Mr Pallas (Tarneit) — I move:

  That all the words after ‘That’ be omitted with the view of inserting in their  place the words:

This bill be withdrawn  and  redrafted to provide for the establishment of the  Parliamentary Budget Officer as a permanent standing office that can provide a  genuine resource of  advice  on policy costings  to members of Parliament  and  that  is funded and staffed  from existing Department  of Treasury and Finance  resources’.

The  opposition opposes this bill in its current form and therefore opposes this bill,  because  the  establishment  of a  Parliamentary  Budget Officer  is  too important a reform to  be done  in such  a half-hearted,  ineffectual way as the government is proposing. A temporary Parliamentary Budget Officer (PBO) does not fit the  realities  of  public  policy  debate,  and  it  also  misses  a  vital opportunity to make genuine improvements to the quality of debate in this state.

In its current form, the Parliamentary Budget Officer is so limited as to almost be a waste of  the resources that will fleetingly be dedicated to  it, as any of the  services  which  it  presumably  would  provide will  largely  have  to  be supplemented anyway.

Effectively what  we have  is a short-term body with  a limited  life during  an electoral cycle that ultimately will be limited in  its scope, time of operation and  the  value  of advice it provides, and it  will  in essence and by its very nature fail  to  meet the needs of  the  people that it is  being established to provide  assistance  for,  who  of  course  are  the  opposition  parties.  Most worryingly, what this will  mean is that the government simply does no more than tick a  policy box in the most transparent and minimalist of  fashions. In  many ways this is a failure by the government to honour its  commitment to the people of Victoria.

This Parliamentary Budget  Officer is the wrong model being implemented  for the wrong  reasons.  Our  objection  to the bill is in principle on the  fundamental issue of the function that the PBO is to perform in public life in Victoria. The bill represents a disappointing effort.

The bill represents a disappointing  halfway house. It is a half-hearted measure which misses  an opportunity to take  a bipartisan approach  to improving public debate and policy development for the state of Victoria.

Those opposite have  not learnt from their policy development failures  prior to the last election, such as the capital cost blow-out of the  protective services officers scheme and the Public Accounts and Estimates Committee’s (PAEC) finding of  at least $750  million  in capital cost  overruns  on election  commitments. Indeed the  Public Accounts and  Estimates Committee estimated  that  the policy costings of  the government were out by  something in the order of  35 per cent. Sadly,  Labor will  not be  able to use the parliamentary  budget office  as the primary source of costings advice for the 2014 election.

The great worry of course is what is the government seeking to do with this?

Is it seeking to ensure we  improve the level of public understanding and public appreciation of the way policies are developed and  costed,  or  is  it  seeking simply to tick a box and provide a minimalist body that will not ultimately have the  confidence  of  the  opposition parties and that certainly will not, in its current form, have the confidence of my party — the state opposition — because it has been developed under  entirely  the  wrong  model  for entirely the wrong reasons?

Labor  has  provided  the  government  with  every opportunity  to  convert this perfunctory  exercise into  a  genuine step forward  for  public policy in  this state.  We   have  put  forward  amendments  which  would  create   a  permanent parliamentary budget office  with the capacity  to provide costings and tactical advice to parliamentarians on an ongoing basis, and we would be seeking for such an office to be resourced using existing departmental resources.

I say  that because that is the  current government’s policy, or at least it was the  policy  government members took to the last election  —  that  they  would establish  such  a  body  and  would  resource  it  from  existing  departmental resources. That was the coalition’s 2010 election policy.

The  coalition has been transparently and fundamentally hypocritical in terms of the way  it has processed and progressed this bill. The bill has been  presented to Parliament after years of the government effectively avoiding the opportunity to bring such a bill to this place despite  the impassioned  claims of coalition members when in opposition  and despite the fact that the proposal for a PBO had support from the now opposition.  We have had to go so far as  to start publicly calling for this government to act, and we have been doing it  long and loud for quite some time.

In a  media release headed ‘Labor  must back independent election  costings’ and dated  9  November  2010  the  now  Minister  for  Finance  stated that a ‘truly independent parliamentary budget office’ is the only way to have ‘credibility on costings’. I think  that must ultimately be the  test we apply to  the nature of the body that is being established here: is it truly independent? If it fails to be  truly  independent, then it fails this government’s own measure of the value of a  parliamentary budget  office. If it fails to be truly independent, then it fails  to  meet  the  credibility  requirement  that  opposition   parties  will understandably and necessarily need it to comply with.

