible change in the political climate in the future.

The committee also dealt with four matters of detail that warrant early attention.

First, the committee was disappointed that the National Audit Office found over half of the responses to PBO requests are routinely late.

The government needs to ensure that agencies meet the timeframes agreed in the MoU.

Second, we agree with the Parliamentary Budget Officer that details of the individual components of the Contingency Reserve should be released to the PBO.

There is more than adequate provision in the Parliamentary Service Act to protect the confidentiality of that data.

Third, the government should work with the PBO and Commonwealth agencies to identify and remove or modify legal provisions that prevent the release of data to the PBO.

This is largely a housekeeping matter and should proceed as soon as possible.

Fourth, the outsourcing of budget estimates or policy costings has led to fees being levied by third parties—including the Australian Government Actuary.

This is inconsistent with the Parliament's intention, the MoU and international principles of best practice.

To rectify this situation Commonwealth contracts should guarantee the PBO free and timely access to data held by third parties in the public or private sector.

After the 2013 election the government established the National Commission of Audit.

The Commission recommended that the Commonwealth should adopt certain fiscal rules and the PBO should report against the government's adherence to those rules.

The pursuit of certain fiscal rules is an issue close to my heart and one I intend to pursue as a member of the Committee.

We have deferred our full consideration on that issue until there is a government response to the Commission's report.

We did conclude, however, that the mandate of the Parliamentary Budget Officer should be expanded to include the preparation of detailed medium term projections on an annual basis.

This will fill an important gap in the financial data currently available to the public.

The post-election report analysis should also be extended beyond the current four years required by the act to provide, as far as possible, projections over a 10-year medium term.

The creation of the PBO is an important development in our democratic arrangements and has already made a significant contribution to transparency and accountability in the country's finances.

The changes we propose are important refinements to ensure the PBO can continue to bring reliable and comprehensive analysis to the public debate and promote fiscal responsibility across the political spectrum.

I commend the report to the Senate.