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Australia Creates U.S.-Style Budget Office to Gauge Policy Costs

Wayne Swan, Australia's treasurer. Photographer: Eric Taylor/Bloomberg
Wayne Swan, Australia's treasurer. Photographer: Eric Taylor/Bloomberg

Aug. 22 (Bloomberg) -- Australia will create an independent parliamentary budget office to provide federal lawmakers with research and advice on the cost of their policies, mirroring similar bodies in the U.S. and Canada.

The government will introduce legislation into parliament this week to create the institution, which will cost A$24.9 million ($25.9 million) over four years to run, Treasurer Wayne Swan said in an e-mailed statement yesterday.

The office will “promote greater understanding in the community about the budget and fiscal policy,” Swan said.

An Australian version of the U.S. Congressional Budget Office aims to give voters an independent assessment of policies and their impact on the nation’s finances. Prime Minister Julia Gillard, whose government relies on support from independent lawmakers, this month called on the opposition Liberal-National coalition to explain how it would fund promises that include scrapping her mining and carbon taxes.

The opposition, which disputed a Treasury department analysis of its policies before last year’s federal election, supports the creation of the PBO. Former opposition leader and now shadow communications spokesman, Malcolm Turnbull, urged the government to establish the office in 2009.

“We want an independent source,” opposition Finance spokesman Andrew Robb told the Melbourne Age newspaper last month. “I’d expect next time there will be no debate over our costings.”

Budget ‘Black Hole’

Gillard, whose government trails opposition leader Tony Abbott in opinion polls, has sought to intensify pressure on his pledge to scrap her mining and carbon taxes, saying it creates a “black hole” in the budget.

Australia expects to raise about A$27.8 billion in three years by making polluters pay an initial charge of A$23 per ton of carbon dioxide from July 2012, increasing the price by 2.5 percent a year, plus inflation until the tax gives way to a cap-and-trade system in 2015. Gillard announced the proposal July 10.

The government has also proposed a 30 percent levy on iron ore and coal profits from July 2012 that is forecast to raise A$7.7 billion in its first two years.

Opposition to the taxes is likely to reemerge this week with a planned protest by truck drivers in Canberra today. The National Road Freighters Association, which has organized the so-called “convoy of no confidence” protest, says about 11 convoys from across the nation are headed to the capital to call for a fresh federal election.

“The public feel ripped off by this government and I’m not surprised that people are converging on Canberra to register their protest,” Abbott told Network Ten in a television interview yesterday.

To contact the reporter on this story: Jacob Greber in Sydney at jgreber@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

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