Economic Statistics in Australia: Challenges and Opportunities

Keynote Address to the 2015 Australian Conference of Economists, Brisbane (10 July 2015)

David W. Kalisch, Australian Statistician

Introduction

Good Afternoon, I would like to thank the organisers for this opportunity to speak on the role of the ABS in economic statistics. The ABS is a long time sponsor of the Conference of Economists and is very pleased to continue this support.

There is a long standing relationship, built on mutual dependency, between economists and the ABS. In 1933 the Commonwealth Statistician at the time, E.T. McPhee, stated:

¹ McPhee to Secretary to the Treasury, 12 April 1933, AA A571, 33/1625. The joint Parliamentary Committee on Public Accounts had recommended in its Report on the General Question of Tasmania’s Disabilities, the creation of a permanent body to study federal-state financial relations with ‘a qualified economist’ under the control of the Commonwealth Statistician.

This statement was made by McPhee in the context of supporting Roland Wilson as his successor. A year earlier, in 1932, Wilson, on appointment as Assistant Commonwealth Statistician, had become the first economist employed at a senior level in the Commonwealth Public Service. In 1936 Wilson succeeded McPhee as Commonwealth Statistician, a role he was to hold for the next 15 years. Many in this room would be aware of his distinguished career and many awards which followed. Very relevant to this forum was his appointment in 1988 as a Distinguished Fellow of the Economics Society of Australia.

This close partnership between economists and statisticians has continued. The tools of economists have been described as “devices [which] bring together people, knowledge, and material things in ways that turn the messy, endlessly complex world into a formal, calculative order that can be used productively”. Reflecting on some of the tools, it is evident that they are shared by both economists and statisticians. The most prominent example of this is the System of National Accounts, a conceptual framework of the economy developed through collaboration between economists and statisticians.

Contemporary understandings of the ABS

The range and quantity of statistics produced by the ABS has increased enormously over the years. In 2013-14 the ABS released 727 statistical products, there were 13.7 million visits to the ABS website and 2.8 million downloads of ABS data. These statistical products form the bedrock for economic analysis and decision making across both the private and public sectors in this country.

The ABS is often unreasonably seen like a utility company, where at a flick of a switch or the turn of a tap, many users expect the delivery of timely and robust statistics to support analysis.

Expectations are high and our users have long memories. I began my term as Australian Statistician in December last year and this was one of the first things made clear in my discussions with our users – they have high expectations of the ABS and can recite from memory the handful of major quality issues with our thousands of statistical releases across the last two decades.

The ABS understands the importance of these national statistics and we need to have a zero risk approach to the quality of our main economic indicators and key population statistics that are crucial to many important choices and decisions.

This robust and timely information must also be delivered efficiently, properly respecting taxpayer funds that fund these national statistics. We operate in the constrained fiscal environment across the public service.

Over the past fifteen years the Australian population has grown by about 25%, the economy (as measured by GDP volumes) by 60% and Commonwealth Government outlays, in real terms, by around 90%. So by any measure the statisticians’ job is getting bigger.

And over the same period the number of ABS staff has fallen by almost 25% - we have one quarter fewer employees now than we did in 1998. These figures provide some indication of the challenge the ABS has faced to measure a dynamic economic and social environment, and the greater efficiency of our processes.

The importance of information is increasingly being recognised, across government and elsewhere. In recognition of today’s changing information environment and the needs of government, business and community, the Government will invest $250 million over five years in the ABS for critically urgent upgrades to our business processes and ICT systems.

This significant Government investment will provide the infrastructure required by the ABS to continue delivering timely and quality economic, demographic, environmental and social statistics for Australia. Of interest to many in this room will be that this Budget funding also secures the production of annual Input-Output Tables. However aside from the IO Tables, the funding does not provide for any increases to the ABS work program.

We expect that the investment will reduce our costs, help manage some quality risks in our processes, and position the ABS to improve the range of potential statistics the ABS is able to provide in the future. However, at this stage, any new statistical enhancements will only be possible through the provision of additional funding or through substitutions within our existing statistical program. Key users of information may need to more directly contribute to ABS resources if they want particular data enhancements.

The historic $250m Government investment in the ABS’ core infrastructure is an important step, but the ABS must go much further in transforming to meet the challenges of remaining relevant. We are conscious that the information needs of our users are constantly evolving, and that developments in information technology provide exciting new opportunities.

We need to better recognise the information resource and expertise of the ABS is a central part of Australia’s key infrastructure that, if used wisely, can contribute to a more informed community, good decisions, growth and productivity enhancements, and the efficient operations of markets.

The ‘functions of government’ and ‘complexity of social structures’ demand the continual expansion of statistical inquiry; and certainly there has been no reduction in the ambitions or interests of economists …….

At the ABS, we are up for, and committed to, meeting the challenges which confront us. In meeting these challenges I see three areas of focus for the ABS:

1. Ensuring continued delivery of robust, timely data

2. Increasing the level of innovation in order to meet new and emerging needs

3. Improving the availability & use of data through building strong partnerships

I will briefly discuss each of these areas.

