EXPLANATORY NOTES


INTRODUCTION

1 The statistics presented in this release have been compiled from data collected by the Australian Bureau of Statistics (ABS) in the Information and Communication Technology (ICT) industries survey.

2 Data were supplied, in respect of the year ended 30 June 2007, by Australian businesses from industries considered to be the main industries involved in the production and distribution of ICT goods and services in Australia. (Refer to the Scope section of these Explanatory Notes for further detail.) However, it is acknowledged that significant ICT activity is also carried out by some types of businesses not included in the scope of the survey. As such, the estimates in this release do not represent all ICT activity carried out in Australia.

3 The ICT industries survey is part of the overall ABS program of economy wide statistics.

4 The 2006-07 cycle of the survey represents the first to collect and compile ICT industry data using the 2006 edition of the Australian and New Zealand Standard Industrial Classification (ANZSIC06).

5 This cycle also represents the first for which non-employing businesses were included in the scope of the survey. Refer to paragraph 7 for further detail.


SCOPE

6 The scope of the ICT industries survey draws on, but is not identical to, the currently accepted OECD ICT industries definition. The survey scope is based on a set of goods and services descriptions that are of relevance in the Australian context. It draws together a number of standard ANZSIC industries that specialise in ICT activity. For the 2006-07 survey, these industries were reviewed to accommodate implementation of ANZSIC06 and have been agreed by major policy and industry organisations. The OECD ICT industries definition includes a wider range of goods and services produced than the Australian definition and, consequentially, industries involved in ICT activity.

7 The survey scope for 2006-07 was extended to include non-employing businesses. For efficiency purposes, this was restricted to include only those which contribute to the top 97.5% of total turnover for all non-employers in the ICT sector, based on previously submitted Business Activity Statement (BAS) information to the Australian Tax Office (ATO).

8 The scope of the 2006-07 survey included non-employing businesses (as per paragraph 7 above) and all employing businesses recorded on the ABS Business Register (ABSBR) and classified to the following ANZSIC06 classes:

• 2421, Computer and electronic office equipment manufacturing
• 2422, Communication equipment manufacturing
• 2429, Other electronic equipment manufacturing
• 3492, Computer and computer peripheral wholesaling
• 3493, Telecommunication goods wholesaling
• 3494, Other electrical and electronic goods wholesaling
• 5420, Software publishing
• 5801, Wired telecommunications network operation
• 5802, Other telecommunications network operation
• 5809, Other telecommunications services
• 5910, Internet service providers and web search portals
• 5921, Data processing and web hosting services
• 5922, Electronic information storage services
• 7000, Computer system design and related services
• 9422, Electronic (except domestic appliance) and precision equipment repair and maintenance

9 The scope excluded businesses classified to the General Government sector but includes government owned Public Trading Enterprises.

10 As a consequence of reviewing survey scope when implementing ANZSIC06, a decision was made to exclude the industry class associated with the manufacture of electric cable and wire due to the relatively small contribution it made to the Australian ICT sector. This industry (Class 2431 under ANZSIC93) was previously included in ICT industries survey scope.

11 The previous issue of this release included summary of operations data for the Recorded media manufacturing and publishing industry (ANZSIC93 class 2430). These data were presented separately from the main ICT industry estimates due to being outside the OECD definition of ICT industries. Implementation of ANZSIC06 means the publishing activity of the industry is now included in scope of the main ICT industry. The reproduction of recorded media activity is a separate class (1620 under ANZSIC06). Results for class 1620 are not presented in this release due to the small contribution it made to the ICT sector.


CHANGES TO SCOPE AND BRIDGING ESTIMATES

12 Estimates presented in this release are based on ANZSIC06 and include in-scope non-employing businesses. Summary estimates for 2006-07 have been recompiled to match previous survey scope as closely as possible (i.e. presented on an ANZSIC93 basis and excluding non-employers) and are referred to as bridging estimates. These bridging estimates are given in Appendix - Changes to scope.

13 Further information about the impact on ICT industries survey scope resulting from moving from ANZSIC93 to ANZSIC06 are also provided in the Appendix.


