| Parliamentary Joint Committee on Parliamentary Budget Office
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Chapter 3 Role of the proposed Parliamentary Budget
Specialist research and analysis units or Parliamentary Budget Office (PBO)
type bodies that have been established in other parliaments tend to have a
broadly common mandate. Broadly this mandate has included: to better inform the
quality of economic debate and contribute to financial scrutiny in the Parliament
and the wider community. This chapter outlines the views presented to the committee
on the mandate, functions and clients of the PBO.
A number of contributors to the inquiry stressed the importance of
providing the PBO with clear directions on its role, the scope of its work, the
extent to which its work may be self-guided and its type of outputs. This
section addresses the broad directions or mandate of the PBO. How the PBO’s mandate
should be captured, for example, in legislation, will be addressed in Chapter
The Department of Parliamentary Services (DPS) advocated for the PBO to have
a broad mandate to comment on legislation, and Government and non government
policies. Similarly, the Australian
Chamber of Commerce and Industry (ACCI) considered that the PBO should be
enabled to provide analysis ‘beyond fiscal and economic forecasts’.
The Public Policy Institute suggested that the mandate of the PBO cover
broad matters affecting the budget including ‘economic policy generally; trade
and commerce (domestic and international); Government revenues and
expenditures; Federal fiscal arrangements; infrastructure and capital works;
productivity; wages, salaries and income support’.
In its draft legislation provided to the committee, the Federal Coalition
proposed that the PBO be tasked to provide objective and impartial advice and analysis on:
- the Commonwealth budget and budget cycle; and
- medium and long-term budget projections; and
- the costs of policy proposals; and
- other matters as requested by Members and Senators.
The appropriateness of the PBO to assist with the development of policy,
for example, by critiquing policies and making recommendations was raised with
the committee. It was suggested that while the work of the PBO would invariably
be used for political purposes, an association with policy development in such direct
ways could lend a partisan tone to the work of the PBO and draw it into
political debate, compromising its independence and impartiality.
Examples from other jurisdictions
The main purpose of the New South Wales (NSW) PBO is ‘to provide
independent costings of election promises and, outside pre-election periods, to
provide independent costings of proposed policies of Members of parliament’.
Notably, the legislation specifically excludes ‘developing policy proposals on
behalf of Members of Parliament’.
The mandate of the United States Congressional Budget Office (CBO), as
summarised by the CBO is:
Objective, nonpartisan, and timely analyses to aid in
economic and budgetary decisions on the wide array of programs covered by the
federal budget, and
The information and estimates required for the Congressional
The actual legislated mandate, outlined in the Congressional Budget and
Impoundment Control Act of 1974, now Chapter 17, Title 2 of the US Code (The
Congress), requires the CBO:
... to provide to the Committees on the Budget of both Houses
information which will assist such Committees in the discharge of all matters
within their jurisdictions, including (1) information with respect to the
budget, appropriation bills, and other bills authorizing or providing new
budget authority or tax expenditures, (2) information with respect to revenues,
receipts, estimated future revenues and receipts, and changing revenue
conditions, and (3) such related information as such Committees may request.
- Assistance to
Committees on Appropriations, Ways and Means, and Finance ...
- Assistance to other Committees
and Members ...
- Assignment of office
personnel to Committees and joint committees
- Reports to budget Committees
- Use of computers and other
- Continuing studies
and federal mandate studies ...
The primary objective of the Canadian Parliamentary Budget Officer,
specified under the Parliament of Canada Act, is to:
... provide independent analysis to the Senate and to the
House of Commons about the state of the nation’s finances, the estimates of the
government and trends in the national economy.
The work of the CBO and Canadian PBO strives to be policy neutral, in
that their assessments generally do not seek to comment on the merits of a
policy under discussion and make no normative judgements or policy
The mission of the Korean National Assembly Budget Office is ‘to support
legislative activities through analysis and evaluation of national finances and
policies’. Its mandate, however, is
restricted to ‘the final accounts of the national budget or the administration
of national funds and finance’.
The resolution of appointment for the committee envisaged that the PBO
would primarily undertake fiscal analysis, research and costings and also have
a public awareness role. The preamble to the committee’s resolution of
It is proposed that the PBO will provide information to
assist the Parliament in its consideration of matters related to the budget, by
undertaking fiscal analysis and other relevant research and by providing policy
costings advice. The PBO will also promote greater public awareness of key
budget and fiscal policy issues.
The committee did not limit itself to consideration of these areas. Mr Barry Anderson
of the Organisation for Co-operation and Economic Development (OECD) identified
eleven core functions of PBOs. These functions included the preparation of
economic forecasting and projections (eg. of spending and revenue), baseline
estimates, analysis of the Executive’s Budget proposals, analysis of proposed
legislation and policies (which may include costings), options for spending
cuts and medium and long term analysis of the above functions.