In an extraordinary statement  in the  same media release of 9 November 2010 the same member went on to  attack  the  Department  of Treasury and Finance, saying ‘it’s nonsense to claim they are truly independent and able to treat all parties equally’. The Minister  for Finance, then  the  shadow minister,  committed  the coalition to following the approach adopted by the commonwealth.

This is  critically important in terms of an assessment of whether the coalition is  meeting  its own pre-election  commitments. The test those  opposite set for themselves was to  scrap Treasury costings  of election policies and  to instead set up a parliamentary  budget office. The  coalition committed to  establishing this office within Parliament,  to  transferring  to  the  parliamentary  budget office the taxpayer-funded  resources used to exclusively  develop and cost  the government’s  election policies and  to making those resources available for all parties and MPs. That was the commitment and the test government members set for themselves when in opposition.

Under the  policy the coalition  specified that the  parliamentary budget office would be cost neutral, so of course there is  no suggestion here of any monetary requirement being insisted upon.

It is after all,  as I said, the government’s policy, which  it took to the last election, that  the  office should be  cost neutral, and our  reasoned amendment makes it clear that the resources  would be provided via a reallocation from the Department of Treasury and Finance. The coalition’s policy went on to say:

  We  will  transfer  to  the  parliamentary budget office  the  taxpayer-funded  resources Labor is  using  …  to develop and cost its own election policies,  and make those resources available for all parties and MPs.

Once in government those opposite put that off  as long  as they possibly could. That represents a critical omission because it tells us so much about where this government intended to take  this minimalist model. It did that deliberately, in a premeditated way and with a clear view to minimising the independence and ultimately the  autonomy  of this body and  its  capacity to be  of  use  to any parliamentary  party,  let  alone  an  opposition  party. 

Despite  its dramatic statement  and  the  fact  that  the  idea of a parliamentary budget office  had in-principle support from the now opposition, the coalition did nothing about it until  late last year, three  years after the promise was  made and only a  year before the next election.

Labor had been making  its concerns about the delay  clear, and we did  that for very obvious reasons.  We warned the government  repeatedly, ‘If you don’t bring this mechanism into life and into effect early so that we have  confidence as to its independence, as  to the  utility and timeliness of its advice, you may well find you are simply creating a white elephant’.

Ultimately, if  this legislation is  about elevating public  debate and ensuring that the  people of Victoria can have  some confidence  in the  costings of  all parties and the costings of their  policies,  then the government needs to bring the opposition  parties along. But that is not part of this game; this is simply the  same tit-for-tat game that the government was more  than  happy  to  squeal about when  in opposition. Indeed it was members of this government who attacked the  professionalism of the  Department  of Treasury and  Finance when they were opposition.

You  will  not hear such attacks coming from  those  of  us on this side of  the house. We understand the  responsibilities  of  a  professionally  resourced and frank, fearless and independent bureaucracy.

However,  opposition  members also  understand  that  public  servants  have  an obligation to provide advice to the government of the day, and as members of the opposition we  will  effectively ensure  that  we  will put  forward  only those policies that  we are confident  have been adequately  costed.  Nevertheless, in many respects  the  practical effect  of  the  model the  government  is putting forward will ensure that this process will not be of any utility, or at least of only marginal utility, to the opposition parties.

Despite the  government’s dramatic statements  and its clear desire  to resource this body, the government has failed to implement its own measures. Despite  the fact  that  Labor  has  been  making  its  concerns  about the timeliness of the delivery  of this body  critical,  quite frankly the  body  has been effectively turned into a largely moot exercise.

More than two years ago  the  finance  minister  stated  in  correspondence to a member in  the other place that  the establishment of  the  Parliamentary Budget Officer was an  important reform that  would  have beneficial  and  far-reaching consequences and that the government would proceed as expeditiously as possible. This just  goes to  prove  that  this  government moves  at a  glacial pace.  As expeditiously as possible? It has taken the government two years.

