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Monday, 12 September 2011
Page: 9573


Mr HOCKEY (North Sydney) (12:11): 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.