The committee received evidence in regard to many of these areas. Discussion
on the main functions follows.
Research and analysis
Mr Stephen Bartos commented that fiscal research and analysis of Government
expenditure and fiscal policy are the most important functions of a PBO. In
particular, it was considered that the PBO could add value to the existing
range of statements and reports and other Budget commentary by providing an
independent explanation and analysis of Government proposals in plain language.
The Business Council of Australia (BCA) suggested the adoption of the
approach taken by the Australian Strategic Policy Institute (ASPI) in its post
Budget analysis of the Defence portfolio. The BCA stated:
... the Australian Strategic Policy Institute’s annual review
of the defence Budget navigates the complexity of the Budget data and
synthesises the context and implications, providing an excellent example of the
transparency and value of independent analysis.
Established as a Commonwealth owned company in 2001, APSI’s mandate is
to provide independent, non partisan policy information and analysis on ‘strategic
and defence issues, generate new ideas for Government, and foster strategic
expertise in Australia’.
Research and analysis available through the Parliamentary Library
includes the preparation of confidential responses to Members of Parliament and
other publications. In addition, the Economics Section of the Library presents
a Seminar each May to assist parliamentarians in their consideration of the Budget.
The Library also produces an annual Budget briefing book which examines key
features of the Budget across a number of policy areas.
The Department of the Treasury (the Treasury) has primary responsibility
for preparing economic forecasts on behalf of the Government. The two main
forecasting rounds each year are for the May Budget and the revised forecasts
of the Mid-Year Economic and Fiscal Outlook report in October to January.
Another two rounds of forecasting are held around June and December.
The Joint Economic Forecasting Group, consisting of officials from central
agencies and the Reserve Bank of Australia, provide input into the development
of forecasts. Other line departments contribute to forecasts where relevant. Key
indicators subject to forecasting include economic growth, inflation,
employment, household consumption, private and public demand, exports and
Forecasting is a costly and resource intensive exercise requiring
technical staff to maintain an economic model and use it skilfully.
Examples from other jurisdictions
The purpose of the United Kingdom of Great Britain’s (UK) Office for
Budget Responsibility (OBR) is to produce the Budget forecast for the Government
and provide independent assessments of the Government’s ability to achieve its
own fiscal goals, through the publication of a Budget and Pre-Budget Report.
The OBR is an interim body. A parliamentary committee has made recommendations
to enhance a future permanent body.
The Netherlands Bureau for Economic Policy Analysis (also known as the
Central Planning Bureau or CPB) provides quarterly short term forecasts
including the Central Economic Plan, published every Spring, and the Macro
Economic Outlook, published jointly with the Annual Budget.
The Canadian PBO prepares projections based on average private sector
forecasts and provides its analysis with the framework in which it was produced.
The Canadian Parliamentary Budget Officer explained:
... we provide our projections; we provide detailed assumptions
behind those projections; we do risk analysis based on track records of
forecasting one, two and five years out; and we analyse the structural and
cyclical nature of these fiscal balances.
The CBO produces a range of medium and long term forecasts. For example CBO
publishes annual Federal Budget forecasts covering the following ten years,
based on current policy settings. The Joint Committee on Taxation specialises
in estimating the revenue impacts of proposed changes to tax laws.
Suggested role of the PBO
The BCA highlighted a need for more comprehensive and regular fiscal
forecasting from an alternative source to Treasury. It was suggested that
additional forecasting could complement the Intergenerational Report, which is
required to be produced under the Charter of Budget Honesty (the
However, opinion was divided as to whether the PBO should undertake an economic
forecasting role. Those in support of the PBO performing a forecasting role
included the ACCI and the Federal Coalition
Treasury and Finance alerted the committee to the significant resources the
PBO would require to undertake forecasting and questioned the public value in
duplicating the Departments’ work in this area.
Mr Stephen Bartos advised against the PBO taking on a forecasting role
I think it would clearly be a waste of resources for a PBO or
an independent outside body to try and duplicate the efforts of Treasury in
doing those economic forecasts. It is very resource intensive and, in any case,
they come down to a matter of judgments in relation to the assumptions that you
make, particularly on behavioural responses to particular government policies.