The  fact is  that in November last year opposition members came into this place with a bill that would have given effect  to the  government’s policy.  We wrote that  legislation  for  the  government, but I was not  even  granted  leave  to introduce  it in  this place to give effect to the government’s own policy. That shows how slow this government is — slow in so many ways — and how tricky this government is, because this bill is nothing more than a confidence trick.  It is a shabby attempt to tick a box on policy but not really tick it.

It is a shabby attempt to reflect in the minds of the electorate that members of this government  have actually  done what  they said  they would do, but in many ways they have just created a pale imitation of a properly resourced independent parliamentary budget office. If the office were to be of any  value and  elevate public debate in  this  place,  then  the  government should have dealt with the issue of costings in a substantive way.

This measure means little to the opposition in  the  following sense. As members of the opposition we  are confident that we will  have a process of costing  our policies  that  far  exceeds  anything  that those opposite ever tried to put in place  when they  were in  opposition. We are confident of that because  we know what work needs to be done. During the Public Accounts  and  Estimates Committee (PAEC) budget  estimates hearings for  2013-14 the government  confirmed that no funding allocation had  been made for  the  establishment of  the  parliamentary budget office.

Effectively it has taken until the middle of an election year before a budgetary allocation has been made. The confirmation was that funds had not been available either from the executive or from the Parliament.  However, the President of the Legislative Council did note that the issue had been raised at PAEC and would be placed on the agenda for discussion with the Treasurer.

It is almost as if  members  of this government did not realise that  they had a policy obligation that would have a timely impact. The finance minister had been consistently  berated  and written to  by members of  Parliament,  including me, urging  him, if he was intending that this body would  have any  credibility and value,  that he move quickly and in  a  bipartisan  fashion.  There  is  nothing bipartisan about  this process. This  is  a thimble-and-pea trick  about how one might deal with policy costings simply for the purposes of ticking a box but not providing any genuine confidence, either to the opposition parties or ultimately to the public at large, because members of this government have failed to take the opportunity to build a consensus around this issue.

As I have said,  in November last year Labor  decided that if the coalition  was not going  to  do anything to honour  its  own policies, then we  would,  and we attempted  to introduce a  private members bill  to  establish the parliamentary budget office. Of course the coalition government refused to even allow the bill to be debated in the Parliament. I understood why the government might  not want the opposition  to move such a bill, so our draft bill was made public. Doing so gave the  minister plenty  of time  to think  about what it was that  opposition members thought was critically important.  Indeed  that bill religiously adhered to the content  and terms of the  government’s policy announcements  about  what would be reflected in the parliamentary budget office, and this legislation does not. This is not such a bill, because it fails to  meet the test of independence and fails to give sufficient time for parties to develop  policies and have them effectively absorbed within the community.

We are now in this ridiculous situation, only months before an election, when we should  be choosing to have our policies considered by this parliamentary budget office but  where we will only be able to submit our policies to the office. How ludicrous! Labor has been producing substantial policies for at least two years, so to simply say  that a short-term non-standing committee can meet the needs of an opposition party that is genuine about policy is foolhardy. We do not need to hear the  patronising language of the finance minister when he says, ‘We are not in  the business  of  providing  the  opposition  with  a resource  about  their policies’. We do not need it, and we do not want it. If the government wants the opposition to participate in this process, then we need  an adequately resourced standing  body  that effectively is able to deal with costings requests as  they come from the political parties.

We now have  a  government which is attempting to constrain policy and political debate to a particular period in time.

Quite  frankly that  is a  great loss  to the  community.  It is  ludicrous that members of the coalition seem to have no  appreciation of the value of obtaining proper costings advice  which is informed  by  knowledge from  departments,  and particularly so given government members’ experiences and the promises they made prior  to the 2004 election.  Of course the  protective services officer program blew out  by more than $85  million  in 2011-12, and last  year a PAEC estimates inquiry found that  some  $750 million of  additional  funds had been  required, which exceeded the government’s original  election commitments. Of  course we do not  hear much  about that  from the  government  — about  its failure  to have appreciated  the implications and  the long-term costs of  its policies. We will not hear much from government members about that, because apparently they are so good at managing money that any errors  they have  made are  simply things  that whistle past.

