This audit assessed the effectiveness of the Parliamentary Budget Office in conducting its role since being established in July 2012.

Audit objective, criteria and scope

The audit objective was to assess the effectiveness of the Parliamentary Budget Office in conducting its role since being established in July 2012.

In order to form a conclusion against this audit objective, the ANAO adopted the following high level criteria:

• effective governance and administrative arrangements were established, to support the delivery of services to the Parliament;
• sound and timely processes facilitated the conduct of the PBO’s key functions within and outside of the caretaker period; and
• performance was monitored, reviewed and reported.

The audit focused on the functions of the PBO including arrangements in place to prepare costings, and whether these arrangements had been consistently followed. The audit did not independently cost any of the policies, or other work costed by the PBO but did consider the views of Treasury and Finance in relation to PBO policy costings that were subsequently prepared for the 2014 Budget process.

This audit has been conducted under subsection 15(1) of the Auditor‑General Act 1997. In conducting this audit, the Australian National Audit Office (ANAO) was mindful of the Parliamentary Service Act, which allows the JCPAA to request an independent review of the operations of the PBO, to be completed within nine months after a general election. The ANAO briefed the JCPAA on the planning for this audit—its objective, criteria and expected tabling date (planned for completion within nine months of the general election held on 7 September 2013).

In conducting the audit, the ANAO was aware of the Government’s National Commission of Audit and its terms of reference, which included identifying options for strengthening Commonwealth budgeting arrangements, incorporating an examination of the role of the PBO. The Commission’s report was released publicly on 1 May 2014. The report contained a recommendation for the Government to adopt a high‑level fiscal strategy with fiscal rules which set out how a fiscal strategy will be achieved (Recommendation 1). With reference to the PBO, the Commission recommended that the PBO reports the Government’s progress against the fiscal rules following the release of the Final Budget Outcome each year (Recommendation 2). The Government has not yet responded to these recommendations, however, the additional function for the PBO suggested in Recommendation 2 would be consistent with one of the four key features of effective IFIs identified by the IMF, and with the functions performed by 11 of the 17 OECD countries’ IFIs.

Overall conclusion

Prior to the establishment of the PBO in July 2012, there was no independent body in Australia that specialised in the research and analysis of fiscal policy for the Federal Parliament. At this time, there were also limited resources for non‑government political parties, individual and independent members of parliament to have policies costed outside of the caretaker period for a general election. The establishment of the PBO was expected to: help level the playing field for all parliamentarians by providing non‑partisan access to policy costings (outside of and during the caretaker period), budgetary and fiscal policy analysis; and improve the transparency of Australia’s budgetary frameworks.

Since commencing operation in July 2012, the PBO has effectively undertaken its statutory role and is already well regarded as an authoritative, trusted and independent source of budgetary and fiscal policy analysis. The PBO has made a significant contribution to levelling the playing field for all parliamentarians. Stakeholders consulted during the course of this audit all agreed that, for the first time, all parliamentarians have access to independent policy costing and information request services during all periods of the parliamentary cycle. In addition, parliamentary and peer group stakeholders viewed the costings prepared by the PBO as being of high quality, and those involved in the costing process agreed that the PBO was professional to deal with. These stakeholders also agreed that the PBO’s work has improved the transparency around election commitments, and facilitated a more informed public debate about budgetary matters that has the potential to increase as the PBO releases further information and the public becomes better educated about these topics.