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Finance and Public Administration Legislation Committee
Parliamentary Budget Office

Parliamentary Budget Office


CHAIR: I welcome the Parliamentary Budget Officer, Mr Phil Bowen, and officers of the Parliamentary Budget Office. I thank the office for providing updated information on PBO activity, which has been circulated to the committee. Mr Bowen, did you hear my statement earlier about the ABC crew—who I notice are now leaving, so it is a bit redundant.

Mr Bowen : Yes. I will not take offence!

CHAIR: Mr Bowen, would you like to make an opening statement?

Mr Bowen : No, thanks.

CHAIR: We will go to Senator Wong for questions.

Senator WONG: This may be in your document. I wanted your staffing profile, how many you are budgeted for, how this has changed and how it will change over the next 12 months? I am happy for you to take it on notice if it is going to take a while. But, if you are able to answer it, that would be good.

Mr Bowen : I did not quite—

Senator WONG: I want your current staffing profile—what you are currently budgeted for; whether that has changed in the last financial year; and whether it will change over the next 12 months.

Mr Bowen : Just briefly—and then we will give you detail perhaps on notice—in the lead-up to the election, we did recruit additional staff. From memory, and Ms Williams may be able to help me, our average staffing level in 2014-15 was 37. Our average staffing in 2015-16, the election year just passed, was 42. We recruited quite a number of staff in the latter part of the financial year. We were not necessarily expecting the election to be held quite so early at that time, but we did get the additional staff on deck. I think at one point we had 48 staff plus a couple of temporaries, which would have taken us to around 50. But we are back now at about 45.

Senator WONG: I am indebted to Senator McAllister, who has pointed me to the last page of your activity report, which reflects that.

Mr Bowen : As at 30 September.

Senator WONG: Yes, as at 30 September. Over the last year, what was the highest number of total staff you had?

Mr Bowen : I think it was 50, but we could confirm that.

Senator WONG: Sure. What are you budgeted for?

Mr Bowen : Notionally around 40. But, as you know, every third year we get supplementation for the election for the purpose of increasing our capacity.

Senator WONG: Has the way in which that is calculated changed? How is the election year supplementation calculated?

Mr Bowen : I do not think the way in which it is calculated has changed, except that we get fewer now than we used as a result of efficiency dividends affecting it.

Senator WONG: So how is it calculated?

Mr Bowen : Originally it was to be $500,000. That was the original amount. Now I think the figure would be closer to $350,000.

Ms Williams : We get half a million dollars every three years. That half a million goes in our forward estimates when the third forward year is created. So, by the time it comes to budget year, it is diminished by efficiency dividends.

Senator WONG: So the $500,000 additional is for the election year supplementation, and it is not a formula based on a proportion of your base funding; it is a nominal amount?

Ms Williams : It is a nominal amount.

Senator WONG: Which has not been increased since the PBO was established?

Ms Williams : No.

Mr Bowen : It has not been increased and, as a result of efficiencies—

Senator WONG: I understood that. This is the headline figure and then you have an ED applied to it. I understand that. Would you anticipate the number of staff dropping back down to 40 over the coming financial year?

Mr Bowen : Probably. The reason I hesitate is that we will have to keep an eye on the demand for our services and then judge what staffing we need to cope with that. You will have seen, of course, that in the past financial year, the election year, we completed more than double the number of costings that we completed in the 2013 election year. That demand is continuing, I would have to say. So we will monitor fairly closely the level of demand and the staff that we need to cope with that.

Senator WONG: The supplementation was for which financial year, Ms Williams?

Ms Williams : For 2015-16.

Senator WONG: In terms of the forward estimates, is your current funding profile assuming a supplementation in 2018-19?

Ms Williams : That is correct.

Senator WONG: And if the election were to be held earlier would you anticipate that there would be a bring-forward of that?

Ms Williams : Yes, I think we would probably look to do that. Can I just go back to your question about our staffing peak?

Senator WONG: Sure.

Ms Williams : I have just been given some information that during 2015-16 our staffing peak was 48.2 FTE.

Senator WONG: Does that include secondments?

Ms Williams : No.

Senator WONG: How many additional secondees did you have on top of that?

Ms Williams : We had three graduates under the Parliament of Australia Graduate Program during 2016. And we had one additional secondment from the Taxation Office during the year as well.

Senator WONG: Did you second more during the election campaign?

Ms Williams : I cannot recall when they started but it would cover the election caretaker period.

Mr Bowen : I think most of them were there for the election campaign but I think we recruited them prior to the campaign.

Senator WONG: Your information requests—does this document show me how many costings you prepared during the election campaign?

Mr Bowen : Yes. If you go to page 4—

Senator WONG: That is right. That deals with my question.

Mr Bowen : We have given you every year since we started operating, actually.

Senator WONG: But they are full years.

Mr Bowen : They are full financial years.

Senator WONG: My question was about during the election campaign. Are you able on notice to give me that?

Mr Bowen : Do you mean during the caretaker period?

Senator WONG: Yes, sorry, I should say that—during the caretaker period.

Mr Bowen : We will take it on notice.

Senator WONG: That is fine. I think we have had a discussion, or someone else has been asking questions previously, about what forecasting capacity there is within PBO.

