Mr McMULLAN (3:57 PM) —I wish to begin by thanking the voters of Fraser. One way or the other, I have been representing this area, my local area, for more than 16 years. To build on that by achieving a swing to Labor in this very difficult election for us was a ray of light in what was otherwise a very dark night on 9 October. I also want to congratulate all the new members elected this year. I hope they all gain the same satisfaction and recognise the great privilege which flows from being a member of the House of Representatives as I have.

I take this first opportunity to ask you, Mr Deputy Speaker Causley, to convey my congratulations to the Speaker on his election. I actually know the real reason why he pursued that position so assiduously. It appears that being in the Parliament House office next to mine was much too great a shock for him and he had to find the first available excuse to move. So, on the very day that I moved in, he moved out! I understand that and there are no hard feelings. My only regret about his activities as Speaker so far, apart from a ruling yesterday and another one today with which I disagreed, is that he has decided to wear that silly gown over his suit. I hope he reconsiders that decision and just sits there dressed like any other member, as you do, Mr Deputy Speaker, and as do all the others. I think that is a 19th-century tradition that we can do without.

Before turning to the principal national issue that I want to address, I want to focus on some national issues with particular relevance for my local community, the community that I have the honour of representing here. First, let me refer to the government's quiet announcement, pretty much unheralded here in Canberra, during the election to fund one of the Prime Minister's extravagant election promises by increasing the efficiency dividend from one per cent to 1.25 per cent. Let us get the context of this clear: the Liberal Party were being hit by the judgment of Australians that their election promises were reckless and extravagant. Clearly this assessment was coming through in their polling, as I understand it was reflected in ours. This made the Liberal Party very nervous, so they felt the need for a savings option—one of I think only two they put out during the whole election. And where did they turn? They turned to the modern Liberal Party tradition: to sack public servants.

Senator Humphries here in Canberra had been talking up his campaign for re-election on the basis of supposed attacks by the Labor Party on the public sector. After this Liberal Party policy announcement, Senator Humphries was struck dumb. We heard nothing more from him on the subject. The Prime Minister announced on 1 October that the government, if re-elected, would increase the efficiency dividend from one per cent per annum to 1.25 per cent. It sounds little enough but the government claims that it will make savings—and I think it is probably right—of about $240 million over three years arising from this measure. We do not yet know all the detail but, if the measure is implemented—as you would expect—in the same manner that the one per cent efficiency dividend has been applied over the years, it is pretty clear by the Howard government's track record that this change will mean a loss of up to 2,000 jobs—probably at least half of them here in Canberra and over the border in the electorate of the member for Eden-Monaro, who is at the desk.

So here we are with 2,000 jobs potentially being lost, maybe as many as half here in the ACT and over the border in Queanbeyan. It is true that there are hundreds of millions of dollars which could be saved in wasteful Commonwealth expenditure, but it will not be achieved by an efficiency dividend unless the Howard government changes its policies on issues like government advertising and other indulgences. We were able to identify hundreds of millions of dollars of waste but we did not need to reduce it with broadbrush measures like increasing the efficiency dividend, which is always lazy policy. Why should decent, hardworking Australians lose their jobs to protect pork-barrelling and self-indulgence by this government? If they want to make savings, they should cut it in their own areas of indulgent spending. That is one big issue here in the ACT that concerns me as the representative of Fraser and as an observer of the national public debate.

Another issue of particular concern in my electorate of Fraser is the future of the Australian National University. In many ways, the ANU's problems are those of all universities in Australia, which have been slowly strangled by the Howard government—with worse to come—including other universities in my electorate, notably the University of Canberra. I assume that it was put out a few days ago, but I received today some key data on higher education, put out by the Australian Vice-Chancellors Committee. It summarises some of the issues that anybody who has any association with Australia's universities is aware of. For example, even since 2001 the student per teacher ratio in our universities has increased from 19 to 21. That is just in the two years from 2001 to 2003. Anyone who, like me, has had the opportunity, first of all, to go through university and then to see their children go through university knows that we are the first generation giving our children a worse university education than we received ourselves. There are fewer resources, bigger classes and tutorials the size of the lectures I used to attend.

There have been some inevitable changes in the funding of universities. In 1981 Commonwealth and state government funding was 90 per cent of the operating revenue of universities. By 2003 it was only 44 per cent. Some of that change had to happen, but the consequences of that are that, when the Commonwealth tightens funding, it puts more pressure on students, parents and families, it makes it harder for people to get access and it makes it harder for the universities to supply the resources. As I said, the student to teacher ratio has increased from 18 to one, to 21 to one. In areas like management and commerce, it has increased to 32 to one and, very fundamentally for the future of this country, in areas like education it has increased to 23 to one.