So, almost inevitably, if somebody else tried to do a similar set of forecasts,
there would be minor differences on all sorts of those forecasts. Even though
they are only a matter of slight differences in assumptions, we know that the
media would beat them up into some sort of scandal. You do not want that. It is
dangerous for the reputations of both Treasury and the Parliamentary Budget
An alternative to undertaking its own forecasting would be for the PBO
to provide independent validation and commentary on Government forecasting. It
was suggested that this role ‘would provide a level of independent assurance
that would improve both public and market confidence in fiscal governance in
The need for analysis and commentary on Government forecasting was
supported by the Clerk of the House of Representatives who stated:
One of the major issues during each Budget is the overall
performance of the economy and the Government's proposed fiscal program as a
whole. While these matters do receive some coverage in Budget debates,
discussion may be more comprehensive if Members had access to some additional
quantitative analysis on how Government projections had been arrived at and
their sensitivity to assumptions.
Costings of proposals
Treasury and Finance have primary responsibility for the preparation of
costings on policy and legislative proposals for the Government. Relevant line
departments assist the central agencies in conducting this work. There is
currently no statutory process to enable the proposals of non government
parliamentarians to be costed by those departments outside the election period.
However, the agreements between the current Government and the
Australian Greens and three Independent Members of Parliament negotiated
following the 2010 election provide those non government signatories access to Government
departments, via the Office of the Prime Minister, for policy analysis and
For example, the Government’s Agreement with the Australian Greens
contains the following provision:
... proposals may be formally submitted to the Office of the Prime
Minister and forwarded to the appropriate Department and Minister for analysis.
Where the proposal is likely to involve costs, it may also be sent to the Department
of Treasury, and the Treasurer, and the Department of Finance and Deregulation,
and the Minister for Finance, for costing.
- The number of proposals that may be considered in this way
is not limited in number but the Parties will ensure that the workload arising
- Every endeavour will be made to provide required advice
within ten business days
- The Parties acknowledge that during the six week period
leading up to the Federal Budget, the turnaround time may be greater than ten
The policy costings prepared for the Australian Greens and Independents
in accordance with the agreements are not routinely published, although some
have been released following requests made under the Freedom of Information
Act 1982 (Cwlth).
Election policy costings
The Charter provides for the costing of election commitments
during the caretaker period for a general election. Under the Charter, the
Prime Minister and the Leader of the Opposition, through the Prime Minister,
may request the Secretaries of Treasury and Finance to prepare costings of
publicly announced Government policies.
The Charter requires that each costing is to be publicly released as
soon as practicable after each request is made. Other Commonwealth bodies have
a statutory requirement to assist with the preparation of costings where
necessary and subject to other laws. A total of 128 costings were released by
Treasury and Finance for the 2010 Federal election.
According to the Charter, the timeframe in which costings may be
requested is during the caretaker period, defined by the act as ‘the period
starting with the issue of the writ for the election and ending at the close of
the poll on the polling day for the election’.
This differs with the guidance on caretaker conventions issued by the
Department of the Prime Minister and Cabinet, which provides that the caretaker
period ‘continues until the election result is clear or, if there is a change
of Government, until the new Government is appointed.’
Guidelines for the costing of election commitments specify that costings
should be prepared in accordance with the methodologies used to prepare the Budget
statements and fiscal reports required by the Charter. Costings are to focus on
‘the effect of a policy on the Australian Government’s key Budget aggregates’
and may include ‘behavioural responses, but will generally not incorporate the second
round effects’ of a policy.
The election costings provisions were designed to reduce the incumbency
advantage of a Government by enabling the opposition to have access to the
resources of the public service for costings on the same basis as the Government
during the election period. The purpose of these
provisions was to ‘allow the electorate to be better informed of the financial
implications of election commitments.’
During the election period, Treasury and Finance also cost other
policies which have not been submitted under the Charter. These costings, which
are not usually published, are produced for the purpose of advising an incoming
Government on the cost of its election commitments.
The Parliamentary Library was also involved with costings work at the
2010 Federal election. This initiative was funded by a Budget allocation of $0.5
million in 2010-11 and in 2013-14 ‘to assist non government parties in
developing policies in the lead-up to federal elections’. The allocation was
made as part of the Operation Sunlight reform agenda.
A Pre-Election Policy Unit (PEPU) was established within the Library to
give effect to the new measure. The PEPU worked within principles established
by the Joint Standing Committee on the Parliamentary Library and commissioned
economic modelling from external consultants on behalf of non government Members.
Those reports commissioned were provided to the requesting Members on a
confidential basis on the understanding that they were to be published on the
Library website in the event that they were referred to on the public record by
a party or parliamentarian. Some of those reports were used as costings to
support certain election commitments and were subsequently published.
