Who are the Policy Costing Analyses for?

PBO Policy Costing Analyses support parliamentarians and the public to engage with policy debates by presenting complex fiscal issues in digestible, numerically-grounded formats, including by providing transparent, comparable estimates, and enhancing fiscal literacy.

Parliamentarians rely on the PBO for confidential costings to support policy development. Our costings, like those the government presents in its budget papers, are based on the principles included in the Charter of Budget Honesty. To enhance understanding, PBO Policy Costing Analyses will use the same underpinning budget models and present information in a broadly similar manner.  

In addition to this stream of work, the PBO also informs the public about the fiscal impacts of policies through its Election Commitment Report. Following a federal election, the PBO publishes costings of each of the election commitments made by parliamentary parties and independent members. These include information of the fiscal impacts of election commitments, and include information on the assumptions, methodology and data the PBO has used to estimate those fiscal impacts.

How to interpret Policy Costing Analyses?

Each Policy Costing Analysis focuses on the mechanics of a costing and the fiscal impacts. They provide context on current policy settings and outline the impact on expenditure, revenue and distributional analysis.

Policy Costing Analyses are designed to be illustrative and educational, helping users understand the direction and approximate size of fiscal impacts as a result of policy change or changes to existing policy settings.

Policy Costing Analyses provide estimates as at the time of their publication, based on the most recent fiscal and economic parameters available. They reflect:

1. current tax and transfer system settings
2. demographic and economic assumptions
3. the latest ABS and/or administrative data
4. contemporary behavioural assumptions, where relevant, about how individuals or businesses are expected to respond to policy changes.

To assist interpretation, each document includes detail on policy context, fiscal impacts, our approach, sensitivity analysis, as well as charts and tables summarising the results.

Topics

The PBO aims to publish Policy Costing Analyses to support the parliament and provide information on the fiscal implications in policy spaces that are frequently debated. The criteria that the PBO uses in determining policies for inclusion are:

1. Suitability for illustrating policy costing concepts
   The extent to which a policy area is well suited to illustrating important aspects of policy costings, such as fiscal impacts (including the complexities of budget accounting), distributional effects, behavioural responses, or budget interactions.
2. Potential to address common misunderstanding and address ambiguities
   Whether the policy space is one where fiscal impacts are commonly misunderstood or misinterpreted (for example, due to accounting treatments, interactions with existing programs, or indirect budget effects), and where analysis could improve understanding.
3. Relevance within the broader public policy debate
   Whether the policy area forms part of the broader parliamentary or public policy debate, including over time in the costing work of the PBO, and where PBO analysis could provide clarity through scalable, illustrative estimates of changes to key policy parameters, such as thresholds or rates.

Over time, the policies that are selected will aim to reflect a broad range of topics, covering different aspects of the budget and costings. These analyses do not imply endorsement of, or advocacy for, any particular policy.

The PBO welcomes suggestions on topics for Policy Costing Analyses, please email publications@pbo.gov.au.

When will Policy Costing Analyses be released and updated?

Policy Costing Analyses will generally not be updated for the release of new information, such as updates to the budget economic and fiscal parameters. While their stated impacts on the budget baseline will be estimated using the most-recent baseline, they would broadly apply to future updates to the baseline. However, Policy Costing Analyses may be re-released if there is a significant change in the policy space in the interim.