EXPLANATORY NOTES
INTRODUCTION
1 This release presents statistics for a selection of topics in Australian business as collected by the 2016-17 Business Characteristics Survey (BCS). Statistics included are additional to those outputs from the BCS released earlier this year in Summary of IT Use and Innovation in Australian Business, 2016-17 (cat. no. 8166.0) and Innovation in Australian Businesses, 2016-17 (cat. no. 8158.0).
2 The BCS is an annual survey and it is the vehicle for the ABS' Integrated Business Characteristics Strategy (IBCS). The strategy integrates the collection and quality assurance of data required for input into both the ABS' Business Characteristics Longitudinal Statistics (BCLS) and the production of point in time estimates for; use of information technology; innovation; and a broad range of other non-financial business characteristics.
3 A key part of the IBCS is the production of annual use of IT and innovation indicators, with a more detailed set of items for each of these topics collected every second year (i.e. in alternating years). The 2016-17 BCS collected detailed information relating to innovation undertaken by Australian businesses.
STATISTICAL UNITS USED
4 The Economics Unit Model is used by the ABS to determine the structure of Australian businesses and other organisations. The model consists of:
The Enterprise Group (EG)
Legal Entities (LEs)
Type of Activity Units (TAUs)
Location Units
5 Businesses contributing to the estimates in this publication are sourced from the ABS Business Register (ABSBR), and are selected at either the Australian Business Number (ABN) unit or the Type of Activity Unit (TAU) level, as described below.
6 In the BCS the statistical unit used to represent the majority of businesses, and for which statistics are reported, is the ABN unit. The ABN unit is the business unit which has registered for an ABN, and thus appears on the ATO administered Australian Business Register (ABR). These units are suitable for ABS statistical needs when the business is simple in structure, and are generally referred to as the non-profiled population. In these instances, one ABN equates to one statistical unit.
7 For more significant and diverse businesses where the ABN unit is not suitable for ABS statistical needs, the ABS maintains its own units structure through direct contact with the business, and the statistical unit used is the TAU. A TAU comprises one or more business entities, sub-entities or branches of a business entity within an Enterprise Group that can report production and employment activities. When a minimum set of data items is available, a TAU is created which covers all the operations within an industry subdivision (and the TAU is classified to the relevant subdivision of the Australian and New Zealand Standard Industrial Classification (ANZSIC)). These units are generally referred to as the profiled population.
CLASSIFICATION OF UNITS
8 ANZSIC is used to classify the industry in which the TAU or ABN has productive activity. Further information on this classification can be found in Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (Revision 2.0) (cat. no. 1292.0).
9 SISCA provides a framework for dividing the Australian economy into institutional sectors. Further information on this classification can be found in Standard Economic Sector Classifications of Australia (SESCA), 2008 (Version 1.1) (cat. no. 1218.0).
SCOPE AND COVERAGE
10 The scope of the estimates in this publication consists of all business entities in the Australian economy, except for:
SISCA 3000 General government
SISCA 6000 Rest of the world
ANZSIC06 Division O Public administration and safety
ANZSIC06 Division P Education and training
ANZSIC06 Groups 624 (Financial asset investing) and 633 (Superannuation funds)
ANZSIC06 Groups 954 (Religious services) and 955 (Civic, professional and other interest group services)
ANZSIC06 Subdivision 96 Private households employing staff
11 The frame for the BCS is a subset of the ABSBR and includes employing businesses only. These are defined as those businesses which register for the ATO's Pay As You Go Withholding (PAYGW) scheme. It is not unusual for some of these 'employing businesses' to have zero employment at various times during the reporting period. The frame is updated quarterly to take account of new businesses, businesses which have ceased employing, changes in employment levels, changes in industry and other general business changes. Businesses which have ceased employing are identified when the ATO cancels their ABN and/or PAYGW registration. In addition, businesses with less than 50 employees, which did not remit under the PAYGW scheme in each of the previous five quarters, are removed from the frame. The estimates in this publication include an allowance for the time it takes a newly registered business to be included in the survey frame.
SURVEY METHODOLOGY
12 The sample design for this survey is complex due to it serving dual purposes: collection of characteristics data for the ABS' BCLS; and production of point in time estimates. While there are scope differences between the BCLS and point in time estimates, the intention is to maximise the number of businesses selected for which data collected can contribute to both purposes. More information about releases for the BCLS is provided in Explanatory Note 28.
13 Collection of data included in this release was undertaken based on a random sample of approximately 7600 businesses via online forms or a mail-out questionnaire. The sample was stratified by industry and an employment-based size indicator. All businesses on the ABSBR identified as having 1000 or more employees were included in the sample. The 2016-17 BCS was dispatched in early October 2017.
14 As in previous years, the sample design of the 2016-17 BCS does not include state or territory as part of stratification design.
REFERENCE PERIOD
15 The reference period for most of the characteristics items included in the 2016-17 BCS is during the year ended 30 June 2017 or as at 30 June 2017. Financial data relates to the most recent financial year ended on or before 30 September 2017.
DEFINING "INTERNET COMMERCE"
16 In the BCS, the ABS uses the Organisation for Economic Co-operation and Development (OECD) narrow definition of e-commerce transactions when collecting data on internet orders and internet income. The definition states that "an internet transaction is the sale or purchase of goods or services, whether between businesses, households, individuals, governments, and other public or private organisations, conducted over the internet. The goods and services are ordered over the internet, but the payment and the ultimate delivery of the good or service may be conducted on or off-line" (i.e. the commitment to purchase is made over the internet). In Australia, orders placed or received via manually typed email are included.