An evaluation of the service provided by the PEPU was undertaken in
October 2010. The first two recommendations of the evaluation reflected a need
for an ongoing costings and modelling service. These were:
Recommendation One: In the event a parliamentary
budget office (PBO) is established, its brief should include provision of the
kinds of assistance offered by the PEPU in 2010, such as costing and economic
Recommendation Two: Reflecting the iterative,
interactive nature of policy development, this assistance should be available
to parliamentarians on an ongoing basis.
Issues with the current election policy costing process
Many costings are not prepared prior to the election as parties can submit
their costings requests very late in the election period. This has the effect
of making it impossible for the departments to release a costing before polling
day. One possible reason for there being a delay in requesting certain costings
is that parties may seek political advantage by avoiding public scrutiny.
Rather than enabling the public to be better informed about the cost of
election promises, it has been reported that the public nature of the costings
process places pressure on Oppositions to withhold policies during the campaign
period, so that the costings process cannot be used against them.
Another reason for delaying the submission of policies for costings
relates to the availability of the latest fiscal and economic estimates, so
that they may be incorporated into the policy development process. Those estimates,
in the form of the pre‑election economic and fiscal outlook report, are
not released until ten days following the issue of writs for an election.
In its response to the Operation Sunlight Report, the Government
acknowledged the bias inherent within the costings provisions of the Charter.
The Government stated:
Policies of governments and oppositions are not costed fairly
under the Charter. The Charter is heavily biased in favour of the government of
the day including the release of the Pre-Election Economic and Fiscal outcome
up to 10 days into the election campaign with no opportunity for independent
scrutiny. Access to costing resources for the Opposition only applies during
the heat of an election campaign whereas the Government has access year-round.
Moreover, the timeframe for submitting costings under the Charter does
not allow for iterative development of policy as Mr Stepehn Bartos explained:
... during an election campaign is the wrong time for getting
policies costed, because development of policy is an iterative process where
people want to test ideas and see how much they are going to cost. If they are
going to be hugely expensive and unsustainable, they want to amend those ideas
and go through them again.
As part of Operation Sunlight the Government committed to amending the
Charter to extend the period during which the Government and Opposition could
request costings to ‘within 12 months of the last day for issue of writs for a
general election to the end of the caretaker period’.
A previous proposal to amend the Charter included allowing Oppositions
to directly request costings from the secretaries of Treasury and Finance,
rather than make a request through the Prime Minister, and to provide that the
departments’ dealings with the Opposition are not to be disclosed to the Government.
However, extending the role of Treasury and Finance in providing
costings, particularly during the non-election period, places those departments
in a conflicted position. As noted in the Review of Operation Sunlight:
... potential conflict could arise for the public service if
it had to balance two simultaneous requests from the Government and Opposition.
As many of the requests for costing outside the caretaker period would be for
policies that have not yet been announced, the current approach of receiving
requests via the Prime Minister would not be appropriate.
Minor parties and Independent Members of Parliament do not have access
to the costings process under the Charter. The exclusion of minor parties from
the Charter’s costings provisions compounds their existing disadvantages in
relation to their staffing resources.
The Review of Operation Sunlight recommended amending the Charter to
implement the Government’s proposed expanded timeframe for costings and to enable
‘reasonable access’ to costings for minor parties.
The Government noted the recommendation.
Costings in other jurisdictions
As previously noted, the main purpose of the NSW PBO is to prepare
election policy costings. The NSW Parliamentary Budget Officer Act 2010
provides that a parliamentary leader or their nominee may request the costing
of their own policies ‘that are announced or proposed for implementation after
the next State general election’.
Election policy costings may be requested during the ‘pre-election
period’, defined as the period between the day of the last State Budget before
the election and the day of the election. The costing is to be
provided to the parliamentary leader who requested the costing and may be
publicly released by that leader, or by the PBO once it has been notified that
the policy concerned has been publicly announced, or with the release of the
Budget Impact Statement (BIS).
In addition, the PBO is to prepare BISs for all costed policies in the
pre-election period covering those requests made by each parliamentary leader.
The BISs are to include the total net financial impact of all costed policies.
Outside the pre-election period, the NSW Parliamentary Budget Officer
Act enables Members of Parliament to request the PBO to ‘prepare a costing of a
proposed policy’, and ‘any analysis, advice or briefing of a technical nature
on financial, fiscal and economic matters (including in relation to the costing
of proposals included in the State budget)’. In relation to such
costing requests, the documents prepared by the PBO may only be provided to the
Member who made the request.
There is no statutory requirement for costings or advice to be publicly
released. The Clerk of the NSW Legislative Assembly advised that ‘it may be
appropriate for information on the number of requests made for such work and
the types of requests to be noted in the Officer's annual report which is
required to be furnished to both of the designated committees in accordance
with section 15 of the Act’.
