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Wednesday, 23 November 2011
Page: 9330


Senator BIRMINGHAM (South Australia) (12:05): As always, it is a pleasure to follow Senator Bushby, who makes arguments in this place that are well considered, well constructed and really do highlight very sensible points of concern about legislation that comes before this chamber.

Senator Feeney: You flatterer, you!

Senator BIRMINGHAM: You will never catch me doing that to you, Senator Feeney. Never live in fear of that.

Senator Bushby: On uranium, maybe.

Senator BIRMINGHAM: Perhaps on uranium. It is disappointing that in this debate on the Parliamentary Service Amendment (Parliamentary Budget Officer) Bill we are considering a flawed bill when there was such great potential and great opportunity. This proposal has the capacity, if we get it right, to change the way politics and the polity in this country work. It has the capacity to ensure we have a higher standard of debate, a higher standard of policy making, particularly during our election campaigns. Unfortunately, it looks like the government is going to get this wrong and miss its opportunity. This had the opportunity of being perhaps the one good, lasting thing to come out of minority government. There is not much to be said for the minority government we have functioning at present. There is not much to be said for the way the other place works, with its mishmash of crossbenchers determining what the government does. But when the crossbenchers, in negotiating minority government, said we should have a Parliamentary Budget Office, when they chose to adopt the policy first announced by the member for Wentworth on behalf of the coalition as a key criterion for whomever formed government, they grabbed hold of something that has great potential to ensure that oppositions, minor parties, Independents and backbenchers in this place are empowered to make far more constructive contributions to policy making than the current regime allows. However, this legislation fails to take that opportunity and make the most of it. In fact, it fails to make anything effective of that opportunity. If we do not fix this legislation by adopting these good amendments proposed by Senator Cormann then frankly it will probably be a waste of time to pass this bill. We will not achieve any of the good outcomes that could have come of it. However, if we adopt Senator Cormann's sound amendments we have a real potential to change the way campaigns and policy making work in this country.

Let me look from my own portfolio space at some of the policy making that we have seen in recent years. There are many, many lessons to be learnt from the multiple train wrecks that were once flagship environmental programs of the Rudd and Gillard governments. There are many lessons that can be learned. Some of them you can perhaps summarise in cliches, such as that we need to look before we leap. Any government and any party should take a serious look, and a decent Parliamentary Budget Office would help to take that serious look. Or we could make other cliched phrases about making haste slowly. However, this government has charged headlong into some very poor policy lines and promises.

A classic policy that I have spoken about many times in this place, but which has not had the same public exposure as some of the higher profile debacles like the Home Insulation Program, is the Green Loans Program. The Green Loans Program was a quintessential Kevin 07 promise. It offered 200,000 Australians interest-free loans to make them feel good about buying a more environmentally friendly fridge or the like. It came at the not insubstantial cost of $300 million but, importantly for the Labor Party, running in the 2007 election campaign, because of the way the policy was structured, the $300 million was a fixed cost and the budget impact of the program was capped. That meant that, when they announced it, they got the positive headlines from announcing a policy that would make a difference to the environment and their policy did not carry the risk that their costings could be wrong.

We see all too often in modern election campaigns that the parties, whoever they are, are restricted very much to announcing policies and campaigns that have a guaranteed fixed cap on their costing. Why are they restricted to those? Because every party in an election campaign fears being pinged with some type of budget error or mistake. It is far, far easier to say, 'We are going to give out X number of grants at X dollars,' which is a capped policy. That ensures that you do not run into any campaign trouble. Is that good policy? Frequently, it is not. Green Loans, of course, was a classic example of a bad policy. The policy turned out to be a complete and utter dog of a policy. Yes, it cost taxpayers around the $300 million that the Labor Party claimed in the lead-up to the 2007 election that it would, but instead of delivering 200,000 loans it delivered 8,000 loans—same cost; fewer loans.

