1383.0.55.001 - Measures of Australia's Progress: Summary Indicators, 2009
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 30/04/2009
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A FRAMEWORK FOR MEASURING PROGRESS
This paper describes the framework used by the ABS to underpin MAP. We have used a framework built on social, economic and environmental domains to help in selecting measures of progress. Like frameworks in general, the MAP framework is a tool to support statistical measurement, data analysis and analytical commentary. This framework has evolved slightly since the first report in 2002 as we have sought better ways to combine interrelated and sometimes overlapping dimensions into a coherent presentation of progress. Frameworks have two main purposes. At one level, frameworks can break the world into manageable pieces by providing a map of the conceptual terrain surrounding an area of interest. In other words frameworks can define the scope of an enquiry, delineate the important concepts associated with a topic and organise these into a logical structure. Rather than asking 'how should we measure progress?', we can use a framework to consider, separately, ways to measure progress in social, environmental and economic concerns. When considering progress, the choice of a view is largely a matter of convenience; the view is a tool to help choose or present areas of progress and progress indicators, but it does not have to purport to be a model of a world in which society, the economy and the environment are separated. Such a framework can help in the preparation and presentation of a publication. It can also begin to set out the links between the various dimensions of progress: paid work for example is important to the economy and to people's sense of self-worth. At another level, frameworks can actually aim to provide a theory of the way the world works. Such frameworks set out to demonstrate how the various aspects of progress fit together and relate to one another. Such theoretical frameworks often require value-judgements about what overall progress means. There is no one international framework on which everyone agrees. Some international statistical initiatives, such as the United Nations' Human Development Index (HDI), consider only a very few issues of concern common to all nations. Others, like the proposed set of Statistics for sustainable development developed by the joint working group coordinated by the United Nations Economic Commission for Europe, use a larger number of issues. But it is unlikely that any international initiative will include all aspects that are important to any one country. Just as there is no one view of progress, there is no single framework. We have listened to many views when developing this publication, and recognise the divergence of opinion that exists. We welcome comment and feedback from readers to assist in evolving the ideas and framework presented here as the basis for the way we have chosen to measure progress in Australia. BACK TO TOP GENERAL APPROACH: THREE KEY QUESTIONS This ABS framework is built around three fundamental questions.
QUESTION 1: WHAT IS 'PROGRESS'? Throughout this publication, three principles are key when considering progress.
We have chosen three domains of progress, and described what constitutes progress overall. But what constitutes progress in each domain? BACK TO TOP QUESTION 2: PROGRESS IN EACH DOMAIN We have defined progress to be synonymous with life getting better. We characterise progress in each domain as follows.
We now have a broad characterisation of what progress in each domain amounts to. The next question we asked was: ‘In order to assess progress, what dimensions (aspects) of each domain should be considered?’ SOCIETY Social progress involves increases in the wellbeing of the population; a reduction of threats to, and increases in social cohesion; and protection and enhancement of democratic rights. Some of these aspects of life focus more directly on the individual while others refer to the way we live together in society. In order to assess progress, what dimensions (aspects) of this domain should be considered? Individuals
Individuals Health: People hope to have a long life, free from pain, illness or disability. Good health for all brings social and economic benefits to individuals, their families and the wider community. Education and training help people develop knowledge and skills that may be used to enhance their living standards, contribute to society and sustain and extend their cultural traditions. For an individual, educational attainment is widely seen as a key factor to a rewarding career. For the nation as a whole, having a skilled workforce is vital to supporting ongoing economic development and improvements in living conditions. Work: Paid work is the means through which many people obtain the economic resources needed for day to day living, for themselves and their dependants, and to meet their longer-term financial needs. Having paid work contributes to a person's sense of identity and self-esteem. People's involvement in paid work also contributes to economic growth and development. Living together Family, community and social cohesion: Families and communities are core structural elements in society - basic building blocks of national life. Families provide guidance on the social values underlying civil society and the care generated within the family supports the development of healthy functioning individuals. The vast range of services provided within communities by groups, clubs and charitable organisations are a crucial adjunct to support the role of the family. The quality and strength of people's relationships and bonds with others - their family, friends and the wider community - are