The Netherlands CPB offers political parties analysis of the economic
implications of their policies well in advance of elections, but does not
conduct ‘last minute’ costings in the non-election period.
On request, it also provides the same service for parties following an election
where the formation of the new Government is under negotiation.
The CBO produces cost estimates for almost every bill reported by
Congressional committees. Those estimates consider the implications of the bill
on revenue and expenditure over the following five years or more. Cost
estimates of bills may also be prepared on the request of individual Members,
although this service is limited to the availability of resources.
The UK’s Institute for Fiscal Studies, a non government economic
research institute, publishes its analysis of election policy proposals put
forward by the three main political parties in their election platforms.
Publications covering the three parties for the 2010 general election included
proposals on environmental policies, families and children, and pensions and
The Parliament of Canada Act provides for the Parliamentary
Budget Officer to ‘estimate the cost of any proposal that relates to a matter
over which Parliament has jurisdiction’ on the request of a Member of
Parliament or its committees.
In practice, the Canadian PBO undertakes costings on request for Private
Members’ Bills or on Government programs. Major costing reports on Government
programs include engagement in Afghanistan and Aboriginal education
infrastructure. It does not cost the election commitments for political
Role for the Parliamentary Budget Office in policy costings
A particular challenge, should the PBO undertake policy costings, would
be the significant workload and resourcing required to fulfil this function.
Treasury and Finance indicated that the costings process involved the work of
about 300 staff during the election period.
In addition to the number of staff needed, costings work generally
requires high level skills, technical knowledge and data, the application of
professional judgement and specialised economic models. Treasury and Finance
... costings require highly experienced specific professional
skills, access to and familiarity with specialised data, as well as ‘off the
shelf’ and tailored financial and economic models designed for specific public
Treasury and Finance also identified a number of risks for the PBO in
undertaking election costings while the current Charter costings processes
remain in place. These were identified as:
... having two separate publicly funded sets of costing
arrangements duplicating each other’s role would not be cost-effective from a
public finance perspective, may create confusion, and is unlikely to be
feasible in any case, certainly in the short term, given that many of the
necessary resources are already in short supply.
Treasury and Finance considered that a more appropriate role for the PBO
may be to analyse costings of major Government programs, provide costings to non
government parliamentarians outside the election period, and retain the
Charter’s costings provisions during the election period.
Given that Treasury and Finance already undertake costings of a wider
range of policies than those submitted under the Charter, it is likely that the
election costings prepared by the PBO may also be informally costed by those
departments. In addition to the issue of duplication, it is probable that the
cost of a given policy determined by the PBO would differ from that of Treasury
and Finance, given the use of different methodologies, assumptions, judgements
and data used.
Furthermore, compared with the resources of the public service, costings
prepared by the PBO may not have the same status. The Department of Finance explained:
The question is about the status of the costing and whether
or not that costing is the result of the same level of rigour, experience and
judgment and has the same standing in a decision-making process as you would
get if you went to a costing by the departments.
A risk of enabling the PBO to undertake costings is that following an
election, Treasury and Finance may determine that the true cost of a party’s
election platform is quite different than that estimated by the PBO during the
election period. This could lead to an unedifying debate about whose costings
are most accurate.
A number of suggestions were put to the committee to enhance the rigour
of costings undertaken by the PBO and promote consistency with current
processes undertaken by Treasury and Finance.
The Auditor-General suggested that the PBO may consider providing a
draft of its estimates to the relevant Government department for comment. This
approach is similar to the ANAO’s current process of providing draft audit
reports to agencies, so that their comments can be incorporated into the final
product. The ANAO requires agencies to respond to draft reports with 28 days.
Alternatively, the PBO could act as a confidential intermediary between
parliamentarians and Government departments to gain assistance with policy
costings outside the election period. While dependent on the cooperation of the
Government, this process could enable the preparation of costings using
departmental data and methodologies, consistent with that currently used by
Treasury and Finance.
Another approach put forward was that the PBO should not undertake
costings, but work with parliamentarians in developing their proposals so that they
are well developed when they are formally submitted to Treasury and Finance for
costing. The PBO could also provide independent analysis on the costings
prepared by departments.
and public awareness role
A broader role of education was also envisaged for the PBO in the
committee’s resolution of appointment. DPS and Treasury and Finance supported
inclusion of a broader educational role for the PBO.
Treasury and Finance suggested the PBO’s education role could be primarily
focused on Members of Parliament. Treasury and Finance stated:
In view of the scope for an educative role for a PBO, there
may be merits in a PBO producing: regular publications such as an annual
post-Budget commentary which analyses the Government’s budget papers; research
items covering relevant topics on budget and fiscal policy issues; and
educational products and seminars for members of parliament.