17 Internet income is defined as income resulting from goods and services ordered over the internet where the commitment to purchase is via the internet. Excluded from these measures are orders, payments or transactions for which the commitment has been made using other arrangements. The ABS collects these data by asking businesses to estimate what percentage of their income from sales of goods or services can be attributed to orders received via the internet. The estimated value of internet income is derived by applying the percentage to business income from sales of goods or services. This method of collecting internet income has been put in place to address reporting errors previously observed when the actual dollar figure was requested.
18 The definition of internet income used in BCS does not align with the ABS Australian System of National Accounts (SNA). The internet income estimate in BCS is generally higher, as this value is attributed to business income gained through all orders received via the internet, including all business to business and business to consumer orders. The internet income estimate for SNA is a measure of production or output, which does not include all business to business and business to consumer orders but captures only the value-added component of all goods and services sold over the internet.
DEFINING "INNOVATION"
19 The 2016-17 BCS draws on the conceptual definitions and guidelines included in the 'Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data' (Third Edition, 2005). This manual provides a framework for the collection of innovation statistics and specifies the definitions of innovating businesses and innovation-active businesses that are used by the ABS. The BCS draws on this manual for the questions used in the BCS and in the presentation of outputs from the survey.
20 Key indicators of innovation include: measures of business innovation (innovating, innovation-active); types of innovation (goods or services, operational processes, organisational/managerial processes, marketing methods); and status of innovation (introduced, still in development, abandoned). Definitions for each of these measures of business innovation are provided in the Glossary.
BUSINESS COUNTS IN THIS RELEASE AND COMPARABILITY WITH OTHERS PUBLISHED BY THE ABS
21 Estimates of the number of businesses operating in Australia can be derived from a number of sources within the ABS. They may relate to a particular point in time or may be presented as an average annual figure. However, these estimates will not always show the same results. Variations will occur because of differing data sources, differing scope and coverage definitions between surveys, as well as variations due to sampling and non-sampling error. More information about business counts can be found in the Information Paper: A Statistical View of Counts of Businesses in Australia, Jun 2005 (cat. no. 8162.0).
22 The BCS is not designed to provide high quality estimates of numbers of businesses for any of the output classifications (for example, employment size or industry) and the number of businesses in this publication are only included to provide contextual information for the user. The estimate of the total number of businesses may not equal to the sum of each employment size range due to rounding of business counts to the nearest thousand. A more robust source of counts of Australian businesses is available from Counts of Australian Businesses, including Entries and Exits, Jun 2013 to Jun 2017 (cat. no. 8165.0).
OUTPUT CLASSIFICATIONS
23 For output purposes, businesses are classified to employment size ranges based on actual data reported in the survey. For industry output, the classification is drawn from information held about the business on the ABSBR.
AVAILABILITY OF STATE/TERRITORY OUTPUT
24 As indicated in Explanatory Note 14, the sample is designed to produce efficient estimates for industry and employment size, therefore it does not provide quality estimates for states/territories. As estimates may not reflect change over time for a selected state/territory or adequately enable comparison between states/territories, they are not available.
MOST RECENT RELATED RELEASES
25 The most recent issue of ABS releases related to demography of Australian business is:
Counts of Australian Businesses, including Entries and Exits, Jun 2013 to Jun 2017 (cat. no. 8165.0)
26 The most recent issues of other ABS releases related to innovation in business in Australia are:
Innovation in Australian Businesses, 2016-17 (cat. no. 8158.0)
Research and Experimental Development, Businesses, Australia, 2015-16 (cat. no. 8104.0)
Research and Experimental Development, Higher Education Organisations, Australia, 2016 (cat. no. 8111.0)
Research and Experimental Development, Government and Private Non-Profit Organisations, Australia, 2016-17(cat. no. 8109.0)
27 The most recent issue of ABS releases related to IT Use and Innovation in Australian Business are:
Summary of IT Use and Innovation in Australian Business, 2016-17 (cat. no. 8166.0)
Innovation in Australian Businesses, 2016-17 (cat. no. 8158.0)
Internet Activity, Australia, December 2017 (cat. no. 8153.0)
BUSINESS CHARACTERISTICS LONGITUDINAL SURVEY - CONFIDENTIALISED UNIT RECORD FILE
28 The primary outputs for the BCLS are Confidentialised Unit Record Files (CURFs). The BCLS design is comprised of panels (or waves) with each panel representing the entire population of in-scope small and medium businesses at the time of initialisation. Each panel is surveyed for five years. The most recent edition of the BCLS CURF was released 20 July 2016 and contained data for the five year period ended 30 June 2014. The CURF is available via the Remote Access Data Laboratory which can be accessed via the ABS website (cat. no. 8168.0.55.001).
ROUNDING AND OTHER ADJUSTMENTS
29 Estimates of proportions have been calculated using unrounded figures, but are shown in the tables rounded to one tenth of a percentage point. Where figures have been rounded, discrepancies may occur between the sum of the component items and the total. Figures presented in the commentary have been rounded to the whole percentage.
ACKNOWLEDGEMENT
30 The ABS acknowledges the ongoing contribution made by the Department of Industry, Innovation and Science towards the conduct of the BCS and the collection of innovation statistics.
31 ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated: without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.
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