Presented by the Minister for Finance and the Treasurer

Victorian Parliamentary BudgetOfficer

Discussion paper

The Secretary

Department of Treasury and Finance

1 Treasury Place

Melbourne Victoria 3002

Australia

Telephone: +61 3 9651 5111

Facsimile: +61 3 9651 5298

www.dtf.vic.gov.au

Authorised by the Victorian Government

1 Treasury Place, Melbourne, 3002

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Published September 2013.

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Contents

Foreword 1

Introduction 3

1. Functions of the Parliamentary Budget Officer 4

Costing election commitments 4

Pre-election costing period 4

Fixed term office 5

Costing requests 5

Aggregate Budget Impact Statement 6

Underlying costing assumptions 6

Discretion to access the PBO 6

Independence 7

2. PBO institutional structure 8

Institutional structure and location 8

Staff 9

Budget 9

3. Appointing the Officer and employment conditions 11

Appointment 11

Cessation 12

Post-election report of operations and performance 12

Employment conditions 12

4. PBO access to information 14

Accessing information 14

5. Disclosing PBO information 16

Disclosing costing information 16

PBO information is confidential 17

Penalties for improper use of information 17

PBO can make public comments 18

Access to PBO information on expiry of term 18

6. Governance and oversight 19

Administrative governance 20

Operational oversight 21

7. PBO operations 22

Plan 22

Protocols 22

Report of operations and independent review 23

8. Other legislative protections 25

State indemnity 25

Exempt from Freedom of Information 25

Appendix 1: Operating timeline 27

Victorian Parliamentary Budget Officer
Discussion paper, Presented by the Minister for Finance and the Treasurer / i

Foreword

The establishment of a Parliamentary Budget Officer in Victoria is a key reform initiative of the Government and an important election commitment to the people of Victoria.

In the past, various Australian governments have conducted Treasury-run election policy costing systems for political parties in the lead up to general elections. These systems have frequently been criticised, in part because of the way they risk politicising the Treasury and its public servants and fail to provide non-government parties with an assurance of independence from government.

To improve the independence and transparency of election policy costing for political parties, the Victorian Government proposes to introduce legislation to establish a separate independent election policy costing office within the Parliament.

The Parliamentary Budget Office (PBO) will be headed by a Parliamentary Budget Officer who, like the Auditor-General and the Ombudsman, will be an independent officer of the Parliament. The PBO will provide an authoritative, independent source for the costing of parliamentary political parties’ and independent members’ election policies.

Given the important role the PBO will play in Victorian general elections, the Government wishes to ensure the community and all interested parties have the opportunity to provide feedback on the proposed model in advance of finalisation of legislation.

We encourage you to put forward your views on this important innovation.

The Hon Robert Clark MP The Hon Michael O’Brien MP Minister for Finance Treasurer

Invitation to respond

We are seeking your contribution to the proposals set out in this paper. In particular, we are interested in your views on:

· the proposed mandate, role and powers of the Parliamentary Budget Officer;

· the functions, operational scope and size of the Parliamentary Budget Office; and

· the Parliamentary Budget Office’s integrity, confidentiality and independence of the election costing process.

All information (including name and address details) contained in written responses will be made public on the Department of Treasury and Finance website unless you indicate you would like all or part of your response to remain in confidence. Legal requirements, such as those imposed by the Freedom of Information Act 1982, may affect the confidentiality of your written comments.

Submitting your comments

Submissions can be sent to by no later than 29October 2013.

Introduction

General principles

The overriding objective in establishing a Victorian Parliamentary Budget Officer and PBO is to provide an authoritative, independent and credible election costing service for parliamentary party leaders and independent members, and deliver timely, relevant and readily understandable election policy costing information to the Victorian community.

To achieve this objective, the PBO will be:

· independent – beyond any perceived or real political, executive or bureaucratic interference in carrying out its mandated functions in a non-partisan manner;

· efficient and effective – producing high quality and timely information as required by the mandate, while providing value for money to the Parliament and the community;

· confidential – systems and processes will be in place to ensure that sensitive material remains confidential; and

· accountable – high standards of governance will be established under which the PBO and those who use and oversee the PBO will have clear responsibilities, with effective performance criteria and oversight mechanisms in place to ensure the mandate is being met.

Features of PBOs in other jurisdictions

The roles and functions of PBOs and Officers overseas and those recently established in Australia have varied greatly, including some or all of the following features:

· research and analysis on government budgets, expenditure and fiscal policy;

· advice to parliamentary committees;

· independent economic forecasting;

· independent costing of policy proposals;

· independent costing of proposed election policy commitments; and

· promotion and public awareness of public financial management.

The primary role and function of the Victorian PBO is intended to be the independent costing of proposed election policy commitments, as described in Chapter 1. The subsequent chapters describe the institutional structure, appointment processes, access to and disclosure of information, governance and oversight of the Officer and the PBO.

1. Functions of the Parliamentary Budget Officer

Costing election commitments

1.1 The function of the Officer and the PBO will be to prepare costings of proposed election policy commitments and the consequential budget impacts, as requested by parliamentary leaders and independent members, within a defined costing period.

An election policy costing service for members of Parliament and the electorate should provide independent, accurate and timely information on the cost of policy announcements made during election campaigns. The PBO should provide equitable access for the incumbent party or parties and the Opposition, minor parties and independent members.

In line with the Government’s 2010 election commitment, the PBO is designed specifically to support election policy costing within a defined period.

Unlike some other jurisdictions that have introduced a PBO, such as the Commonwealth, the Victorian PBO will not have a broad research responsibility to examine the Victorian economy or public sector finances. To do so would duplicate work undertaken by other parliamentary bodies and public sector agencies and would not be a prudent use of public funds.

