This presentation was made Katie Hill, Parliament of NSW, Australia, at the 11th Meeting of OECD PBO & IFIs held in Lisbon, Portugal, on 4-5 February 2019

1. Katie Hill
11th Annual Meeting of the OECD network of PBOs and IFIs
Lisbon, Portugal
4-5 February 2019

2. New South Wales context
• NSW is Australia's largest State economy
• Government revenues $81.76 billion
• Government expenses $80.66 billion
• Fastest growing state economy in Australia,
gross state product of A$557.9 billion in
2016–17, a third of national gross domestic
product
• Government expected to spend $89.7 billion
over the next four years on infrastructure
• NSW has no debt and is a net lender (General
Government Sector), with a AAA credit rating

3. PBO- 1 year in 4 years
• NSW has fixed Parliamentary terms:
– Elections are held the third Saturday in March every four
years
– Next Election is 23rd March 2019
• NSW Parliament took the view it needed a PBO only in
the lead-up to elections.
• NSW PBO is appointed for a term starting in
September every fourth year in advance of the
election.

4. Establishment of Parliamentary
Budget Offices in Australia
Nov 2010
•The NSW PBO was established by the Parliamentary Budget Officer Act
2010
Feb 2011
•First NSW Parliamentary Budget Officer appointed
2012
•Commonwealth Parliamentary Budget Office established
2014-15
•Second NSW Parliamentary Budget Office
2017
•Victorian Parliamentary Budget Office established
2018-19
•Third NSW Parliamentary Budget Office

5. Current NSW Parliamentary Budget Officer
Stephen Bartos
• Appointed for 2015 election and
re-appointed for 2019 election
• Former Commonwealth Finance
department Deputy Secretary and
head of Budget Group
• Also previous Professor of Governance
and economics consultant
• Publishes regularly on public policy
and finance

6. What does the NSW PBO do?
The NSW PBO has two principal functions:
1. Costs “announced or proposed” election policies
for the Premier and Leader of the Opposition.
2. Publishes Budget Impact Statements 5 days before
the election.

7. Costings (1)
• A costing is the best estimate of the impact of a
proposed policy on the forward estimates (that is,
the current budget year, 2018-19, and the next
three years)
• Considers expenses, revenues, capital, net lending
• Spells out all the assumptions needed to work out
the costs of a policy
• Costing can include a ten year impact, usually for
major infrastructure projects and revenue

8. Costings (cont)
How does the PBO cost a policy?
• The PBO staff review policies to determine whether the PBO
requires further information from a Government agency to
prepare the costing.
• Agencies are obliged to provide information unless there is an
overriding public interest against disclosing this information.
• With agency information, the PBO prepare independent
advice, outlining the key assumptions, calculation methods
and models used to prepare the costing.

9. Budget Impact Statements (2)
– Two Budget Impact Statements are prepared,
Government and Opposition
– The Statements list all policies (spending, savings,
revenue increases, revenue decreases) and show
the impact of these on the forward estimates
– The NSW PBO uses a Pre-Election Budget Update
issued by Treasury as the starting point for the
Statements

10. OECD Principles for Fiscal bodies
Principle Role of the NSW Parliamentary Budget Office
Manage Budgets within clear, credible and
predictable limits for fiscal policy.
 Prepare Budget Impact Statements over a four year
period for the two major political parties in NSW
Closely align budgets with the medium-term
strategic priorities of government.
 Ensure Budget Impact Statements accurately reflect
polices of both political parties
Design the capital budgeting framework in order to
meet national development needs in a cost-effective
and coherent manner.
 While the PBO does not have a direct role, it provides
input into capital budgeting through the preparation of
costings relating to infrastructure projects that impact on
capital expenditure.
Ensure that budget documents and data are open,
transparent and accessible.
 All announced costings of election policies are published
on the PBO website.
 Budget Impact Statements are published on the PBO
website.
Provide for an inclusive, participative and realistic
debate on budgetary choices
 Published Costings and Budget Impact Statements
support informed discussion on policies.
 The PBO is an independent office that has a mandate to
request advice from Government agencies and prepare
independent costing models.

11. OECD Principles for Fiscal bodies (contd)
Principle Role of the NSW Parliamentary Budget Office
Present a comprehensive, accurate and reliable
account of the public finances.
 The Budget Impact Statements support the
preparation of the incumbent Government’s
budget following the election.
Actively plan, manage and monitor budget
execution.
 The PBO plays an active role in budget execution
during an election year through the preparation
of the Budget Impact Statements. The Statements
are built on advice from the current Government
with input from the PBO's costing of election
policies.
Ensure that performance, evaluation and value for
money are integral to the budget process.
 While the PBO does not provide comment on the
merits of a policy, assumptions used to determine
the costing will provide information for the
general public to make their own determination
of the policy.
Identify, assess and manage prudently longer-term
sustainability and other fiscal risks.
 The assumptions used to prepare costings will
outline risks and reference longer term or second
round effect impacts of a specific policy.
Promote the integrity and quality of budgetary
forecasts, fiscal plans and budgetary implementation
through rigorous quality assurance including
independent audit.
 Through the costing process, the PBO provides
independent financial analysis of polices and
provides an independent audit of sorts of the
state accounts immediately before an election.

12. Questions and Answers