Internationally, we are falling behind best practice. If you look at comparable countries to see the percentage of the population aged 25 to 64 with a university qualification, you see that in Australia in 2002 we were 20 per cent, compared to the USA at 29 per cent, Norway at 28 per cent, Denmark at 23 per cent, the Netherlands at 22 per cent and Canada at 21 per cent. The problem is that we are not increasing as fast as they are. The total expenditure on higher education institutions as a percentage of GDP in Australia is trailing behind those countries at 1.5 per cent, compared to the United States at 2.7 per cent and Canada at 2.5 per cent et cetera. We are behind and falling further behind in an area of fundamental need if we are going to be a successful country in the 21st century.

There are two special factors that I wish to refer to which affect the Australian National University in my electorate over and above that crisis. Firstly, it is uniquely dependent on Commonwealth funding. It has no state government to assist it as, for example, the Queensland government has done so very well in its Smart State strategy, helping the University of Queensland and others. The ANU is uniquely dependent on the Commonwealth, so when the Commonwealth gets tight-fisted with universities then the ANU suffers more than others. Secondly, the education minister has been speculating vaguely about new arrangements between the ANU and the CSIRO when it comes to research. No-one seems to know what the minister is talking about, but he has referred to it a couple of times. I am very keen to know what Minister Nelson is referring to and what he has in mind, because the ANU is a precious national asset.

In its international assessment of universities, the Times Higher Education Supplement said the ANU is the leading Australian university. It is 16th best in the world ahead, for example, of the renowned Columbia University in New York, which ranks 19th. We have many fine universities in Australia, including the six that the Times Higher Education Supplement listed in the top 50 in the world, but No. 1 in Australia is the Australian National University. This is a very significant assessment. The table ranks universities on the basis of a survey of 1,300 academics in 88 countries and takes into account things like cited research produced, the ratio of faculty to student numbers, an institution's attractiveness to foreign students and the presence of internationally renowned academics. Against those significant criteria and on the assessment of peers around the world, it is the best university in Australia and in the top 20 in the world, ahead of great universities like Columbia. So I sincerely hope that the minister will do nothing which has the effect of undermining either this great national asset or the fundamentally important role of the CSIRO.

I want to turn now to the election campaign in general and the role of the Charter of Budget Honesty in this and previous elections. Of course, the election result was a great disappointment to everyone on this side of the political divide, but we live in a democracy and that always raises the possibility of losing elections as well as winning them. Having lost, we at least get the chance to learn the lessons that defeat can teach us. In some countries you do not get that chance. There are many such lessons—after all, we did not just lose; we actually went backwards—but most of those lessons are for others to comment on. I am sorry to disappoint all those who hope that because I have graduated to the backbench I am going to make speeches to embarrass my leader or my party. I know there are precedents for such things, but I do not intend to follow them.

I do, however, want to make a positive contribution about one of the lessons the Labor Party in opposition needs to learn: a lesson about the Charter of Budget Honesty. Only in the Howard government's Australia or a George Orwell novel or perhaps Aldous Huxley's Brave New World could something called the Charter of Budget Honesty be rigged. And it is rigged. It is as crook as the electoral system in Florida, with all the trappings of a fair process but operated in a manner designed to favour the incumbents.

Let me make it crystal clear: I am not criticising the officials in the Department of Finance and Administration or the Treasury. On all the evidence I have, they have behaved properly within the constraints set by the legislation and the process which flows from it. What I am referring to is the fundamental unfairness of the structure and process created by the legislation. What purports to treat government and opposition equally is in fact massively skewed in favour of the incumbent party—not skewed by accident but as a conscious design feature of the system.

The fundamental issue is that the implication that, by having a charter in the first place, you somehow put the opposition and the incumbent on an equal footing with regard to the costing of new policy during an election is not only false but also disingenuous. Unlike the opposition, the incumbent government have access to the bureaucracy in the lead-up to the campaign. They can request a policy to be costed, they can put various versions forward and they can have an iterative process backwards and forwards through the draft cabinet process where policies are costed by Finance and Treasury, only to be shelved for later use. We all know that after the Prime Minister called the election, but before he issued the writs, there was another cabinet meeting where they were able to make decisions before the caretaker period began, with all the access to Treasury and Finance that incumbent governments have and oppositions do not have.

Incumbent governments also have complete access to budget parameters and updated budget information. So they can get all their policies costed before the election, put them on the shelf and pull them down when the election comes. This creates the situation where the government has effective access to an interactive, iterative process of exchange with the costing departments while the opposition has a one-off shot which can be damaged by secret information that has never been made available to the public or the opposition—only to the government—or by a legitimate disagreement over underlying assumptions which cannot be questioned. There is no capacity to have a debate about it.

