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Wednesday, 4 March 1998
Page: 440

Mr ROCHER (6:24 PM) —In my opening remarks in the debate on the original Charter of Budget Honesty Bill 1996 [No. 1] I noted that the legislation was especially important for the coalition, given the commitment of the Prime Minister (Mr Howard) to the electorate at the last election to improve standards of political behaviour. As part of that, it was the Prime Minister's stated intention to restore greater meaning and authority to the parliament in the public eye and to commence this process with a commitment to enhance economic honesty.

My comments made some 13 months ago on the strengths and weaknesses of the original bill remain valid because this bill has been returned to the House by the Senate in exactly the same form in which it first left. I was broadly supportive of both the content and the intent of the initial legislation and I remain so. If anything, I have come to view the bill more favourably owing to the widespread support that it has received from the ensemble of business and industry leaders which appeared before the Joint Committee of Public Accounts in March last year when this bill was being considered, although it is a cause for concern that the JCPA prefaced its findings on the bill with the statement that it had to complete its review in an unreasonably tight time frame at the expense of an exhaustive consultation process.

While some of those witnesses who appeared before the parliamentary committee suggested areas in the legislation that could be improved, each of them endorsed the general thrust of the bill. Further, representatives of the Australian Chamber of Commerce and Industry, the Business Council of Australia, the Australian Society of Certified Practising Accountants, the Australian National Audit Office and the Australian Council of Auditors-General all commended the coalition on specific key features of the legislation.

It is a curious thing that so many of our independent economic leaders were prepared to publicly support the charter of budget honesty but that neither the opposition nor the minor parties in the other chamber can see fit so to do. In report No. 351 from March 1997, the JCPA stated very clearly that it saw no reason why the Senate should further delay the passage of this bill.

In the interests of improved disclosure of information and an enhanced democratic process, it suggested that those who opposed the original bill should reflect on the evidence provided to the JCPA in March 1997 and re-evaluate their positions. The bill is not immutable. As Mr David Hope, a representative of the Australian Society of Certified Practising Accountants, the ASCPA, suggested in his testimony before the JCPA:

The charter should not be set in stone, and improvements should be made over time, in the light of experiences.

Another contributor to the public hearing embraced the terms of the charter, describing them as not just a step in the right direction, but a fairly long run in the right direction. But by no means does that preclude future changes to the initial legislation.

The JCPA came to a similar conclusion, noting that the charter has `the capacity, within the fixed principles and standards specified, to reflect changes in the demands of accountability, in information technology, and the needs and expectations of the electorate, well into the next century'. The parliament will have the opportunity to amend this bill, if it is deemed necessary, once it has been put into practice, building on its strengths and correcting any deficiencies.

The first step, however, must be to expedite enactment. Critics of the terms of the charter of budget honesty note quite accurately that the rights and responsibilities set out in the bill, while desirable, are not legally enforceable. I remain disappointed with the absence of judicial enforceability of any part of this bill. However, I accept that the standards the coalition seeks to introduce will bring about greater discipline in the management of our economy. If a government is fiscally irresponsible, that will be shown to be the case following the publication of its financial reports.

The Australian electorate can decide for itself how best to discipline such aberrant behaviour. Similarly, should this or any future government arrogantly ignore the requirement to produce regular detailed fiscal updates, as laid down in this legislation, it is reasonable to expect that both the media and the electorate will take it to task.

The strength of the bill lies in the frequency of government reporting. As one witness before the JCPA noted, the combination of the pre-election report, the annual fiscal statement, the budget account, the post budget update and the intergenerational estimate will mean that `we are never more than three months away from a reasonably current view of Australia's economic outlook'.

With the recent admission of Mr Ted Evans, the Treasury secretary, that it is in the nature of economic forecasts that they will always be wrong—and we have seen many examples during the life of this and previous parliaments to suggest that Mr Evans is spot on in this regard—the frequent updating of these forecasts will minimise the margin for error. That a government will find it more difficult to avoid public scrutiny of its recent past performance as well as its future fiscal intentions should bring the focus more sharply on delivery at a minimum of a balanced budget.

The two proposed financial reports to have won the greatest support from the private sector are those that have not been released by past governments—that is, the intergenerational report and the pre-election fiscal update. The inclusion of these reports puts paid to the claim that the bill does nothing more than codify existing practice. If this bill is enacted, every Australian voter will have access to information about any underlying debt or surplus, levels of government debt and the state of national savings within 10 days of the issue of the writs for a general election.

The opportunity currently afforded to political parties to curry favour with the electorate with unsustainable levels of election promising will be severely curtailed under this legislation. Governments may attempt to fudge their economic performance, and oppositions may opt to avoid clearly articulating their preferred fiscal program, but they would do so at the risk of being exposed to the broad Australian public. As Mr Claud Piccini, assistant director of economics with the Business Council of Australia, noted in his evidence to the JCPA:

The whole idea of transparency in (fiscal) documents is that they are open to the public. Not only is there the responsibility on government and public servants to be honest about what their expectations are, but there is also an obligation on the commentators . . . to take governments to task.

The Australian Chamber of Commerce and Industry has suggested that the publication of comprehensive fiscal information prior to an election will increase the pressure on government to act responsibly and that this will have a direct impact on improving the overall level of business confidence during an election campaign.

In addition to the publication of material about the short- to medium-term fiscal strategies of federal governments, the Business Council of Australia, the BCA, indicated that it also sought to have information about the long-term impact of these strategies on the national economy made available to the general community. The proposed five-yearly report on the long-term and intergenerational consequences of existing fiscal policy certainly meets that expectation.

As the ASCPA made clear to members of the Joint Committee of Public Accounts last year, the requirement on government to produce longer term economic action plans will bring them into greater alignment with the standards expected in the business sector. That is important for sustaining investor confidence in Australian markets, for providing greater stability to the economy and to enable business to determine the likely outcome on the economy of a change of government.

For the intergenerational reports to be truly transparent, however, clarification is needed as to the content of those particular reports. It would have been naive to assume that the charter of budget honesty will oblige governments to behave with greater integrity. No amount of legislation can regulate for honesty. What the charter will do is to put the onus on the government of the day to provide the Australian people with a greater pool of data on which to judge the effectiveness of that government's public sector program. The Auditor-General has made that point clear in the public hearing into this bill when he noted that even if the Charter of Budget Honesty Bill 1996 does pass through the parliament:

People can [still] query your competence and query the basis of the information on which you made the judgment.

Importantly, the Auditor-General went on to say:

But they cannot query your honesty in coming out and saying, `This is the judgment we made and this is the reason for the variation of the judgment.'

I concur with the findings of the JCPA that reporting is not an end in itself but rather that it is merely another link in the accountability chain. But it is an important link. It is important because it seeks to provide a greater amount of information to the Australian community.

Those who oppose this legislation for a second time should think very carefully about their opposition because a vote against this bill is a vote against a better informed public; it is a vote against accountability in government; and it is a vote against a more sustained level of business confidence and investment. As I said in February 1997, it is important that this legislation be supported in this and the other place. If the legislation creating the charter is enacted the second time round, it is incumbent on each of us to ensure that this and future governments uphold their commitment to publishing their fiscal targets and to make regular progress reports against those targets. I support the bill.

(Quorum formed)