The 2010 election had its own version of this policy from the Labor Party. There were none of those old power hungry fridges from Kevin 07's campaign. Instead, in the 2010 election, Green Loans was traded in for real Julia's cash-for-clunkers scheme. Cash for clunkers had of course the same type of policy formula: 200,000 cars were to be taken off the road, thanks to a $2,000 rebate. It was the classic construction of a safe policy for an election campaign designed purely to get newspaper headlines during the campaign and to avoid any threat that the costings could possibly be wrong. Simple costings: 200,000 cars; $2,000 rebate. There is your fixed cap. Absolutely no risk whatsoever.

All politicians chase a good headline in an election campaign. There is no sin there; that is the expectation. However, the need to minimise the potential for arguments or risks or the threat around costings blowouts is leading parties to submit and pursue what are, frankly, mickey mouse programs and bad policy. I am sure if those on the other side were inclined to do so they could give examples of policies of ours that have a similar construction with a similar capped cost, because we operate within the same paradigm and with the same concern not to suffer those types of potential cost blowouts. These debates about policy costings are as ubiquitous during election campaigns nowadays as the inevitable debates about leaders' debates. You see it during an election campaign: there will be a sustained debate about when the leaders will debate, how many debates they should have, who should moderate a debate, whether there should be an audience or not and which network will broadcast it. The same thing happens with costings. Throughout an election campaign there is constant argy-bargy between the government of the day and the opposition of the day, whoever they may be, about whether or not the other side will have a budget blowout or a budget problem. What happens when we have those debates is that frequently we forget to debate the merits of the policies being proposed. This legislation, if we get it right, has the capacity to stop having those mindless debates about whether one side or the other has a budget blowout in one of their policies and allows us to debate the merits of the policies. More important than getting away from having debates about costings is what those policies are. Serious reforms, if any of us in this place are being honest, are by their very nature complex. Serious reforms involve complex assumptions to achieve estimates of their budget impacts that are virtually guaranteed by their nature to be contestable. Treasury, with all of their models, as we so often see, get forecasts wrong as often as they get them right. Yet the media, somehow, expect both parties to produce bulletproof costings during election campaigns. That, of course, is an impossible task. If the Treasury cannot do it you cannot expect that the parties are going to produce bulletproof costings unless the parties simply produce the Mickey Mouse policies that I described before.

Imagine, from opposition, trying to model the budget impacts of serious welfare reforms to reduce effective marginal tax rates and to increase the incentive to move people from welfare to work. These are the types of reforms that are often talked about but rarely seriously pursued. From opposition, during an election campaign, the risk to your political campaign, frankly, would currently be too great to bear. It would be too risky to pursue that type of very complex reform where the impact is not just on the welfare benefits that are paid out but on the tax receipts that government has and on money that might be spent on programs to assist people in that transition from welfare to work. They are complex policies. So all political parties find it far easier to propose a capped back-to-work program grant targeted to a limited number of recipients instead of the fundamental structural reforms that we should be talking about far more often in this place, and particularly in the public arena during election campaigns.

I would argue that experience with programs like Green Loans and the cash-for-clunkers scheme dramatically strengthens the case for establishing a strong, independent and confidential Parliamentary Budget Office. As I indicated, such a proposal was mooted by Malcolm Turnbull in 2009 and taken to the 2010 election by Tony Abbott. It has been embraced by the Independents in their negotiations thereafter, and I am pleased that the Labor Party and the Greens came to the party and accepted it as a good proposal. A good Parliamentary Budget Office has the potential to provide independent costings to all parties—to back¬≠benchers, Independents and crossbenchers, not just to party leaders and the leadership machine. Although such costings will not be bullet proof, because, as I said before, even the costings of Treasury are far from bullet proof, they should provide sufficient armour to the parties pursuing those costings to encourage greater bravery in policy development and to encourage people to pursue real and complex reforms, even from the opposition benches, the crossbenches and even—dare I say it—from the backbenches of opposition or potentially of government.

