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Monday, 12 September 2011
Page: 9581

Mr ROBB (Goldstein) (12:43): 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-barrellin g 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)