According to Mr Stephen Bartos:
For most of the community budgeting remains a mysterious
‘black box’ process inside Government. A feature of a healthy democracy is
informed debate on important policy issues; economic policy should not be an
Another benefit of a public awareness role offered to the committee was
that the PBO could raise important issues that have been left off the political
agenda. Mr Stephen Bartos stated:
The independent body would be able to raise awareness of
uncomfortable or difficult fiscal questions and propose tough options for
dealing with them, without the Government necessarily having to take sides in
that debate or commit itself prematurely to unpopular causes.
Other suggested functions
The Clerk of the Senate advised the committee that a PBO could play a
role in identifying inappropriately classified items in Appropriation
Bill No. 2, ‘although it would be preferable that such analysis continues to
be undertaken by Senate officers who bring institutional knowledge to the task.’
Associate Professor Charles Lawson proposed that the PBO should be
tasked to set the requirements and standard for the information provided to the
Parliament by the Executive. Moreover, the PBO should regulate the Executive’s
compliance with those standards. It was argued that this would ensure that the
Parliament receives the information that it needs to fulfil its scrutiny and
Clients of the Parliamentary Budget Office
The terms of reference for the inquiry suggest that the PBO is intended
to serve the Parliament and that individual Members of Parliament may request
‘non-routine’ work of the PBO. The Agreement for a Better Parliament provides
that the PBO is to serve all Members of Parliament, especially non government Members.
There are many ways in which the PBO could serve the Parliament, the
Houses, all Members, non government Members and possibly committees. There may
also be reasonable grounds to restrict certain services to certain categories
of Members such as non government Members, party leaders and Independent Members.
Members of Parliament
The Parliamentary Service Act 1999 (Cwlth) requires the
Parliamentary Librarian to serve the Parliament ‘on the basis of equality of
access for all Senators, Members of the House of Representatives, parliamentary
committees and staff acting on behalf of Senators, Members or parliamentary
The Parliamentary Librarian suggested that its model of equality of
access for all is an appropriate framework for the PBO to serve the Parliament.
This was supported by the Joint Standing Committee on the Parliamentary
Library. The Federal Coalition’s
draft legislation also provided for responses to the ‘requests of individual
Members and Senators’.
While all parties and Independent Members require the research services
of the Parliamentary Library, in practice, it is the non government Senators
and Members who have the greater demand for the service.
The Clerk of the Senate was of the view that all Senators and Members
should have access to the PBO:
On the basis that parliamentary services are provided on an
equal basis to all members and senators, I do not think you could put any
restrictions on the service the PBO might offer...
The NSW PBO legislation restricts requests for election policy costings
to ‘parliamentary leaders’. The Act defines a parliamentary leader as the Premier,
the Leader of the Opposition, a parliamentary leader of a registered party and
an Independent Member of Parliament not elected as an endorsed candidate of a
There are a number of jurisdictions where PBOs have formal relationships
(created through legislation) with parliamentary committees and public sector
agencies. The aim of having formal relationships with committees allows the PBO
to support the work of the Parliament by contributing to committee inquiries
through providing: submissions, financial analysis and appearing as a witness.
The OECD stated that the relationship between the PBO and parliamentary
committees should be legislated for and that the PBO should principally serve
committees and subcommittees rather than individual Members. In addition, the
PBO ‘should have the right to testify before committees of parliament.’
The Canadian PBO has formal relationships with three parliamentary
committees in addition to the estimates committees. These committees are: the
Standing Committee on Finance of the House of Commons; the Standing Committee
on National Finance of the Senate; and the Standing Committee on Public
Accounts of the House of Commons. These committees can request the Canadian PBO
to undertake financial research and analysis. The Canadian PBO can
also provide such information to a committee of either House of Parliament.
The Scrutiny Unit attached to the House of Commons in the UK has the aim
of assisting select committees of the House to perform their financial and
analytical scrutiny function, by providing expert staff to assist with
inquiries and research as needed. The Scrutiny Unit also provides general
research support ‘when the committees’ own staff teams are over-stretched, ...
[and] for the Liaison Committee, which consists of the Chairs of the main
In contrast to PBOs with legislated relationships with committees, under
its establishing Act, the NSW PBO is not enabled to work for the committees of
There were also a number of suggestions in regard to creating a
legislated relationship between the PBO and the Joint Committee of Public Accounts
and Audit (JCPAA) for the purpose of parliamentary oversight, similar to that
in place between the Auditor-General and the JCPAA. This issue is discussed in more
detail in Chapter 4.