If we get this right, it may well be that future party leaders will rue the day this legislation was passed because ambitious backbenchers will be able to get complex policy reform proposals costed and argue the case with evidence to help back them up. Most importantly, if we get this right, we may, in future debates—especially in future election campaigns—get to debate ideas themselves instead of simply being bogged down in debates about whether the costings underlying such ideas hold up or simply stack up.

Unfortunately, there was little in the final deal struck with the Independents that will leave a positive mark or a positive legacy on our body politic—but this had the potential to be it. Equally unfortunately, though, there was little in that deal that outlined the detail of how such a Parliamentary Budget Office should or would work. Regrettably, now we come to debate the legislation before us, we see that it fails in the detail to achieve the lofty aims that we should be striving for in the type of reform we want to achieve.

Most critical in this, and it has been raised by all the other speakers and it is tackled in Senator Cormann's amendments which he moved on behalf of the coalition, is this issue of confidentiality. When you are making policy, when you are trying to consider policy options and when you want to get those policy options costed, it is essential that the information is treated in a confidential way because you may not choose to go ahead with it. Once modelled, once you get the costings back, political parties may look at it and say, 'The cost of this measure is too great.' Frankly, isn't that what we want out of this proposal? Isn't it that, when informed of the cost of some policy measures, we want political parties to rule them out, to say the cost is too great and therefore to not proceed. Under this legislation there is a risk that such proposals would then be made public and that the political party which internally had decided not to pursue a certain policy option, had decided that they were not going to go ahead with it, would then be faced with publicly having to justify why they were considering it in the first place. They would be faced with the newspaper headlines of 'Coalition considers' or 'Labor considers' or 'Greens consider XYZ', and the huge budget cost that comes with it. That, of course, would mean that parties would be less likely to use the services of this Parliamentary Budget Office. That would undermine greatly what you would hope to achieve from it.

The government of the day, when it comes to the release of information, often relies on a clause in the freedom of information laws that relates to deliberative matters. When the government of the day, working through Treasury, is getting policy options costed, the opposition, the media or others may go along and make FOI applications to try to see what the government is doing or considering. Frequently you get a response to the freedom of information request—I know this because I receive them often—saying they will not release this information under the clauses of the FOI laws that relate to 'impact on deliberative considerations', matters that are under deliberation, the fact that the government is still making up its mind.

The same really should apply here. If a party chooses not to go ahead with a policy then it should never be made public unless that party chooses to make it so themselves. That would seem to me to be a core and fundamental aspect. I would urge those on the crossbench in particular to think sensibly about the benefits that could be had if we get this legislation right, to think about it with clear eyes, to think about it in the real world of politics, where some things have to remain confidential. Sometimes good ideas do not turn out to be that good after all and so you ditch them. In that world, you do not want those ditched ideas to drag you down during a campaign—and nor should they, because you have made a rational decision, once informed by all of the facts, to cast them aside.

Senator Cormann is pursuing a range of sound amendments that deal with the concern about confidentiality that I highlighted. His amendments also deal with the powers the Parliamentary Budget Office will need to be able to get information out of government, empowering it to effectively advise on policies and costings and ensuring that its functions allow it to consider, have regard to and develop proper economic forecasting and budget estimates—the types of things that we should want from this.

I appeal to the crossbenchers, to the Greens in particular but also to the government: have lofty ambitions for this. This legislation could have the potential to change the way our debates around politics work in this country. It could allow us to debate good policy, good ideas, real reforms and radical reforms in the future, rather than be dogged by mickey mouse policies and election campaigns that, frankly, are all too often meaningless and do not achieve the types of reforms we should be considering in this country. Adopt Senator Cormann's amendments. Support Senator Cormann's amendments. We have the potential to get a great deal out of this, to have an effective Parliamentary Budget Office that can work for the benefit of politics and raise the standard to a level that I believe all Australians would welcome. That is what you should do. The challenge lies with all of those opposite. (Time expired)