Mr Bowen : Do you mean economic forecasting?

Senator WONG: Correct.

Mr Bowen : Our act of course precludes us from doing economic forecasts. The act says we must not do our own economic forecasts. We have individuals who are qualified to do and have worked previously on economic forecasting but we do not have an economic forecasting capacity as such.

Senator WONG: When you are doing certain costings, though—and I noticed you have done a range of medium-term assessments. Is that a—I am using a deliberately non-specific term—

Mr Bowen : The word 'projections' is what we would use.

Senator WONG: Your medium-term projections—they are beyond projections, but let us not get into that. I assume that as part of those, though, you have to make assumptions about a range of the economic parameters. Is that not the case?

Mr Bowen : Senator, we—

Senator WONG: We do not have a lot of time, Mr Bowen, so I wonder whether we could be reasonably precise. When you are doing that do you simply use economic parameters from Treasury?

Mr Bowen : We are required to use Treasury's economic parameters in our costings and projections, yes.

Senator WONG: Do you ever do your own?

Mr Bowen : We have not done our own economic forecasts or prepared our own economic parameters, but what we have done and will continue to do is sensitivity test for economic shocks. We did a report on that a year or so back. We will do another one. It would have been after this budget but we were caught up with other matters. But after MYEFO we will be putting out ten-year projections with sensitivity testing attached to it. That gives an indication, if the economic forecasts vary, of what impact that would have on the budget estimates.

Senator McALLISTER: I have one follow-up question in relation to the resourcing arrangements. I am trying to understand the special appropriation that is provided for under your act and how that intersects with the remark you made earlier about the funding that is made available to you at election time. Are they the same thing?

Mr Bowen : It is a little confusing, I accept, Senator—but, no, they are not the same thing. The additional money provided every third year is a supplement to our annual appropriation.

Senator McALLISTER: Your departmental appropriation?

Mr Bowen : Annual departmental. The money in the special appropriation, which is in the Parliamentary Service Act, stood at $6 million when we were created. When the PBO was established there was $6 million in that appropriation. Today, four years down the track, there is $5 million in that account and our estimates, as set out in our portfolio budget statement, show that we propose to draw that down progressively over the next four or five years.

Senator McALLISTER: What is the underlying policy purpose of having a special appropriation of this kind?

Mr Bowen : You would probably have to go to the government of the day to get a policy purpose. That amount was included in the act originally for the first year's operation of the PBO, but the establishment of the PBO was delayed and so that money was not required to be used as an annual appropriation. We took legal advice, which was very clear that we could use that appropriation for the normal purposes of the PBO. You would have to appreciate that everything was new when it came to setting up the PBO. It was very unclear what type of budget would be required. For example, we have had to fit out office space and put in a secure IT network, and all that has cost money that was never budgeted for in our annual appropriation. We have been able to do that and have only drawn to date $1 million from the $6 million special appropriation. But over the next few years if we are going to maintain the levels of service we currently provide we will have to draw that down, which means that not now but within maybe a couple of years time we will have to come back through the public accounts committee and put a case for a change in our resourcing, I expect.

Senator DODSON: I am interested in the external engagement part of the report you have given us. Firstly, there is the cost of the trip to South Africa. Have there been other external participations of a like nature?

Mr Bowen : Yes. We do not have a lot of international engagement trips, but once a year I do attend the OECD's network of parliamentary budget officials and independent fiscal counsels. That is a very useful forum for the exchange of experiences and ideas between like organisations. I am not sure whether you are aware of this, but within the OECD there are now more than 30 such organisations operating. Those organisations are also spreading to the developed world; hence, I was asked to go to South Africa a few weeks ago to participate in a conference there. There were a number of parliamentary budget officials there from the developed world, including from the UK and Canada. There was OECD representation as well as IMF and World Bank representation. It is usually one trip a year. The last couple of years I have also participated in conferences in Japan and Korea. In each case those were funded by the Japanese and Korean authorities. In the case of the South Africans, we funded that travel, as you would probably expect. As to the cost, I may have to come back to you to give you a figure for that.

Senator DODSON: That is fine. What do you assess the impact of this is? I know there is a lot of mutuality about this. I am interested in what impacts arised for us and what impacts arised for particularly the South Africans in this case on the operations and standards that were adhered to.

Mr Bowen : The South Africans have been operating for a shorter time than we have. They have some similar challenges to us and some challenges that we do not have or at least certainly not in the same order of magnitude. They were very keen to hear from us how we operate, how we interact with the parliament and how we in this country deal with issues around value for money, which is a huge issue for them. It is not only value for money but whether the money is actually spent on what it has been appropriated for, which I think we would agree is less of a problem here.

Senator DODSON: Yes.

Mr Bowen : So we operate in very different environments. Nevertheless, they seemed to appreciate hearing from us on the practices that we engage in. But we are in very different environments. For me, it reminded me, I guess, that many of the problems that we are dealing with here—and I mean here in this building and my engagement with parliamentarians—are very much First World problems. South Africa is the most developed country in Africa, but nonetheless there are huge issues to do with poverty, corruption et cetera.

CHAIR: As there are no further questions for the Parliamentary Budget Office, I thank you, Mr Bowen, and officers.