Examination of and research into budgetary, financial and economic issues is undertaken by the Public Accounts and Estimates Committee (PAEC), other parliamentary committees, and the Parliamentary Library's Research Service. The AuditorGeneral also provides regular independent commentary on financial issues through financial and performance audit reports.

Pre-election costing period

1.2 The proposed defined costing period will be from 1 September in the year of a State election to 5pm on the Thursday immediately before polling day. A proposed PBO operational timeline is outlined at the end of this document.

A defined and fixed pre-election costing period of up to three months will be established to provide clarity and certainty.

The costing period will allow parliamentary party leaders and independent members to develop and refine policies before requesting costings from the PBO and publicly announcing election commitments. It will also ensure the PBO has sufficient capacity for a complete and effective analysis of election policy costing requests. A shorter costing period, such as the preelection caretaker period (typically four to six weeks before election day), would not allow this.

Fixed term office

1.3 There will be an independent Parliamentary Budget Officer appointed for a fixed term, supported by a non-permanent Parliamentary Budget Office.

A PBO that solely costs election policy commitments during a state election need only operate for a fixed period. Under these circumstances, the position of Parliamentary Budget Officer can be a nonpermanent position activated immediately before each state election.

The PBO should commence after the pre-election budget in May and conclude its costing activities and end of term reporting to Parliament shortly after the November election. The period from 1 July to 31 December is proposed.

This will ensure the PBO operates within one financial year for funding purposes, and should provide time for the Officer to obtain appropriate expertise, and establish relationships with the public sector, party leaders and independent members.

Costing requests

1.4 Costing requests must be received in accordance with published protocols and in any event no later than 5pm on the Tuesday immediately before polling day.

In the defined costing period, the PBO should analyse costing requests (in consultation with the persons making those requests) and document the budget impacts of election commitments.

The PBO will prepare costings using the specifications set out in the request. The PBO will not provide guidance, commentary or advice on the proposed policies.

The PBO will be able to receive requests to cost specified policies up until a legislated closing time. This will also ensure the PBO can incorporate all costed and announced commitments into an aggregate Budget Impact Statement (BIS) for each parliamentary party or independent member. This will be published by the Officer on the Thursday immediately before polling day.

It is proposed that all new costing requests must be lodged with the Officer no later than the time specified in legislation or in protocols issued by the Officer, but in any case no later than 5pm on the Tuesday immediately before polling day.

It will be the responsibility of the parliamentary party leader or independent member to ensure that any request for costing is provided to the PBO early enough to allow time for the Officer to complete the costing before the closing time, and consistently with any protocols issued by the Officer.

After receiving and assessing a policy, the Officer may refuse to cost the policy if there is not enough time or information to do so and must thereupon notify the person who requested the costing as soon as possible.

If the Officer requires more information on the specifications in the request, a written request will be issued. If the relevant political party or independent member announces a policy, that the Officer has been unable to cost due to insufficient information or time to prepare a policy costing within the stated time limits, the Officer must include a statement to that effect in the relevant BIS.

A person submitting a policy may withdraw a policy costing request at any time. In this case, the PBO will cease work on the costing and the Officer will notify any person from whom information has been requested.

Aggregate Budget Impact Statement

1.5 The PBO will prepare an aggregate Budget Impact Statement for each parliamentary party leader or independent member of all election policy commitments that have been costed by the PBO and publicly announced by the parliamentary party leader or independent member no later than 5pm on the Wednesday before polling day.

1.6 The aggregate BIS will show the costing impacts on the forward budget estimates and key financial indicators.

1.7 The aggregate BIS will be publicly released no later than 5pm on the Thursday before polling day.

The aggregate BIS will provide a transparent and concise summary of the financial impact of election policy commitments announced by a political party or independent member.

An aggregate BIS should show the impact on the forward budget estimates and the net impacts of the policies on the most recent key financial indicators included in any reports published under the Financial Management Act 1994.

For example, the aggregate BIS could show the aggregate increase or decrease in the general government sector:

· net result from transactions; and

· net debt.

Underlying costing assumptions

1.8 The PBO must use the economic forecasts and parameters and fiscal estimates contained in the most recent and available budget publication mandated under the FinancialManagement Act 1994.

1.9 The PBO will not prepare its own budget forecasts and estimates.

The PBO will use the economic forecasts and parameters and forward fiscal estimates contained in the most recent report released by the Government or mandated under the Financial Management Act 1994. Typically, this would be the latest budget papers or the pre-election budget update when available during the caretaker period.

This will ensure costing processes and the assumptions underpinning PBO costings will be transparent and consistent for all parties.

The PBO will not prepare its own economic forecasts or budget estimates.

Discretion to access the PBO

1.10 All political party parliamentary leaders and independent members (sitting in the current Parliament and seeking re-election) will have access to the PBO and have discretion to submit their election policies for costing by the PBO.

Similar to other Australian jurisdictions, requests for costing may be made by candidates for parliament who were sitting members of the Victorian Parliament before the caretaker period commences.

To ensure equitable access to costings by the Office, the Officer will issue protocols for the equitable allocation of the PBO’s activities and resources across the requests of all parliamentary party leaders and independent members.

Independence

1.11 No person or office (including the Presiding Officers, the Clerks or the Public Accounts and Estimates Committee) will have power to direct the Officer in carrying out legislated election costing functions.

The Officer’s independence will be protected so that he or she can provide objective election costing analysis without political or executive interference. This is consistent with the Victorian AuditorGeneral Act 1994 and other Australian PBOs.