Senator MURRAY(10.44 a.m.) —The Treasurer (Mr Costello) is to be congratulated on bringing the Charter of Budget Honesty Bill 1996 forward. This legislation is welcomed by the Australian Democrats as it does represent an essential reform: it aims to improve fiscal policy outcomes by providing a framework for the conduct of government fiscal policy. The Australian Democrats have pushed for reforms of this kind for a very long time, as political history has indicated that no party has had the capacity to tell the fiscal truth to the electorate because of the failure to have them objectively costed.

In the 1982 budget, an election budget, the then Treasurer, Mr Howard, forecast a surplus of $230 million, which blew out to a deficit of $4,473 million. The post-election revelation of the budget deterioration allowed the new Labor government to junk virtually all their election promises. Since then that practice has become pretty much a recurring picture. Governments have deliberately painted a rosier than truth picture of their finances, which only seems to be corrected after elections. Thus, in 1992, Paul Keating produced his now infamous One Nation forecasts, which claimed that the deficit would repair itself. On the back of this, he and Dr Hewson went into the 1993 election campaign with the most outlandish and unfunded tax cut promises.

The Democrats said at the time that the tax cuts were not funded and were not fiscally responsible. Democrats leader Senator Kernot moved in the Senate to cancel the cuts on the grounds of fiscal responsibility. But the coalition joined with Labor to vote in the $4 billion of tax cuts which they both knew were not funded. Three years later the coalition had the gall to gloat over the `Beazley black hole'. If they had voted with the Democrats to stop an unfunded $4 billion in tax cuts, there would not have been a black hole; it would have been more like a black divot, to use golfing terminology.

Over the last four years, fiscal reporting continued to be a very political process. The 1995 budget included a claimed `headline' surplus of $718 million. The real picture was an underlying deficit of $7.2 billion, a point which Senator Kernot tried to make as clear as possible through trying to set up a Senate inquiry into the matter. Again, the coalition joined with Labor to defeat the Democrats' proposal. Why? Because they wanted to rely on Labor's ridiculously rosy economic forecasts to build up their unfunded and unaffordable election promises—$7 billion of them.

With the change of government, we had the now familiar display of the new government junking most of their election promises after a shock-horror revelation about the black hole they had helped create. Ignoring the fact that the black hole was always an exaggeration and was mostly accounted for in the 1996 budget papers anyway and that the actual budget deterioration was about $2 billion to $3 billion, the government used this deliberately misleading fiscal crisis to put in place another round of vicious, socially and economically destructive budget cuts, many of which, particularly in business, labour market and social justice areas, were frankly unnecessary. They were so unnecessary that last year's budget ended up $1.6 billion ahead of forecasts. The private sector assessment agency, Access Economics, says that next year's budget will be over $4 billion ahead.

Fiscal reporting, while it might seem boring, is absolutely essential to an open and accountable budget process. Once again, I record the Democrats' belief that the government is to be congratulated on recognising that and bringing the bill forward.

All this manipulation of figures over the past 15 years has resulted in a massive disruption of government service delivery, billions of dollars of broken promises, unfunded promises being made and deceit on a massive scale, undermining public confidence in the electoral process, in politicians' probity and major mistakes in fiscal policy which have affected national economic performance. To combat this, in 1996, Senator Kernot, in her charter for reform, called for far more openness and accountability in fiscal reporting. This bill does go some of the way towards achieving that. In the committee stage we will be pushing amendments to make it go further.

The bill makes the government and the Treasury responsible for reporting to parliament specified information about fiscal strategy, the current economic and fiscal situation and the outlook over the medium and long terms. It specifies principles of fiscal policy that the government is to consider but not necessarily to implement when developing its budgets. The principal effects of the legislation will be: to introduce greater accountability and transparency in matters; to tilt the balance of fiscal decision making away from the short-term economic and political considerations that have dominated the past and instead focus towards strategic and long-term fiscal objectives; and to provide the electorate with an accurate account of the government's financial position and the pricing of its, as well as the opposition's, policies—all laudable effects.

The charter of budget honesty seeks to achieve these objectives by requiring the government's fiscal strategy to be based on sound fiscal management and for the publication of regular reports setting out such fiscal strategy. The bill also provides for the publication of an intergenerational report at least once every five years, which it is hoped will encourage the development of long-term sustainable and forward government policies.

This legislation puts in place a number of important accountability mechanisms which will help to ensure that members of the public are better informed about the government's fiscal strategies when they go to the polls and vote in federal elections. It will mean that the electorate will be able to determine more accurately the effectiveness of government in its management of financial affairs and the costs and benefits of government policies. It will mean that the media, who are the prime commentators in the area of election reporting, will be able to do some important and independent analysis. Importantly, it will also be possible for voters to weigh the costs and benefits of government policies against those of the opposition and, if our proposed Democrat amendments get up, other minor parties.

