The election of a record number of independents to the House of Representatives will undoubtedly increase the pressure on parliament to change the way it functions. Already the newly elected independent member for Goldstein, Zoe Daniel, has asked 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 impartial analysis of the budget cycle, fiscal policy and the financial implications of proposals”. In practice, it focuses strongly on the last of those tasks – assessing the financial implications of new plans. And it would not have escaped the attention of the Independents that his findings are seldom out of step with the views of the Treasury.
What this means, says Daniel, is that “backbenchers of all shades are struggling to get the quality 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 that makes predictions and other economic research, independent of the treasury and government.
This is not just a federal issue. Australia’s two other PBOs – in Victoria and New South Wales – also have a much narrower focus than their overseas counterparts.
Federal, two of three items on the PBO’s “about” page deal with costs (the first explicit; the second via a post-election compilation of election commitments) and the third related to public education. In Victoria, according to a parliamentary committee, “policy costing is an important legislative function of the office” although it is “not widespread” in other OECD countries.
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The NSW PBO is even more focused: parliament’s website describes its work as providing “cost of election policies in the run-up to NSW general elections”. This reflects successive NSW governments’ belief that costs only matter before elections, it only works one year out of four. (The NSW system’s pros and cons are discussed in the PBO’s 2015 post-election report.)
Best practice?
Many of the OWO’s counterparts overseas have much broader mandates and more influence on public policy. The most important by far, as Daniel implies, is the U.S. 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 documents and fiscal analysis across all areas of government.
The Netherlands has an even older institution, the Bureau of Economic Policy Analysis. Dating back to 1945, its role plays in budget projections and forecasting. Across the North Sea in Britain, the Independent Office of Budgetary Responsibility prepares the economic forecasts that accompany the government’s budget, evaluates the government’s performance against fiscal targets, analyzes fiscal sustainability and risks, and – yes – provides cost calculations of tax and welfare measures.
The most striking contrast is with the Canadian PBO, which had the habit of criticizing the government, especially when led by independent economist Kevin Page. It was in jeopardy – the government reduced its budget and changed its reporting lines – but the body was always supported by parliament.
Lukas Coch / AAP
Australia’s federal PBO has a narrow focus mainly because the civil service has persuaded parliament to keep it that way. The Treasury opposed any idea that another body should play a role in economic forecasting, and therefore the legislation explicitly prohibits the PBO from drawing up economic forecasts or budget estimates.
The Business Council of Australia was an early supporter of a more powerful PBO. In its 2011–12 budget proposal, based on a research report I wrote that included a survey of international practice, it unsuccessfully advocated for broader competence.
Since then, the PBO has been largely captured by the bureaucracy. Led by a career civil servant, it is part of the “official family”. His research and statements do not even come close to challenging official orthodoxy.
If parliament wants a more independent federal PBO, it has the power to act. The PBO reports to the Joint Committee on 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 civil servants. But it withdrew from that position as parliament became more polarized. The advent of a record number of independents could reverse the trend and strengthen the role of parliament.
And the parliamentary library?
Judging by its independence from the government, the Parliamentary Library is performing much better. It was established in 1901 and has been part of the Commonwealth’s institutional furniture since the first parliament. His long history of austerity and independence gives it a solid foundation on which to provide MPs with information that does not necessarily follow the government’s line.
The library’s record is a good illustration of what is known as road dependency: the way an institution established and operates in its early days has a major influence on how it continues to function. After the library entered a path of impartiality and austerity, the library maintained it. But that does not mean it will turn back the extra funding Daniel asked for.
