We now appear close to having a parliamentary budget office established, a welcome and overdue reform first advanced by Malcolm Turnbull in his 2009 Budget reply speech, and derived from the US Congressional Budget Office. Tony Abbott retained the policy and took it to the election, Bob Brown supports it, and at least Rob Oakeshott has also expressed support for it.

But it might pay to think a little about what a PBO would entail and address some of the high expectations of it.

Part of the push for a PBO is coming from right-wing commentators like Sinclair Davidson and the The Australian’s clutch of braying reactionaries, who want to establish an alternative source of economic advice to Treasury. This is only partly because of the now-routine, unevidenced smear of partisanship directed at Treasury, which may yet have some unlooked-for long-term consequences for future politicians.

Mainly, it’s because reactionaries loathe Treasury for failing to follow their own crackpot theories in responding to the GFC — policies that would have thrown hundreds of thousands of Australians onto the dole queues. In this right-wing logic, Treasury — which Andrew Robb suggested last week was on a par with a mid-tier accounting firm — has proven to be infected with socialist ideas about stimulating the economy to keep people employed, or taxing pollution; having an independent source of economic advice will ensure that we hear nothing but discussion tax and spending cuts and reliance on monetary policy.

Nevertheless, a PBO will be a significant addition to economic and fiscal debate and break down some of the power of incumbency held by Australian governments — assuming it is resourced properly. The Coalition proposed a PBO costing $2 million a year. That would get you 10 mid-ranking public servants sitting in standard APS accommodation, and no spare change for IT or consultancies, and no managers.

Remember that in having to develop its own costings and modelling, the PBO will have to replicate in miniature sections of the Commonwealth bureaucracy. For example, to properly estimate healthcare costs it will need someone with an in-depth understanding of, for example, take-up of new MBS items and how that interacts with other items. A similar issue applies to transfer payments — the Coalition’s education rebate policy was exposed as underfunded during the election campaign due to a failure to properly model take-up.

Such people already work in the line departments and in the Department of Finance, and they could be seconded on an as-needed basis to the PBO. But the home portfolios are unlikely to be offering their best and brightest, and presumably the point of the PBO is to develop costings independently of the existing public service, otherwise what’s the point?

The PBO will also need to develop its own economic forecasts, otherwise its budget forecasts — which obviously rely on economic growth and terms of trade — will be dependent on Treasury forecasts. Developing a miniature macro-economic modelling capacity — or buying it in from external sources like Monash University’s Centre of Policy Studies — will be expensive.

An absolute barebones PBO would be led by a Band 2 SES officer, have a couple of Band 1s, several managers, and a mix of around 15 trained economists or accountants covering the key spending areas. There’d also be a couple of support staff. Let’s assume, unrealistically, they could piggyback off the existing Department of Parliamentary Services HR and IT set-up without any additional costs. Setting them up in normal APS accommodation, and giving them, say, a $1.2 million annual consultancy budget to buy in expertise, would cost not much under $6 million annually.

And if you think all that’s bureaucratic empire-building, the Congressional Budget Office employs around 250 economists and receives over $US45 million a year.

If you actually wanted a PBO that could respond relatively quickly to requests from individual opposition and cross-bench MPs to cost policies, conduct modelling and generally provide economic and fiscal advice, you’d have to bulk it up with more money to hire consultants to do the work — or have full-time staff on stand-by for such requests. It is likely that oppositions and minor parties would heavily exploit this free resource to develop policies and attack governments. To do that, you wouldn’t get much change from $10 million a year.

To keep costs down and bolster the responsiveness of the new office, it might actually be beneficial to house the PBO with an established, independent economic outfit like the Productivity Commission, say, rather than dumping it on parliament and letting it fend for itself. The Coalition might want to think about doing that rather than punishing the PC by replacing it with its sublimely stupid ‘Productivity and Sustainability Commission’.

The costings aren’t the only unrealistic expectations about a PBO. The idea that an independent source of economic and fiscal advice would provide the last word on policy and economic debates is fanciful. The Congressional Budget Office is under constant attack. It was attacked from the Left for being ‘opposed to health care reform’ last year. It was attacked from the US equivalents of Sinclair Davidson for pointing out how much US government stimulus had added to the US economy. For every CBO report, there’s an interest group with its own modelling to disprove it.

After all, modelling is simply calculations based on set of assumptions. Who chooses the assumptions, and on what basis? Would a PBO have the capacity to footnote its work for an opposition, noting that its assumptions were flawed and the modelling it requested was unrealistic? Would requests be confidential? Would PBO offices have to front up to Estimates to be grilled on their work?

Or would it act like so many existing economic consultancies here in Canberra, which simply vomit out whatever they’re paid to produce by their clients, regardless of how absurd it is?

In truth, economic modelling has been systematically debauched over the last two decades by interest groups, the media, governments and, most of all, economic consultancies. The most parasitic industry in Canberra, the one that adds least to public welfare, isn’t lobbying — it’s economic consultants. Nearly all of them have abandoned any pretence of intellectual rigour in favour of repeating what clients want to hear. You can buy modelling to demonstrate that black is white, up is down and the mining industry isn’t lying every time it lifts its snout out of the trough long enough to whine.

One more set of numbers from an ‘independent’ source isn’t going to change matters a great deal, but it’s a start.