The election of a record number of independents to the House of Representatives will undoubtedly increase pressure on parliament to change how it operates. Already the newly elected independent member for Goldstein, Zoe Daniel, has called for more resources for two key institutions, the Parliamentary Budget Office (PBO) and the Parliamentary Library.
The younger of the two, the PBO, was created in 2012 to provide “independent and non-partisan analysis of the budget cycle, fiscal policy and the financial implications of proposals”. In practice, it focuses heavily on the last of those tasks – assessing the financial implications of new plans. And it won’t have escaped the independents’ attention that its findings are rarely out of step with the views of Treasury.
What this means, says Daniel, is that “backbenchers of all shades struggle to get the quality of information and objective advice they need to make decisions based on their merits and on the evidence”. She wants to see a broader, US-style body producing forecasts and other economic research independent of Treasury and the government.
This isn’t just a federal problem. Australia’s two other PBOs – in Victoria and New South Wales – also have a much narrower focus than their overseas counterparts.
Federally, two of three items on the PBO’s “about” page concern costings (the first explicitly; the second via a post-election compilation of election commitments) and the third relates to public education. In Victoria, according to a parliamentary committee, “policy costings are a key legislative function of the office” despite being “not widespread” in other OECD countries.
The NSW PBO is even more tightly focused: parliament’s website describes its work as providing “costings of election policies in the lead-up to NSW general elections”. Reflecting successive NSW governments’ belief that costings only matter before elections, it operates only one year in four. (The NSW system’s pluses and minuses are discussed in the PBO’s 2015 post-election report.)
Many of the PBOs’ counterparts overseas have much broader mandates and more influence on public policy. The most important by far, as Daniel implies, is the US Congressional Budget Office, whose reports and advice to Congress have had a major impact on budgetary policy in the United States. The CBO produces economic forecasts, research papers and fiscal analysis across all areas of government.
The Netherlands has an even older institution, the Bureau for Economic Policy Analysis. Dating back to 1945, its role takes in budget projections and forecasting. Across the North Sea in Britain, the independent Office for Budget Responsibility prepares the economic forecasts that accompany the government’s budget, evaluates the government’s performance against fiscal targets, analyses fiscal sustainability and risks, and – yes – provides costings of tax and welfare measures.
The most striking contrast is with the Canadian PBO, which had a habit of criticising government, especially when led by the independently minded economist Kevin Page. That came at some peril – the government slashed its budget and changed its reporting lines – but the body was always supported by parliament.
Australia’s federal PBO has a narrow focus primarily because the public service convinced parliament to keep it that way. Treasury resisted any notion that another body should have a role in economic forecasting, and so the legislation expressly prohibits the PBO from preparing economic projections or budget estimates.
The Business Council of Australia was an early advocate for a more powerful PBO. In its 2011–12 budget submission, based on a research report I wrote that included a survey of international practice, it argued unsuccessfully for a broader remit.
Since then, the PBO has largely been captured by the bureaucracy. Headed by a career public servant, it is part of the “official family”. Its research and statements don’t come even close to challenging official orthodoxies.
If parliament wants a more independent federal PBO it has power to act. The PBO reports to the Joint Committee of Public Accounts and Audit, which also approves its work plan. The JCPAA has traditionally been a staunch defender of the legislature’s right to question ministers and public servants. But it has retreated from that position as parliament has become more polarised. The arrival of a record number of independents could reverse the trend and strengthen parliament’s role.
And the Parliamentary Library?
Judged by its independence from government, the Parliamentary Library is a much better performer. Established in 1901, it has been part of the Commonwealth’s institutional furniture from the first parliament. Its long history of rigour and independence gives it a solid basis on which to keep offering MPs information that doesn’t necessarily follow the government line.
The library’s record is a good illustration of what is known as path dependence: the way an institution is established and works in its early days has a huge influence on how it continues to operate. Having set out on a path of impartiality and rigour, the library has maintained it. But that doesn’t mean it would knock back that extra funding Daniel has called for.