important ingredients of the level of social cohesion. And a more cohesive society is one in which communities are strong and inclusive. Crime takes many forms and can have a major impact on the wellbeing of victims, their families and friends, and the wider community. Those most directly affected may suffer financially, physically, psychologically and emotionally, while the fear of crime can affect people, restrict their lives in many ways, reduce levels of trust and impact on social cohesion. There are other costs as well, including the provision of law enforcement services and corrective services. Although government agencies take on the major responsibility for law enforcement, many businesses and householders also bear costs in protecting against or paying for the consequences of crime. A reduction in the incidence of crime is linked to greater social cohesion. Democracy, governance and citizenship: National life is influenced, not just by material qualities such as economic output, health and education, but also by many intangible qualities such as the quality of our public life, the fairness of our society, the health of our democracy and the extent to which the citizens of Australia participate actively in their communities or cooperate with one another. Good, effective public governance helps to strengthen democracy and human rights, promote economic prosperity and social cohesion, reduce poverty, enhance environmental protection and the sustainable use of natural resources, and deepen confidence in government and public administration. Gaps? There are many different frameworks for assessing progress and wellbeing in this area. The ABS has a well-developed framework for measuring social wellbeing (Measuring Wellbeing, cat. no. 4160.0). While MAP draws on this framework and covers all the aspects of social wellbeing identified, some aspects are treated differently. 'Culture and leisure' is considered as a supplementary dimension to the headline dimensions described above. Furthermore, due to their importance to economic as well as social wellbeing, housing and household economic resources have been included under the economic domain.
THE ECONOMY AND ECONOMIC RESOURCES Economic progress equates to enhancing Australia's national income (broadly the real per person levels of consumption) while at least maintaining (or possibly enhancing) the national wealth that will support future consumption. Since the economic resources available to individuals and families through household income and wealth shape our standard of living these aspects of life also are considered here. In order to assess progress, what dimensions (aspects) of this domain should be considered?
National income, reflects the capacity of Australians to purchase goods and services, and is a key indicator of material living standards. It is also important for other aspects of progress. Not all income is spent on the current consumption of goods and services. Income that is saved can be used to accumulate wealth in the form of, say, houses, machinery or financial assets. These assets can directly satisfy individual and societal needs, or can generate future income and support future consumption. Economic hardship: Society generally accepts that people should have access to some minimum standard of consumption of goods and services. The presence of economic hardship that could preclude this minimum standard would be of societal concern. National wealth: Along with the skills of the work force, a nation's wealth has a major effect on its capacity to generate income. Some produced assets (such as machinery and equipment) are used in income-generating economic activity. Some natural assets (such as minerals and native timber) generate income at the time of their extraction or harvest. Holdings of financial assets with the rest of the world (such as foreign shares, deposits and loans) return income flows to Australia. Other assets, such as owner-occupied dwellings, provide consumption services direct to their owners. Housing provides people with shelter, security and privacy. Having a suitable and affordable place to live is fundamental to people's identity and wellbeing. For many people, purchasing their home provides both stability of tenure and the opportunity to build wealth through progressively building equity in a major economic asset. Productivity: A nation's productivity is the volume of goods and services it produces (its output) for a given volume of inputs (such as labour and capital). The amount by which output growth exceeds input growth is the productivity improvement. Productivity is an important measure of economic progress and helps link changes in national income with changes in national wealth. Improvements in productivity mean the economy is using resources (capital, labour, energy or materials) more efficiently. Gaps? The System of National Accounts is a well developed framework for considering the workings of the economy. National income and wealth consolidate, respectively, economic stocks and flows. Productivity measures how efficiently economic inputs are used to generate income. Together, these headline dimensions account for key aspects of economic progress. We have complemented these national measures with economic hardship and housing which provide insight into income and wealth at the household level. Supplementary dimensions of Transport, Communication, Competitiveness and openness, and Inflation are also considered. Information on knowledge and innovation is included in the Productivity dimension. THE ENVIRONMENT Environmental progress equates to a reduction in threats to the environment and improvements in the health of our ecosystems. In order to assess progress, what dimensions (aspects) of this domain should be considered?