COVERAGE

14 The frame for the ICT industries survey is taken from the ABSBR, which provides a list of employing businesses, primarily based on registrations to the ATO Pay As You Go Withholding (PAYGW) scheme. 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 Australian Business Number (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 release include an allowance for the time it takes a newly registered business to get on the survey frame. There were approximately 36,000 businesses in-scope of the ICT industries survey on the ABSBR in June 2007 when the survey sample was taken.


STATISTICAL UNITS USED

15 Statistical units are those entities from which statistics are collected, or about which statistics are compiled. In ABS economic statistics, the statistical unit is generally the business. The ABSBR is used to store information about statistical units and is used to create the frames for most ABS economic collections.

16 The ABS uses an economic statistics units model on the ABSBR to describe the characteristics of businesses, and the structural relationships between related businesses. Within large, complex and diverse business groups, the units model is used also to define reporting units that can provide data to the ABS at suitable levels of detail.

17 This units model allocates businesses to one of two sub-populations:

• Businesses with a simple structure - Most businesses and organisations in Australia need to obtain an ABN. They are then included on the whole-of-government register of businesses, the Australian Business Register (ABR), which is maintained by the ATO. Most of these businesses have simple structures; therefore, the unit registered for an ABN will satisfy ABS statistical requirements. For these businesses, the ABS has aligned its statistical units structure with the ABN unit. The businesses with simple structures constitute the ATO maintained population (ATOMP), and the ABN unit is used as the statistical unit for all ABS economic collections.
• Businesses with a complex structure - For the population of businesses where the ABN unit is not suitable for ABS statistical requirements, the ABS maintains its own units structure through direct contact with the business. These businesses constitute the ABS maintained population (ABSMP). This population consists typically of large, complex and diverse businesses. For businesses in the ABSMP, statistical units comprise the Enterprise Group, the Enterprise and the Type of Activity Unit (TAU). The range of activities across the Enterprise Group can be very diverse. The TAU represents a grouping of one or more business entities within the Enterprise that cover all of the operations within an industry subdivision and for which a basic set of financial production and employment data can be reported.

18 Together, these two sub-populations (of ABN units and TAUs) make up the ABSBR population, from which the sample of businesses for the ICT industries are taken.


SURVEY METHODOLOGY

19 Collection of ICT industries survey data was undertaken based on a random sample of 3,900 businesses and conducted mainly via mail out questionnaires. The sample was stratified by state, industry class and employment size. All businesses on the survey frame identified as having 200 or more employees were included in the sample.

20 The 2006-07 survey estimation methodology used auxiliary information sourced from ATO BAS data to improve the accuracy of estimates produced from the survey. The Income Tax Assessment Act 1936 provides for the ATO to pass information to the Australian Statistician for the purposes of the Census and Statistics Act 1905.


BUSINESS COUNTS

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 (cat. no. 8162.0).

22 The ICT industries survey 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. Users should also note that the estimates in this publication are only for the population of businesses in scope of the ICT industries survey. A more robust source of counts of Australian businesses is available from Counts of Australian Businesses, including Entries and Exits, Jun 2003 to Jun 2007 (cat. no. 8165.0).


FINANCIAL DATA

23 While the survey reference period is the 12 months ended 30 June 2007, some businesses were unable to supply information on this basis and instead used an accounting period for which financial data could be provided. Such businesses may have made a substantial contribution to some of the estimates.

24 Financial data presented incorporate all units in-scope of the ICT industries collection that were at the production stage at any time during the year. They also include any temporarily inactive units, i.e. those units which were in the development stage or which were not in production, but which still existed and held assets and liabilities and/or incurred some non-operating expenses (e.g. depreciation, administration costs).


EMPLOYMENT DATA

25 Employment estimates relate to the number of persons employed by the business during the last pay period in June 2007. As such, it is possible for businesses classified on the ABSBR as employing, to report nil employees. It is also possible for estimates expressed as 'per employee' to be affected by any fluctuations in employment during the reference period.

26 Employment size ranges used for output purposes may differ from those used in other ABS releases. Ranges in this release have been used to maximise the amount of data available by employment size.


INDUSTRY CLASSIFICATION USED FOR OUTPUT PURPOSES

27 For the ICT industries survey, the ANZSIC class recorded for businesses on the ABSBR is only used for the purpose of survey selection. A business may be allocated an alternative ANZSIC class for the purpose of output if an error in ABSBR ANZSIC is identified through processing and quality assuring the survey data. This may result in differences between industry data published for the in-scope industries in this release and industry data that may be published in other ABS releases such as Australian Industry (cat. no. 8155.0) and Manufacturing Industry, Australia (cat. no. 8221.0).

