Portfolio Budget Statements
Table of Contents

CHAPTER 1 - INTRODUCTION

Reference

On 21 November 1996, the Senate agreed to an amendment from Senator Colston, then Chairman of Committees, on behalf of all legislation committee chairs, to a motion from Senator Campbell that the Appropriation Bills be read a second time.[1] Amongst other things, this amendment gave effect to the recommendation in the 1996-97 estimates report of the Environment, Recreation, Communications and the Arts (ERCA) Legislation Committee, 'that the matter of Portfolio Budget Statements be referred to the Finance and Public Administration Legislation Committee for consideration of a new, improved format'. [2]

In its examination of the 1996-97 budget estimates of the two portfolios within its purview, namely Communications and the Arts and Environment, Recreation and Territories, the ERCA Committee encountered a number of problems about which it commented in its report to the Senate. In the case of the Communications and the Arts portfolio, the committee had difficulty with the fact that the then portfolio program structure failed to differentiate clearly 'communications' matters and 'arts' matters; it also commented that the Portfolio Budget Statements (PBS) lacked a summary of budget measures by sub-program. In the case of the Environment, Recreation and Territories portfolio, the table of significant variations was not broken down by budget measures, meaning that there was no previous level of expenditure against which to compare the 1996-97 amount of variation.[3] Implicit in the committee's criticisms was the fact that the two PBS, prepared under the same guidelines issued by the Department of Finance, were apparently different in material respects.

Senator Colston's amendment also noted that 'most legislation committees commented adversely on the current content of the Portfolio Budget Statements, including a lack of information' and included a recommendation from the Foreign Affairs, Defence and Trade Legislation Committee 'that the Department of Finance revise the structure of the Portfolio Budget Statements to include information about estimates expenditure for items within sub-programs'.[4] In its inquiry, the committee has taken into consideration all comments by individual senators in the Hansard transcripts of evidence of budget estimates hearings for the years 1996-97 and 1997-98 as well as the collective comments of the legislation committees for the same years.

Criticism of both the format and the content of the PBS and their predecessors is not unusual and should perhaps be regarded as part of a natural process of refinement of the documentation. That it reached the level it did in October 1996 is perhaps attributable to two factors: the large number of new senators following the March 1996 election; and the number of former ministers and other experienced senators who were for the first time coming to grips with the documentation in opposition.

Nor is the referral of such criticisms to this committee unusual, having occurred most recently in 1989 following a recommendation from the then Estimates Committee E. In its April 1991 report, Estimates Committee Documentation and Procedures, the committee concentrated primarily on the conduct of the estimates process rather than the content of the estimates documentation per se.

Conduct of the inquiry

The committee commenced its inquiry by seeking the views of the Department of Finance (DoF), in its capacity as custodian of the guidelines for the compilation of the PBS. Officers from the department, at their request, provided a private briefing to the committee and other interested senators on 24 February 1997. As a result of some of the concerns raised by senators at that briefing, the DoF draft Guidelines to the preparation of the 1997-98 Portfolio Budget Statements were amended to encourage reporting 'at an appropriate level' (that is, sub-program or component level as required) 'having regard to materiality, parliamentary and public interest'.[5] The document went on to state 'You may need to use different levels of reporting for different programs, the key judgment being the need to ensure that sufficient information is provided on the Budget appropriations' and suggested that portfolio coordinators contact their legislation committee secretary if in doubt about the appropriate level of reporting and to determine whether the committee required particular information to be provided.[6] The committee has ascertained that only a few did so.

At the committee's request, DoF followed the briefing with a formal written submission dated 10 April 1997. The committee circulated the DoF submission to all portfolio ministers, legislation committee chairs and other senators as individuals, seeking views both on the matters raised in the submission and on the general issue of the structure, content and level of detail of the PBS. Sixteen submissions were received in all, from fourteen departments, agencies or portfolio ministers (see Appendix A). No legislation committee chair responded; nor did any individual senator. At the committee's urging, however, five of the other legislation committee chairs in their opening remarks at the examination of the Budget estimates invited comment on the PBS and many senators took the opportunity to place their views on the public record in that forum.

On 20 June 1997, the committee held a round-table public hearing on the format of the PBS, to which representatives of each portfolio were invited. Keynote speakers included Senator Sue Knowles, presenting the perspective of a legislation committee chair; Senator Mark Bishop, who spoke as a relatively new opposition senator; Cleaver Elliott, Clerk-Assistant (Committees) who presented the views of the manager and supervisor of the estimates committee process; and various representatives from the Department of Finance who spoke on the current structure and intentions of the PBS and on the proposed changes which will come about as a consequence of the move to accrual budgeting. The discussion which ensued among the participants helped the committee understand the perspectives of the creators of the PBS.

The committee hopes that other participants shared the views of Robert Newton, representing the Department of Foreign Affairs and Trade, who stated:

what a very useful and constructive initiative this meeting is. It is one thing to have the guidelines on how to prepare the PBS from the Department of Finance, which are useful and extremely important, but it is another thing to be able to come here today and to listen to members of the committee who are, in effect, our clients. For those of us charged with preparing these documents, it is a very valuable experience.[7]

In undertaking this inquiry, the committee has not undertaken a serious study of the Portfolio Additional Estimates Statements. It believes, however, that its general comments are equally applicable to those documents. Nor has the committee considered the conduct of the supplementary estimates hearings, in which the documentation plays only a minor role.

Acknowledgments

The committee would like to thank all the participants in its round-table public hearing and particularly those who followed up their appearance before the committee with submissions which further elucidated their views on aspects of the committee's inquiry.

As always in its reviews of budget documentation, the committee is indebted to the Department of Finance officers who have patiently and conscientiously worked with the committee and its secretariat, clarifying points of detail. Any misunderstandings which remain are the committee's alone.

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Footnotes:

[1] Journals of the Senate, 21 November 1996, no. 57, p. 1067.

[2] Environment, Recreation, Communications and the Arts Legislation Committee, Report on Examination of Estimates, October 1996, para 2.16.

[3] ibid, para 2.15.

[4] Journals of the Senate, 21 November 1996, no. 57, p. 1067.

[5] Department of Finance, Guidelines to the Preparation of the 1997-97 Portfolio Budget Statements, p.3.

[6] ibid, p. 6.

[7] Senate Finance and Public Administration Legislation Committee, Hansard, 20 June 1997, p. F&PA 15.