The Charter of Budget Honesty Bill is largely modelled upon the New Zealand Fiscal Responsibility Act 1994. Most of the reports and analyses proposed in the charter of budget honesty appear to have been taken from the New Zealand act. The exceptions in the Charter of Budget Honesty Bill are the intergenerational report, the costing of election campaign promises and proposals and the fact that the Australian bill is not binding on the Crown.

The first two of these provisions have no counterpart in the New Zealand legislation, thus it could be argued that the charter of budget honesty will provide a more comprehensive array of fiscal and economic information than does the New Zealand act. For this the Democrats commend the government. Nevertheless, the Democrats believe that one very important distinction between the New Zealand Fiscal Responsibility Act 1994 and the charter of budget honesty is the fact that, contrary to New Zealand, no rights or obligations arise under the government legislation. This may mean that the so-called advances of the Australian legislation will be cancelled out by this retrograde feature.

Clause 3(2) of the bill states that the charter of budget honesty is not judicially enforceable. The charter is therefore much like a code of conduct, which does not have any enforcement procedures or penalties—a situation which clearly is unsatisfactory. Voluntary codes, as we all know, are often ineffective.

In the current legislation there is no penalty should a party fail to provide pre-election reports and costings, and there is no penalty should a party breach its pre-election reports, costings or commitments. Yet, if you read anything concerning the electorate's view of politicians, you will see that there is an utter need and desire for politicians to speak the truth and to keep their word.

The only sanction currently available for when a government ignores the need to comply with the provisions of the charter of budget honesty rests with the parliament. That is an unsatisfactory situation given that the government of the day will have a majority in the parliament. By contrast, the New Zealand Fiscal Responsibility Act 1994 is binding on the Crown. This means that, if the New Zealand government does not comply with the requirements in the act, any citizen has standing to initiate an action in the courts. In our view, this demonstrates a serious commitment to the provision of information and accountability of the government to the electorate—a commitment which the Democrats and I were disappointed to see was not present in the legislation before us.

The remedy of enforcement where there is a failure to act is denied Australian citizens in the charter bill, which effectively provides a shield of immunity to any claim on public interest grounds, preventing the disclosure of information. I believe that this limits the effectiveness of the charter as a mechanism to improve scrutiny, transparency and fiscal accountability. Therefore, our most important amendment will be to make this act binding on the Crown.

The Australian Democrats propose to amend the bill to provide that it be enforceable against the Crown, as in the New Zealand jurisdiction. In the absence of such an amendment, I believe this legislation would be inconsistent with its own purpose: on the one hand, this bill is proclaimed to be an important contribution to the government's accountability efforts; on the other hand, the government cannot be held accountable to the provisions in this legislation. I urge the government, the non-government parties and the independents to consider this inconsistency and to support the Democrats' amendment in this regard.

The Charter of Budget Honesty Bill puts in place better public sector accounting methodologies. The current methods provide inadequate information. The fact that these methods have continued to be used points to the politically convenient nature of these provisions in that they provide very little information and consequently could be politically expedient.

These poor public sector accounting methodologies are no longer satisfactory. The electorate of today demands that they be provided with sufficient information which will enable them to make an informed vote. This is the right of the elector, and indeed it is the responsibility of the government, the parliament and the Senate to provide the electorate with that information.

The government's accounts must be taken to the next level of international best practice. Setting in place the requirement for pre-budget opening of the books and a post-budget review of fiscal strategy will make government more open, more transparent, more accountable and more respected by the electorate.

The Democrats will also be moving amendments to bring about the consideration of social and environmental implications and the effects of policy decisions. These are issues which are vitally important to many members of the community and many future members of the community, and therefore form an essential basis to their voting behaviour and to their lives in Australia. The provision of this kind of information will better assist the electorate in their assessment of the government and opposition parties' policies.

I will also be seeking the support of other senators for the inclusion of a requirement that any costing that is reported includes an indication of the assumptions, limitations and qualifications of any modelling process used in the reports. This should ensure that any biases or distortions which certain models may create will be subject to public criticism, analysis and debate.

The charter of budget honesty should make a useful contribution to improving policy making, economic sustainability and public accountability in the Australian jurisdiction. The pre-election and post-election reports, along with the intergenerational reporting requirements which will assess the long-term sustainability of current government policies, as well as the accompanying reports by the secretaries of the departments of Treasury and Finance, will all contribute to fulfilling the aims of this legislation—to produce better financial outcomes.

The bills information requirement should considerably improve the chances of framing fiscal policy debate over a longer term horizon and with a concern for integrating sustainable fiscal policy within wider development strategies. In reviewing these strategies, our Democrats amendments will specifically require social and environmental impacts to be taken into account. I reaffirm the Democrats' approval and gratitude to the government for bringing this bill forward, and I hope that our amendments will result in its considerable strengthening.