Part 2: The mandate and functions of the Parliamentary Budget Office

The Parliamentary Budget Office (PBO) was established through amendments by the Parliamentary Service Amendment (Parliamentary Budget Officer) Act 2011 (the PS Act) on 15 February 2012. Its creation followed a review by the Joint Select Committee on the Parliamentary Budget Office (the Committee), with the PBO's mandate and functions consistent with all of the Committee's recommendations.

These legislative amendments established the PBO as a separate Parliamentary Department and created the position of the Parliamentary Budget Officer (the Officer) as an independent statutory office holder. The PS Act also amended the Charter to clarify the responsibilities of the Secretaries, change the definition of Caretaker Period, allow the Leader of a minority party to have that party's election policies costed and prohibit duplicate costings being undertaken by the PBO and the Secretaries.

Mandate of operation

The role of the PBO, as set out in Clause 64B of the PS Act, is to inform the Parliament by providing independent and non-partisan analysis of the Budget cycle (that is, policies and proposals developed throughout the Budget year, as well as the evolution of estimates and the fiscal outlook publicly released during the year), fiscal policy and the financial implications of proposals.

To facilitate these activities, the PS Act allows for the development of working arrangements between the Officer and Australian Government bodies in the form of a Memorandum of Understanding (MOU). This would establish a framework for the exchange of data and information between the PBO and Government bodies, including the use and disclosure of that information.

PBO functions

Clause 64E of the PS Act specifies that the Officer will:

outside of the Caretaker Period — prepare policy costings upon request of individual Senators and Members of Parliament;
within the Caretaker Period —consistent with the Charter, prepare election policy costings upon request from a Parliamentary party or a sitting independent member of Parliament seeking re-election;
- confer with Treasury and Finance to avoid duplication of costings of the same policy proposal during the Caretaker Period;
prepare responses to budget-related requests of individual Senators and Members in line with the PBO's mandate;
provide submissions to relevant Parliamentary Committee inquiries; and
initiate its own work in anticipation of client interests, including general research and analysis of the budget and fiscal policy settings.

While the PBO may undertake analysis of the Government's forecasts and estimates by examining methodologies and assumptions underpinning these figures, its mandate does not include the production of economic or budget forecasts or estimates, either at the whole-of-government or program level. This means that the PBO's analysis and costings will incorporate the latest published economic forecasts and fiscal estimates produced consistent with the Charter (that is, the Budget, the Mid-year Economic and Fiscal Outlook (MYEFO) or the Pre-election Economic and Fiscal Outlook (PEFO)). Further information is provided on this aspect of the Officer's role in Part 3.

Preparation of policy costings

Under Clause 64G of the PS Act, the Officer must prepare policy costings using approaches and costing conventions recommended in the most recent guidelines issued under the Charter. With the agreement of the Secretaries, however, the Officer can issue alternate written principles; these must then be made publicly available.

In the absence of this alternative approach being sought by the Officer, the guidelines in this document constitute the basis for the preparation of policy costings. In particular, Part 4 sets out the requisite costing protocols and methods to be used, and Appendix B summarises the costing conventions that the Officer will be expected to follow.

Confidentiality arrangements

The PS Act allows for a request for a costing initiated by a Senator or Member of Parliament outside the Caretaker Period to be treated as confidential. In contrast, requests to the PBO seeking election policy costings within the Caretaker Period must be made publicly available, consistent with the Charter and with the current publication arrangements employed by Treasury and Finance.

As noted above, it is expected that a MOU entered into by Commonwealth Heads with the Officer will establish a framework for Commonwealth bodies to handle confidential costing requests lodged with the PBO.

Public release of requests and costings — requests made before polling day

In terms of the public release of costings, the PS Act distinguishes between policy costing requests that are made before polling day for a general election and requests that are made on or after polling day during the Caretaker Period.

Where a policy costing is requested before polling day, but the responsible Secretary has not had sufficient time or information to prepare and publicly release the policy costing, the request is deemed to have been withdrawn on polling day.

Where policy costing requests are deemed to have been withdrawn and the Caretaker Period for that general election extends beyond the polling day, should those parties wish to have those particular policies costed, the requests must be formally re-submitted to either the Officer or under the Charter, so that the costing may be completed and released after polling day.

Public release of requests and costings — requests made on or after polling day

The Charter now makes provision for policy costing requests that are made after polling day where the Caretaker Period continues beyond polling day.

These amendments recognise that, on such occasions, it will be necessary to distinguish between pre- and post-polling day costing requests and to establish processes that the Secretaries must follow in responding to these requests. The provisions relating to post-polling day costing requests will be similar to those relating to pre-polling day requests in that, as soon as practicable after the request has been made, the responsible Secretary is to prepare and publicly release a costing of that policy.

Should the responsible Secretary have insufficient information or time to prepare and publicly release the policy costing before the end of the Caretaker Period, then they will be required to release a statement to that effect as soon as practicable after the end of the Caretaker Period. In addition, the costing request will be deemed to have been withdrawn at the end of that Caretaker Period, and the responsible Secretary will not be obliged or authorised to take any further action in relation to the request.

Next: Part 3: Preparation of the pre-election economic and fiscal outlook
Previous: Part 1: Statutory provisions — summary
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