The committee considers that the Parliamentary Budget Office (PBO)
should have a mandate to support and inform the Parliament by providing independent,
non-partisan and policy neutral analysis on the annual Budget, Government
expenditure, fiscal policy and the financial implications of proposals.
In fulfilling this mandate, it is further proposed that the key
functions of the PBO are to prepare responses to the requests of individual Senators,
Members and parliamentary committees, make formal contributions to committee
inquiries, initiate its own work in anticipation of the interests of its
clients, and prepare costings of election commitments during the caretaker
Given the resource intensive nature of the work and the need to minimise
the duplication of work produced elsewhere, the PBO should not be required to
produce its own fiscal forecasts. Rather, it should provide analysis of the Government’s
fiscal forecasts, commenting on the assumptions, judgements and overall
reliability of Government assessments.
Between elections, the routine research and analytical work of the PBO
should include the estimation of costs of proposed policies and draft
legislation. It is expected that the preparation of costings by the PBO in the
non-election period will provide a process for the iterative development of
policy and enhance proposals well before elections are announced.
Costings of proposals
The committee found that the election costings provisions of the Charter
of Budget Honesty Act 1998 (Cwlth) (the Charter) has significant
shortcomings in enabling the electorate to be better informed about the
financial implications of election commitments. Key limitations of the Charter include:
- The limited time available
for the submission of costings requests and an inability for the opposition to
have their policies costed at any other time, severely restricts the
opportunity for the preparation of costings;
- The requirement that
requests are made through the Office of the Prime Minister does not engender
the trust of the Opposition;
- The requirement that
proposals must be publicly announced and that costings are published does not
enable the iterative development of policies; and
- Minor parties and Independent
Members of Parliament are excluded from the Charter processes altogether,
compounding other disadvantages they face in resourcing (although agreements
with the Government enable limited support in this area for some minor party
and Independent parliamentarians).
These limitations amount to clear disincentives for the non government
parties to use the Charter provisions to help promote their policy platform to
the electorate with transparency and accountability during the campaign period.
The level of bias in favour of the incumbent Government of the present costings
system is evident, especially given the ability of the Government to access
confidential costings from Treasury and Finance on an ongoing basis.
The quality of political debate during election time suffers as a
consequence, as voters go without an independent and potentially very valuable
source of information.
However, the committee is faced with some dilemmas in addressing the
question of costings. It is recognised that the resources required to produce
rigorous costings is significant and would be costly to reproduce by the PBO.
In any case, the public benefit of duplicating the process would be highly
questionable considering there would inevitably be differences in estimates
produced by the PBO and those of Treasury and Finance. A public debate over the
technicalities of costings methodologies does not serve the public interest.
Further, the role of Treasury and Finance would be conflicted if it were
to expand its costings role during the non-election period. It is accepted that
the legitimate role of Government departments is to serve the Executive. The
committee also acknowledges the expertise and the rigour that Treasury and
Finance bring to the costings process.
The committee has chosen to focus on improving the current costings
process through a series of new measures to provide incentives for parties to
use a costings process for the ultimate purpose of enhancing transparency and
accountability of election campaigns.
It is accepted that minor parties and Independent Members of Parliament
have an interest in having access to the Charter’s provisions on election
costings. There is also a public interest in providing access to minor parties
and Independents following their rise in electoral support over recent decades.
Broadening the eligibility for election costings by the departments
would have major resource implications. In order to limit the likely demands on
Treasury and Finance for election period costings for minor parties, the
committee considers that costings under the Charter should be available for
political parties with a set minimum number of elected Members.
The Parliamentary Allowances Act 1952 (Cwlth) and the Parliamentary
Entitlements Act 1990 (Cwlth), provides additional resources for
leaders of recognised non government political parties with five or more parliamentary
representatives. The committee considers
that five parliamentary representatives is an appropriate benchmark for
eligibility to the Charter’s costings processes.
This would effectively legislate, for the election period, the current
arrangements for costings negotiated between the Australian Greens and the
The Charter currently restricts the requests for costings to the
caretaker period, ending on polling day, rather than the conventional ending of
the caretaker period when the election result is clear or when the new Government
is appointed. This prevents the costings process from being used following an
election, in the period were the formation of a new Government might be under
negotiation by political parties and Independent Members.
