What the Parliamentary Budget Office can verify

The short answer

the Parliamentary Budget Office can verify

The Parliamentary Budget Office can provide fiscal analysis within its statutory role. Its work does not certify political desirability, legal validity or every claimed social outcome. The PBO was established by the Parliamentary Service Act 1999 as amended by the Parliamentary Service Amendment (Parliamentary Budget Officer) Act 2011. It is an independent office within the Australian Parliament that provides non-partisan fiscal and budget analysis to all parliamentarians. Its core functions include: preparing costings of policy proposals at the request of individual senators and members; preparing the post-election report on the budget impacts of election commitments; conducting research on the budget and fiscal policy settings; and preparing an annual report on its activities. The PBO does not audit government spending, certify that policies are desirable, determine whether announced spending will achieve its stated objectives, or verify claims about non-fiscal outcomes. It works with the data and assumptions provided to it, and its costings are only as reliable as the parameters and policy specifications on which they are based. The PBO's independence is protected by statute: the Parliamentary Budget Officer is appointed for a fixed term and cannot be directed by the government in the performance of their functions.

This is a method for assessing public claims, not a verdict on a party or a direction on how to vote. Conclusions should change when the underlying law, data or implementation evidence changes.

The useful question is not only “what is the rule?” but also “who administers it, which document controls it, and when might it change?” That distinction prevents an accurate general explanation from becoming wrong advice in a particular election, chamber or policy setting.

Evidence review

The PBO's statutory functions and what they cover

The Parliamentary Budget Office was established in 2011 to improve fiscal transparency and provide parliamentarians with independent costings of policy proposals. Its functions are set out in the Parliamentary Service Act 1999 and include: preparing policy costings at the request of senators and members outside the caretaker period; preparing costings of publicly announced election commitments during the caretaker period before a federal election; preparing the post-election report that sets out the budget impacts of each party's election commitments; conducting and publishing research on budget and fiscal policy settings; and responding to requests for budget analysis from parliamentary committees.

The PBO's policy costing function allows any senator or member of the House of Representatives to request an estimate of the financial impact of a policy proposal over the current and forward estimates periods. The requestor must specify the policy proposal in enough detail for the PBO to model it, including the start date, affected population, rate of any payment or tax change, and behavioural assumptions. The PBO does not design policies for parliamentarians; it only costs proposals that are described in sufficient detail. The requestor decides whether the costing is made public or kept confidential.

Beyond costing individual proposals, the PBO publishes regular research reports on the budget outlook, long-term fiscal sustainability, tax expenditures and other structural aspects of the Australian Government's finances. These reports are publicly available on the PBO website and are intended to improve public understanding of the budget and inform parliamentary debate.

Evidence review

How PBO costings work: methods, assumptions and limitations

A PBO costing estimates the impact of a proposed policy on the Australian Government's underlying cash balance over the budget and forward estimates periods. The PBO uses the same economic and budget parameters as the government's official estimates, unless the requestor instructs otherwise or the PBO identifies a reason to depart from them. The PBO draws on data from the Australian Bureau of Statistics, the Treasury, the Department of Finance, Services Australia, the Australian Taxation Office and other government agencies.

Costings are accompanied by detailed explanations of the methodology, data sources and key assumptions. The PBO clearly distinguishes between different types of assumptions: economic parameters such as GDP growth, wages, inflation and employment are drawn from government forecasts; behavioural assumptions such as how people might change their work, spending or investment in response to a policy change are estimated by the PBO using economic modelling; administrative assumptions about implementation timelines and compliance rates are based on comparable existing programs where available.

A PBO costing has important limitations. It is an estimate, not a prediction. Its accuracy depends on the quality of the data and the reasonableness of the assumptions. A costing cannot account for unforeseen changes in economic conditions, future policy decisions or unexpected behavioural responses. It also cannot assess whether a policy is desirable, equitable or constitutional. The PBO itself emphasises that its costings are informational tools for parliamentarians, not definitive statements of what a policy will cost if implemented. The costing letter or report will state its assumptions explicitly, and any user of a PBO costing should read those assumptions before drawing conclusions.

Evidence review

The caretaker period and the election costing service

The PBO plays a particularly visible role during the caretaker period before a federal election. Under caretaker conventions, the government avoids making major policy decisions that would bind an incoming government, and the public service refrains from costing opposition policies. The PBO becomes the principal mechanism through which all parties' election commitments can be independently costed.

During the caretaker period, the PBO may provide public costings of election commitments agreed by the Prime Minister and the Leader of the Opposition. The PBO also prepares the post-election report, which must be published within 30 days of the end of the caretaker period. This report, required by the Charter of Budget Honesty Act 1998, sets out the financial implications of the election commitments made by the government and the opposition during the campaign. The report must be based on the economic and fiscal parameters in the Pre-election Economic and Fiscal Outlook prepared by the Treasury and the Department of Finance.

A PBO election costing is only as complete as the policy description provided. If a party announces a policy in broad terms without specifying the eligibility criteria, commencement date, indexation arrangements or funding source, the PBO may not be able to cost it, or the costing may need to rely on assumptions that increase its uncertainty. Journalists and voters should look at the assumptions stated in a PBO costing before treating the estimate as definitive.

Evidence review

What the PBO does not do — and what other bodies can verify

The PBO does not audit government spending. The Australian National Audit Office (ANAO) is the body responsible for auditing the financial statements of Commonwealth entities and conducting performance audits of government programs. The PBO does not certify that government policies are working or achieving their stated objectives. That is the function of program evaluations, which may be conducted by departments themselves, by the ANAO through performance audits or by the Productivity Commission through its inquiries.

The PBO does not verify claims about non-fiscal outcomes. If a politician claims a policy will reduce unemployment, improve health outcomes, lower emissions or increase national security, the PBO is not the body that verifies those claims. The PBO can cost the fiscal impact of a policy that targets an outcome, but it cannot verify whether the policy would actually achieve that outcome. Verification of non-fiscal claims requires different types of evidence, including program evaluations, statistical analysis by bodies such as the ABS or the Australian Institute of Health and Welfare, and scientific or expert assessment. The PBO does not make legal determinations about whether a policy is constitutionally valid or consistent with existing legislation.

The PBO also does not provide costings to members of the public, journalists or organisations outside Parliament. It only responds to requests from senators, members of the House of Representatives and parliamentary committees. The PBO's publicly available research reports, however, are accessible to anyone and can be a useful resource for understanding the structure of the budget, major spending programs and long-term fiscal trends.

Evidence review

How to read a PBO costing or report — a checklist

Start by identifying who requested the costing and whether the requestor chose to make it public. A costing that was kept confidential by the requestor is not released by the PBO. Next, read the policy specification carefully: what exactly is being costed, over what period, and with what start date. Check whether the policy has been costed against the current forward estimates baseline or a different baseline specified by the requestor.

Review the stated assumptions, particularly those about take-up rates, compliance, administrative costs and behavioural responses. These assumptions often drive the result more than the headline policy parameters. Compare the PBO's assumptions with those used in similar costings, if available, to assess whether they are conservative, central or optimistic. Check the sensitivity analysis, if provided, which tests how the result changes under different assumptions.

Identify what is not in the costing. A costing of new spending will show the gross cost but may not account for offsetting savings if the requestor did not specify any. A costing of a tax cut will show the revenue forgone but will not estimate any economic growth effects unless the PBO has been asked to model them and has chosen to do so. Finally, note the date of the costing: budget parameters and economic conditions change over time, so a costing prepared with one set of parameters may no longer be current if economic forecasts have been revised.

Common questions

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