1. Continued delivery of robust, timely data

The ABS produces a very large range of statistics on a regular ongoing basis. This data provides the bedrock on which Australians build an understanding of their economy and society. Key macroeconomic statistics on income, demand, production, prices and employment inform decisions on fiscal and monetary policy. Demographic and population data inform decisions on investment, both public and private. Household income, consumption and wealth data inform the debate on fairness and opportunity. Environment accounts inform debate on sustainability. And so on.

Rightly, the users of this data see any interruption to the timeliness or quality of this data as unacceptable. The data are embedded in the setting of fiscal and monetary policy, they are critical to informing social and economic policy, they are essential to the efficient operation of markets.

The challenge faced by the ABS is to continue to provide this data in a resource constrained public sector environment, and in a world of constant economic and social change which measurement must respond to. The economy is, to quote Alan Greenspan, “getting lighter”. An ever growing portion of GDP doesn’t weigh anything – services of all descriptions, online information and content, intangible assets and so on. All of which provides measurement challenges and requires changes to measurement approaches.

To confront these challenges we need to not only change our measurement approaches. We also need to update and adopt the underlying conceptual frameworks and standards. This infrastructure, maintained internationally, is critical to the production of coherent and robust statistics. These processes seek to balance how measurement needs to keep up with changes in the real and financial dimensions of the economy with the desire by many users to maintain the comparability of time series.

Even in our continued delivery of ongoing data there is no sitting still. Expectations are that we will deliver data with improved timeliness, with greater frequency and reduced cost, and with improved (or at least consistent) quality.

The recent decision by government to invest in our infrastructure provides an opportunity to update our systems, to move to a more flexible and adaptive environment. However, we are conscious of the need to ensure continuity of service, to maintain time series and other quality requirements through this period.

2. Increasing Innovation

Continuing to do the same thing will not be sufficient into the future; even if that same thing involves being just that bit quicker in delivery, or that much more efficient. We are in the information age, there are new opportunities, there are new needs, and there are increased expectations.

The extent to which innovation is already occurring within the ABS is not fully appreciated. This is not surprising. There is little time or opportunity for users to ‘look under the bonnet’ of statistical production, and the ABS has not drawn attention to innovative developments as well as it should have.

I will give a taste of this innovation with two examples, noting that there are many more developments underway at the ABS:

The ABS has the capability to pursue greater improvements to what it does and how it works. This rate of innovation needs to accelerate, in order to seize the new information opportunities which are emerging; and to meet the emerging policy questions and dilemmas facing business and the wider community. This challenge requires the ABS to adapt its own processes and operations to ensure we are able to produce new information products.

The ABS is embarking on transformation. This transformation includes a refresh of our infrastructure but it is not limited to just infrastructure. We are re-assessing the way in which we operate – our process for conducting surveys, the administrative and transactional data sources we utilise, the manner in which this data is processed, linked and disseminated. We are seeking to utilise the government investment in the ABS to leverage new information opportunities and deliver a range of outcomes: reduced respondent burden, more efficient operations, a more flexible and responsive statistical program.

3. Improving the availability & use of data through building strong partnerships

In addition to infrastructure and operations this transformation must also address cultural change in the ABS.

If we overly constrain access to statistics and the underlying data sets, and therefore insights which follow, we are potentially limiting the capacity to realise our country’s potential. A robust national statistical system is as much a component of essential national infrastructure as our transport networks and utilities.

I am aware that there is a widely held view that the ABS has not done enough to make data available, that we haven’t built relationships which enable the full potential of our data to be realised. I held this view before I joined the ABS, and I would note that we have already made a number of changes over the past six months.

Our legislation (largely dating back to the mid-1970s) does have some clear constraints, but it also expects that we maximise the use of data balanced against privacy requirements. We have the opportunity to develop workable solutions within our existing legislative framework, that make use of contemporary technology and confidentialisation tools. That process is underway now, and tangible improvements have already been achieved.

The Government has also given us the opportunity to come back with proposals to revisit the legislative framework for the ABS – an update not just for today but also for coming years. As with any legislative change, this will not be a quick process as it is critical to get this right including through drawing on effective consultation with our extensive stakeholders. Nonetheless, it is an important step in ensuring the ABS is able to meet the challenges of the future.

A particular focus will be on access to micro-data. This data offers enormous analytical opportunities but any access arrangements must be navigated with care in order to respect the confidentiality and privacy expectations of our citizens and data providers. We intend to navigate this path, to find the right balance between realising the potential of data and respecting the legitimate privacy concerns of the community, using new technology and statistical tools to help deliver this balance.

The ABS sees itself as a key player in the elaborate and inter-connected information environment. We are looking to establish more and better value partnerships that will develop value to the ABS and also to our partners. We seek to be a more open and engaged organisation.

In conclusion, the ABS has a 110 year history, tracing its beginnings back to the formation of the Commonwealth Bureau of Census and Statistics in 1905. Over this time it has confronted many challenges and been required to transform on numerous occasions.

I am committed to leading the organisation through the next set of challenges and transformations. The ABS will continue to provide the extensive range of robust and timely information which guides economic decision making. But it also needs to be an organisation which is more innovative, seizing opportunities and meeting both contemporary and emerging information needs. And an organisation which better values and pursues partnerships to fully realise the potential of the nation’s data.

Thank you.