Research Paper 10 2001-02
Charter of Budget Honesty: Pre election Provisions
Richard Webb
Economics, Commerce and Industrial Relations Group
25 September 2001
The financial position that an incoming government
is likely to face and the cost of election promises are usually issues
at elections. The purpose of this Research Note is to provide information
about the main provisions of the Charter of Budget Honesty Act 1998
that relate to the preparation of financial information before an election.(1)
The Act has two components in this regard. Part 7 deals with the pre-election
economic and fiscal outlook (PEFO) report and Part 8 with the costing
of election commitments. The Parts help cast light on financial matters
by providing that Treasury and the Department of Finance and Administration
(DoFA) prepare certain financial information and make it available publicly.
It should be noted that while the PEFO must be prepared, political parties
are not obliged to use Part 8. Further, the provisions of Part 8 do not
extend to minor parties or independent Parliamentarians. And nothing in
the Charter of Budget Honesty creates rights or duties that are enforceable
in judicial or other proceedings [subsection 3(2)].(2)
Pre-election Economic and Fiscal Outlook Report
Part 7 (sections 22 to 28) deal with the preparation of the PEFO. The
following summarises these sections.
Purpose. The purpose of the PEFO is to update information on the
economic and fiscal outlook (section 23).
Timing. Section 22 requires the public release of the PEFO within
10 days of the issue of the writ for a general election. The Secretaries
of the Treasury and DoFA thus have only a short time in which to prepare
the PEFO.
Contents. Section 24 sets out what the PEFO must contain. The
PEFO is, in essence, an update of information in the annual budget or
mid-year economic and fiscal outlook (MYEFO), since the content of the
PEFO is virtually the same as that of those documents. In short, the report
must contain spending and revenue estimates for the current and following
three financial years, the assumptions underlying the estimates, the sensitivity
of the estimates to changes in the assumptions, and risks that might change
the fiscal outlook materially.
Responsibility for preparation. Section 26 sets out the responsibilities
of the Secretaries of the Treasury and DoFA in preparing the report. Broadly,
Treasury is responsible for revenue estimates and DoFA for spending estimates.
To help the Secretaries, Ministers must disclose Government decisions
or other circumstances that could have material fiscal or economic
implications.
- Such disclosures are to be made within two days of the issue of the
writ for the general election (section 27).
- Ministers must sign a statement that they have made such disclosures
(section 25).
- Commonwealth agencies are obliged to help the Secretaries prepare
the PEFO (section 28).
To date, only one PEFO has been prepared and this was before the 1998
election.(3)
Costing of Election Commitments
Part 8 (sections 29 to 32) deals with the costing of election commitments.
The following summarises these sections.
Purpose. The main purpose of Part 8, although not specified in
the Act, is to provide public confidence in costings by having independent
parties undertake them.
Requests. Section 29 deals with requests, during the caretaker
period before a general election, for costings of election commitments.
- Under this section, the Prime Minister may request the Secretaries
of the Treasury and DoFA to prepare costings of publicly announced Government
policies.
- Similarly, the Leader of the Opposition may request the Secretaries
to cost publicly announced Opposition policies.
In the latter case, the request has to be given to the Prime Minister,
who may then agree to refer it to the Secretaries. The Secretaries are
not obliged or authorised to take any action in relation to the request
from the Leader of the Opposition, unless the Prime Minister has referred
the request to them. The use of the word 'may' indicates that the Prime
Minister is not under any legal obligation to comply with a request from
the Leader of the Opposition.
A request from either the Prime Minister or the Leader of the Opposition
must:
- be in writing
- outline fully the policy to be costed, give relevant details, and
- state the purpose or intent of the policy.
Section 29 also allows the Prime Minister or the Leader of the Opposition
to withdraw a request.
Preparation. Section 30 deals with how policy costings are to
be prepared. It allows the Secretaries to issue guidelines for the preparation
of costings, and allocates to the Secretary of Treasury responsibility
for revenue costings and, to the Secretary of DoFA, responsibility for
costing spending. If the Secretaries need more information, they can ask
the Prime Minister or the Leader of the Opposition (as the case requires)
for that information.
Public release and timing. Unlike the PEFO, the legislation has
no specific timing provision, with section 31 merely providing for the
public release of costings 'as soon as practicable' after a costing request
has been made and before polling day.(4)
If a Secretary does not have enough information or time to prepare and
release publicly a policy costing before polling day, the Secretary is
to release publicly a statement to that effect before polling day. As
with the PEFO, the Secretaries can call on other Commonwealth agencies
to help prepare the costings and the agencies must comply (section 32).
The provisions of Part 8 have not yet been invoked.
- .The Act can be found at http://scaleplus.law.gov.au/html/pasteact/2/3115/top.htm.
Additional information can be found in the Explanatory Memorandum accompanying
the Bill at http://www.finance.gov.au/ausinfo/docs/6cbh00he.rtf.
The Bills Digest is at http://www.aph.gov.au/library/pubs/bd/1996-97/97bd085.htm.
- .See the comment in the Bills Digest on this feature.
- .This can be found on the treasury website at http://www.treasury.gov.au/
under 'publications' then 'economic publications'.
- .DoFA guidelines indicate that a normal timetable is to issue costings
within five days of receipt of a request.
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