The extent of the ignorance  of members of the coalition government is made even clearer when we  remember that they promised  to implement their program without increasing debt or raising  taxes. What a knee  slapper those commitments  were! Three years  later debt  is tripling  and taxes and charges are being forced  up everywhere. Now government members have refused to allow debate on amendments or on the draft bill that  the opposition put in place and have  put forward what I suspect is nothing more than window dressing. A temporary office  is  the  wrong model. Fundamentally the point  of having a parliamentary  budget office is that it would  provide parties  that do  not have  access to  the public service with professional advice on  the  policy proposals they  put forward and  which  they should get the chance to implement. That way there would be no unexpected shocks about the cost of any policy. That measure would be in the public interest.

In this place  we all like to  have  games back and forward  about  who delivers better services and who is best at costing, but — goodness gracious me!

—  this was a chance where, as a  community  and as a Parliament, we could have provided an opportunity to put in place a credible body that  would ensure  some certainty around election commitments, but of course all of that is now lost.

We  would have  been able  to  avoid  shocks  like  the  unexpected cost  of the protective services officers scheme  — shocks that  could have been avoided  if advice had been provided that was based on information that only  experts in the public service could provide.

The bill provides for a temporary Parliamentary Budget Officer who would only be available to provide costings and advice for  the three  months just prior to an election. It  is an unrealistic time frame for the  announcement of pre-election policies, and  it  will unfairly  hamper  an opposition’s  capacity  to  develop properly  costed  policies  in  a  time frame they see as appropriate  to  their political objectives.

It is standard practice for parties — whether in government or opposition — to announce policies over a much longer period than  the three  months prior  to an election.  We  have  already been doing  it  — and, might I  say,  so did those opposite before the 2010  election  —  but apparently now we have a dictatorial provision which tells us what will be an  acceptable  time frame for a policy to be  released in order for it to be adequately costed prior to an election.

Labor has been saying clearly that a body  would have to be established early in order for it to make a useful contribution to the sensible development of public policy by anyone without access to the public service. A temporary body will not address the  fundamental purpose of an independent parliamentary body  set up to provide  advice  to  non-government members. The higher aim of this should be to improve the level of public debate and ultimately provide for better policies to be  enacted for  the state  of Victoria.  This misses an opportunity to create a more level playing field in the complete competition of ideas.

The Minister for Finance’s media release stated that the government would not be establishing a PBO on an ongoing basis. In it the minister is quoted as saying:

The government’s policy commitment was to establish an office to independently  verify election policy costings, not to do the opposition’s homework for them.

God love him — I thank him very much for his concern! He went on to say:

  In this regard, the  Victorian PBO is similar  to  the NSW PBO that  has  been  established for some years…

This  is  a  tricky  and duplicitous statement. The New South Wales model, while having been established for some years, was originally established by the former Labor government there as a permanent office that is described as follows:

 Outside  of  the  election  cycle, the office aims to ensure that  members  of  Parliament are accurately and promptly advised on the estimated costs of their  proposals  and on economic, financial  and fiscal matters  in  which they have  expressed an interest.

The  temporary nature of the  NSW PBO has actually only  been the case since May 2013,  when  the  NSW  Liberal  government  gutted  the  office  that the  Labor government had established only three years before. To say that there is a model of only temporary PBOs  and that that model was adopted in  New South Wales is a nonsense.  The  New  South Wales model was itself a contorted and distorted  one that was ultimately far inferior to the model that New South Wales Labor had put in place. This model  is  completely  untested.  If the Minister for Finance had bothered  to  read it, he would be aware  that  our  own  parliamentary  library research paper on this bill even points this out, saying:

Given that the next NSW  general election is not due until 28 March 2015, this  temporary  PBO  model, off  which  the  Victorian  PBO  is  modelled,  remains  untested.

It is an untested model and, it would appear, a specious  reason upon which this model — our model — has been based.

The change was made after an  inquiry into  the PBO  drew the dubious conclusion that  because  ‘there  are  numerous  non-government  agencies,  institutes  and researchers   who  are  able  to  provide  independent  research,  analysis  and commentary on budgetary, economic  and fiscal issues’  the ‘existing avenues for members of Parliament to obtain independent commentary and analysis on financial matters were adequate’.

That is the basis on which the gutted New South Wales model, the model that this government now seeks to put in place, was in effect reduced in its scope and its capacity — because there is other  stuff  out there that opposition parties can use.