For the opposition there is no effective redress. The charter is essentially an extension of a campaign tool which seeks to discredit any opposition policy and its underlying parameters and costings. It is the pointy heads' equivalent of the 30-second interest rate scare ad and essentially is designed to have the same effect. It is a tool which turns the occasionally subjective art of policy costing into an absolute, and therefore a convenient political hatstand upon which the incumbent can hang hollow slogans such as `unfunded', `uncosted', `costing black hole' and others.

The process is this: both the incumbent and the opposition submit their policies to be costed by the Department of Finance and Administration and the Treasury. But in the government's case they have all been costed before—or they should have been if the government is efficient and effective. This involves filling out a ready-made document provided by the secretaries of the departments which aims to glean as much information about the policy as possible. This document should serve as the basis for the departments' costing of the policy. They should approach the detail of the policies and their underlying assumptions with as much objectivity as possible in order to avoid the interference of departmental views or individual preconceptions of the policy in the costing. Essentially this means that policy officers should be costing the policy that is presented to them rather than the way they think it should be designed or delivered.

This is not an insignificant point, as the case of Medicare Gold demonstrated. Costing a policy with such far-reaching reforms for the sector was never going to be easy. However, with the assistance of health economists, modelling and actuarial analysis and publicly available information, Labor was able to cost the various elements of the policy with rigour. The policy was, however, deemed to be undercosted by the department for two reasons. The first was the use of a different casemix data set, which was departmental information only available from the Department of Health and Ageing and never made available to the opposition. The second was the failure of the department to accept a fundamental aspect of the policy's framework—that is, that the Commonwealth, as a monopsonist in the hospital services market, would be able to leverage better prices and access for services, particularly in participating private hospitals.

Against that, it is interesting to note that the government's own Future Fund was not costed by Treasury and Finance—not because these departments ran out of time to complete the costing but because the government failed to provide the additional detail required to undertake a costing. This act alone reveals the level of arrogance with which the government views its own charter. This should be contrasted with the opposition's willingness to engage the departments in this process by providing additional information when requested. It appears that, in the case of Medicare Gold, the only error Labor made was to engage in the process at all.

The government will argue that they are in the same position that the opposition find themselves in, but this is false. Unlike the opposition, the government have access to underlying budget parameters in the first place. Unlike the opposition, the government have the opportunity to have their election policies costed by the departments prior to the campaign and will have had the luxury of costing under various budget scenarios. So they do not have to change when the PEFO comes out.

The costing of Labor's opposition to the sale of Telstra revealed another aspect of the charter process. As a longstanding policy and in the absence of useful information from the estimates, we found that the department was limited by a commercial-in-confidence classification to not provide any sale parameter information. The Labor Party resorted to using publicly available information and information gleaned from ministerial statements in the parliament and budget papers. This was a rare situation where the government could not totally exploit its incumbency to hide a very damaging story: that the sale of Telstra was bad for the budget, both in the short and medium term. The costing of Telstra presented a rare win for Labor under the charter, but it never got the same media attention as some of the failures, where we ran into conflict in the process. In this one instance, perseverance overcame a rigged process, but it does not change the fact that the process is fundamentally flawed and biased.

So what does all this mean for the opposition next time? It is for others to make that decision, but I suggest that those responsible need to give serious thought to saying, right from the outset, that they will not cooperate with the process unless it is modified to be fair—or at least fairer. One option would be for the opposition to have earlier, confidential access to designated Finance and Treasury officials to enable an iterative costing process on an ongoing basis. Another would be the establishment of an independent body, like the British Institute for Fiscal Studies, to conduct ongoing, independent assessments of the proposals from both sides. Whatever happens, major reform is needed. The Charter of Budget Honesty as it relates to election costing is hopelessly flawed and hopelessly rigged and needs to be reformed or scrapped.

It is a privilege to be returned as a member of this House. We all need to remember that. When we do not get returned on the side of the parliament we want to be, we still have to remember that it is a great privilege, shared by very few, to be here at all. There is no greater honour in a democracy than for your fellow citizens to choose you to be their representative in the parliament.

The election outcome was a great disappointment to me and to the overwhelming majority of the people I represent. We have the great fortune to live in a great country. With a better government, which tapped into our highest hopes rather than our deepest fears, we could be so much better. This last election was a triumph of fear over hope. It is our obligation on this side of the House to be advocates for hope and opportunity, not for ourselves but for those Australians who need a better government, to give them and their families a better chance.