The committee considers that there is value in extending the ability to
request costings to the period following polling day to the formation of the Government,
to enable transparent and accountable negotiations in the event of a future
Given the current disincentives for the Opposition to cost policies
under the Charter and the proposed exclusion of minor parities with less than
five Members, and Independent Members, the committee believes that costings
would more likely be requested if there was to be an alternative source
providing costings. The committee is therefore recommending that the PBO be
empowered to prepare election costings, on request, for publicly announced
While the costings produced by the PBO may in some cases lack the rigour
of those produced by Treasury and Finance, it is considered that there is a
public benefit from increased accountability and transparency if the PBO were to
offer an election costing service. While the availability of accessing costings
through the PBO fulfils obligations under the Charter, in practice, the
availability of an alternative policy costings service may result in the
Government continuing to use Treasury and Finance for costings, while non
government parliamentarians may prefer to use the PBO.
The demand for the election costings service of the PBO could be
confined in a similar way to that of the NSW Parliamentary Budget Officer,
which would limit the service to parliamentary leaders and Independent Members
who were originally elected and are seeking re-election, as Independent Members,
without the endorsement of a registered political party.
The committee is of the view that individual election commitments should not be costed by both
the PBO and Treasury and Finance. To avoid duplication, it is expected that the
PBO and Treasury and Finance would consult prior to the preparation of each
Finally, the committee recognises that the functions attributed to the
mandate of the PBO may produce a significant workload. While the work plan and
the priorities of the PBO are discussed in Chapter 4, the provision of election
costings should be clearly established as the absolute priority during the
In addition to preparing responses to individual requests for research
and analysis from Senators, Members and committees, the PBO should be able to
initiate its own work, consistent with its mandate, in anticipation of issues
likely to be of interest to its clients.
Examples of self-initiated work could include regular analytical reports
following key Government publications such as the annual Budget and the
statements required under the Charter. It is expected that the publication of
material produced by the PBO will perform a broader public awareness role.
Members of Parliament
The PBO should be accessible to every Senator and Member for research,
analysis and advice in relation to the matters covered in its mandate, and
respond to individual requests. It is expected that non government parliamentarians
would have the greater demand for the PBO’s service.
The PBO will create special working relationships with parliamentary
committees and Government departments by virtue of its mandate.
The committee believes that the Parliamentary Budget Officer through
his/her mandate and independence of office should be able to contribute to
committee inquiries by providing submissions and also appear as a witness at
public hearings. In addition, the committee believes that it would serve the
information needs of the Parliament if all committees would be able to make
requests for financial analysis and advice from the PBO.
The committee recommends that the Government establish the
mandate of the Parliamentary Budget Office as to inform the Parliament by
providing independent, non-partisan and policy neutral analysis on the full Budget
cycle, fiscal policy and the financial implications of proposals.
The committee recommends that the Government empower the
Parliamentary Budget Office to undertake the following functions, consistent
with its mandate:
responses to the requests of individual Senators and Members, regardless of
party or Government status, and parliamentary committees, including the
preparation of costings in relation to proposed policies and bills outside
the caretaker period,
- make formal contributions to committee inquiries,
- initiate its own work in anticipation of the interests of its clients, and
- prepare costings of election commitments during the caretaker period.
The committee recommends that the Government amend the Charter
of Budget Honesty Act 1998 (Cwlth) to enable the leaders of parliamentary
parties with a minimum number of parliamentary members to access the election
costings provisions of the Act. The minimum number of parliamentary members
should be consistent with similar requirements set out in the Parliamentary
Allowances Act 1952 (Cwlth) and the Parliamentary Entitlements Act
1990 (Cwlth), which is currently five members or more.
The committee recommends that the Government amend the Charter
of Budget Honesty Act 1998 (Cwlth) to enable the costing of election
commitments in the period starting from the issue of the writ for the
election and ending when the election result is clear or, if there is a
change of Government, until the new Government is appointed.
The committee recommends that the Government empower the
Parliamentary Budget Office (PBO) to provide election costings on request, in
relation to publicly announced policies, starting from the issue of the writ
for the election and ending when the election result is clear or, if there is
a change of Government, until the new Government is appointed. Apart from the
conditions for who can make a request for costings, the caretaker period
costings service of the PBO is to be consistent with that of the Charter
of Budget Honesty Act 1998 (Cwlth).
The committee recommends that the election costing service
of the Parliamentary Budget Office be limited to requests from nominated
parliamentary party representatives and Independent Members originally
elected and seeking re-election, as Independent Members, without the
endorsement of a registered political party.
The committee recommends that the election costing service
of the Parliamentary Budget Office be limited to requests from nominated
parliamentary party representatives and Independent Members (as defined in
recommendation 7), in relation to their own policies.
The committee recommends that individual election
commitments are not able to be costed by both the Parliamentary Budget Office
(PBO) and the Departments of the Treasury and of Finance and Deregulation, and
that to avoid duplication, the PBO and Treasury and Finance confer prior to
the preparation of each costing request.