The Charter of Budget Honesty Act is a piece of legislation passed in the 1990s that sets out the expectations that Parliament has about what documents will be provided, who will produce them and on what basis they will be provided.
For example, they specify—and this is relevant to the fact that we're now in a “caretaker” period here—that 10 days after the issuing of the writs for an election, the secretaries of the Department of Treasury and the Department of Finance will produce an economic statement and a fiscal statement, and they specify how budgets will be produced, in a very high-level sense, and ex-post reporting. For example, it is specified that we will have an annual consolidated financial statement for the whole of government and also monthly financial statements. It's a piece of legislation that does not have any punitive measures to it, but it is a statement, in many ways, of Parliament's expectations in this area.
It was introduced as part of the same wave of reform that introduced accruals to our budgeting system. Around that time—I call that the second wave—we also revised the financial legislation. The financial legislation was changed, the Charter of Budget Honesty Act was put in place, and the accruals framework was put into place.
We have an accruals framework. We sometimes hear that we've moved from an accruals framework, and we struggle to recognize ourselves in that. We produce a full set of accrual financial statements for every document we produce. We have an operating statement, a balance sheet, and a cash flow statement. We have the notes that go with that, all produced on an accrual basis.
What people are sometimes talking about is the relationship between that accrual information and the appropriation framework. We did include, in the late 1990s, reforms in terms of appropriations on a full accrual basis to agencies. That's just the departmental funding, if you like; that's the bit that helps government to run. That's not programs. That included, for example, funding for depreciation, which is an accrual concept.
As we've gone through, our experience is that some of these elements haven't really met their full intent. The inclusion of depreciation in agency financing was a key area. We've decided to centralize that, effectively, and to manage it through a normal allocation process of government. That means people only get appropriated each year for the cash they require in order to meet their capital needs.
We still retain accrual appropriations as far as they relate to, for example, leave liabilities, which is also an accrual concept, but depreciation is not included in our system anymore. I think that is the main departure from the accrual appropriation framework.
I would still say that we run accrual appropriations.