Outside help might be available for some purposes, but this  is not the point of establishing  a parliamentary budget  office. It is  an  acknowledgement that an office with  relevant expertise and  access  to specific knowledge  about public finance issues for the state of Victoria, dedicated to serving  the needs of the Parliament, would be a substantial improvement on that which existed previously. Surely  that  is  why  a  PBO  is  being  established  in the  first place.  The Organisation   for  Economic   Cooperation  and  Development   has  noted  that, ‘Parliaments   need  specialised  resources  in  order  to   carry   out   their constitutional responsibilities vis-a-vis the budget’.

At the commonwealth level  the PBO, established by  the former Labor Government, is a permanent body. The trial of a temporary unit before the 2010  election was questioned  as it  ‘prohibits  the development  of  the  required expertise  for in-house budget analysis’.

The permanent body was well used, and according to the commonwealth PBO’s annual report, as quoted in the library’s research brief on the bill:

  …this workload  reflected  a  pent-up  demand  for  the PBO’s  services,  in  particular from non-government parliamentary parties. That level of demand was  heightened by the impending 2013 general election.

The bill poses a grave risk to the public service.

A temporary office gives us cause for concern about the position of those public servants  seconded temporarily  to  the PBO. The  future  of a public  servant’s career is determined by their future employment prospects.

Before the 2010 election the  former  Treasurer  told the Age that the coalition would not submit its costings to Treasury, accusing then government ministers of running a ‘dirt unit’ with undue influence over the department. Oppositions have the right to  be sceptical about what  happens with policies and what may ultimately compromise their capacity to roll them out, and they even have the right to be sceptical about how governments at  a ministerial level interact with bureaucracies.

However,  the parliamentary budget office should be accountable  to  Parliament, not to  the  line  officers  in  the  Department  of  Treasury  and Finance, and ultimately to ministers. Whether or not the words of the  bill provide  that, if these  people  are ultimately required to go back into an environment from which they have  put forward criticism,  it  will greatly impact  on their employment. This is not a criticism of the  professionalism of  the bureaucracy, but we need checks and balances,  especially where it concerns the fundamental possibilities of  implementing policies and  promises.  The minister said  he  wants to  avoid politicising public  servants,  but clearly this  model actually does  not avoid that.

The Australian Chamber of Commerce and Industry (ACCI) said:

  A  substantial analytical capacity  is generally required  in order to  fulfil  this role adequately while remaining both authoritative and independent.

  …

  There is  a  clear  public  interest  in  ensuring  parliamentarians  and  the  electorate   are  properly  informed  of  the  costs  and  benefits  of  major  infrastructure  investments  and  the   effectiveness  of   government  policy  generally.

It went on to say:

  The independence of the PBO is a paramount reason for its existence.

 Accordingly,  security of funding  for  the body  must  be  guaranteed for  an  extended period  and  a  mechanism should  be  adopted  to ensure  its  staff,  including its head, are independent of the government.

The ACCI, in effect, rejects the substantive short-term  nature  of this body. A temporary PBO that exists for only six months of the  four-year electoral cycle, available as a resource for  only the  second half  of that  time, is completely inadequate for the  purposes  a  PBO  should  serve. These problems are going to persist, however, because the government seems intent on its course of action.

The  trend in other jurisdictions is  for there to be  a permanent office with a broader advisory role. The ACCI submission  to the commonwealth inquiry into the PBO states:

  The business community believes an independent  fiscal  authority will improve  the quality of public debate and enhance policy decision making.

In its  submission  to  the  NSW  inquiry  the  NSW Business Chamber supported a broader  focus  beyond  election promise  costings.  In its  submission  to this government’s discussion paper CPA Australia specifically stated:

  We believe the greatest public benefit and public  confidence in the integrity  of  the  political  system can  be  achieved  through the  installation  of  a  parliament budget office that:

        1. is permanent, and

        2. applies its specialist skills  and expertise beyond election costings to other budgetary and fiscal policies developed by Parliament.

CPA Australia could understand the risks inherent in a temporary PBO and noted:

  … possible negative perception in the public mind  about the independence of  the PBO and staff from the political party that forms the current government.

Why has the coalition  chosen to introduce this legislation giving effect to the least-effective  option?  Unlike those opposite,  who have spent  three years in government obsessing over the Labor Party, when we present election promises, we do so because we want to keep them.