28 The updating of industry class for output purposes has impacted on data quality: 8% of businesses selected were made out-of-scope of the ICT industries survey; and a further 13% of businesses selected were still in-scope but were found to belong to a different ANZSIC class. This has resulted in an increase in the sampling variability of estimates. For more information about the impact of sampling variability on the estimates, please refer to the Technical Note.

29 No attempt is made to adjust for businesses on the ABSBR who are classified to an ANZSIC class not within the scope of the ICT industry survey but which would be in-scope based on their sources of income. The impact of this on estimates is unknown.


REMOVAL OF THE ICT SPECIALIST CLASSIFICATION

30 In previous issues of this release, a distinction was made in survey outputs between ICT specialists and non-specialists, with ICT specialists being those businesses which derived more than 50% of their total income from the sale of ICT goods and services. Furthermore, some outputs were subset to only include ICT specialists. Over time, the difference in estimates for ICT specialists compared to all businesses in the ICT industry declined in significance. With the implementation of ANZSIC06, which included review of survey scope at the ANZSIC class level, further reduction in differences were expected, as much of the non-ICT activity that was in-scope under ANZSIC93 is now out of scope. As such, in consultation with key ICT data users, a decision was made to remove the ICT specialist classification from survey outputs.


STATE AND TERRITORY DATA

31 Data were collected from the Australia-wide operations of each organisation. To enable state and territory statistics to be compiled and comparisons undertaken, businesses which operated in more than one state or territory were asked to provide a state dissection of total employment, wages and salaries, and sales of goods and services.


COMPARISONS WITH OTHER ABS STATISTICS

32 Annual industry data for the ANZSIC classes in-scope of the ICT industries survey are included in Australian Industry (cat. no. 8155.0) and Manufacturing Industry, Australia (cat. no. 8221.0). There are important differences between the statistics presented in these catalogues compared to this release and users should exercise caution when making comparisons between these estimates.

33 One reason the three sets of estimates vary relates to the use of different industry coding practices. For the Australian Industry and Manufacturing Industry, Australia releases, businesses are coded to ANZSIC industry classes on the basis of the activity reported to the ATO when they registered for an ABN or, for more complex businesses, information reported directly to the ABS (see paragraph 17). On the other hand, ICT industries survey estimates for industry classes are based on detailed income data reported in the survey. Refer also to paragraph 24.

34 This release supplements the annual industry summary statistics by providing a detailed examination of the structure and performance of businesses involved in selected ICT industries.


COMPARISONS WITH PREVIOUS STATISTICS

35 A range of changes were made to the 2006-07 ICT industries survey from the previous cycle, including:

• changes to survey scope;
• improvements to the survey questionnaire;
• changes to editing and quality assurance processes;
• changes to estimation methodology; and
• removal of the ICT specialist classification for output purposes.

36 As a consequence of these changes, data presented in this release are not directly comparable to those in previous issues.


RELATED PUBLICATIONS

37 The most recent issue of other ABS catalogues on the use and production of ICT in Australia are listed below:

Business Use of Information Technology, Australia, 2005-06 (cat. no. 8129.0)
Government Technology, Australia, 2002-03 (cat. no. 8119.0)
Household Use of Information Technology, Australia, 2006-07 (cat. no. 8146.0)
Internet Activity, Australia, June 2008 (cat. no. 8153.0)
Summary of IT Use and Innovation in Australian Business, 2006-07 (cat. no. 8166.0)
Use of Information Technology on Farms, Australia, 2004-05 (cat. no. 8150.0)

ABS DATA AVAILABLE UPON REQUEST

38 As well as the statistics included in this and related releases, the ABS may have other relevant data available on request and for a charge. Inquiries should be made to the National Information and Referral Service on 1300 135 070.


ROUNDING

39 Where figures have been rounded, discrepancies may occur between totals and the sums of the component items. Proportions, ratios and other calculated figures shown in this release have been calculated using unrounded estimates and may be different from, but are more accurate than, calculations based on the rounded estimates.