The natural landscape comprises Australia's land and water and the plants and animals that rely on them. The three are inextricably linked. Land: The condition of the soil covering Australia's land has a critical impact on our terrestrial ecosystems. Our soil resources are an important natural asset, and their degradation is a significant concern to Australian farmers, governments and the general public. Water is fundamental to the survival of people and other organisms. Apart from drinking water, much of our economy (agriculture in particular) relies on water. The condition of freshwater ecosystems has a critical impact on the wider environment. Biodiversity: Our plants, animals and ecosystems bring important economic benefits, are valuable to society and are globally important. Native bushland has cultural, aesthetic and recreational importance to many Australians. Most importantly, the ways in which organisms interact with each other and their environment are important to human survival: we rely on ecosystems that function properly for clean air and water and healthy soil. The air: Poor air quality has a range of negative impacts: it can cause health problems, damage infrastructure, reduce crop yields and harm plants and animals. Air pollution occurs both naturally and as a result of human activities. Australians consistently rank air pollution as a major environmental concern. The atmosphere surrounding our planet plays a role in supporting life on earth, for example: oxygen is required to sustain living animals; a layer of ozone shields us from harmful ultraviolet rays from the sun; and greenhouse gases, predominantly carbon dioxide, maintain the surface temperature of the earth. Estuaries and oceans: Our beaches, estuaries and wider marine ecosystems play an important role in Australian life. Our seas also support a vast array of life forms and many of our marine ecosystems are globally important. Gaps? These three dimensions encapsulate all of Australia and its ecosystems (the landscape, the seas that surround us; and the air around and above us). There do not, therefore, appear to be any conceptual gaps in this framework. Now that Questions 1 and 2 have been answered, we have an understanding of progress in each domain and the dimensions of progress that should be measured. But which statistical indicators should we use to measure progress in each dimension? BACK TO TOP QUESTION 3: WHAT INDICATORS COULD MOST EFFECTIVELY BE USED TO ASSESS PROGRESS RELATED TO THESE DIMENSIONS? For each dimension we discuss a conceptually ideal indicator and the best available proxy. SOCIETY Individuals Health: An indicator describing how long Australians live, while simultaneously taking into account the full burden of illness and disability, would be a desirable summary measure of progress. Although such indicators have been developed, no time series is available. Life expectancy at birth is one of the most widely used indicators of population health. It focuses on length of life rather than its quality, but it usefully summarises the health of the population. Education and training: An indicator that recognised the sum of all knowledge and skills held by people might be ideal, but is not available. The indicators of educational progress used in Measures of Australia's Progress measure the attainment of formal non-school qualifications, and the levels of participation in education and training. The headline indicator is the proportion of the population aged 25-64 years with a vocational or higher education qualification. The age range selected identifies an age group where most people have completed any initial non-school qualifications. Work: Many aspects of work affect people's wellbeing, such as hours worked, job satisfaction and security, levels of remuneration, opportunity for self-development, and interaction with people outside of home. An ideal indicator of progress would reflect these and other aspects of work to measure the extent to which Australians' work preferences are satisfied. While a single indicator covering all these aspects is not available, useful indicators of progress may be obtained by looking at the extent to which people's aspirations for wanting work, or more work, are unsatisfied. The official unemployment rate is a widely used measure of underutilised labour resources in the economy, and one that relates to both the economic and social aspects of work. Living together Family, community and social cohesion are important aspects of society, but the way in which they contribute to progress is difficult to define and measure. Rather than present a headline indicator, we present some measures relevant to this dimension, structured around types of networks: bonding, bridging and linking. These are shown in greater detail in the major reports and selected summary measures are presented in the annual web report.
Democracy, governance and citizenship: Although people agree democracy is important, there is less agreement about how to measure progress in the strength and quality of our democracy. In theory democratic government has been characterised as having two underlying principles: popular control over public decision making and decision makers; and equality between citizens in the exercise of that decision making. The strength and health of our democracy in practice, however, is the product of many factors, not just the effectiveness of political institutions like Parliament, fair elections, an independent judiciary, equal laws and a free press. Also important are the trust that citizens have in government and public institutions, and the degree to which they participate in civic and community life, and value and understand their rights and duties as citizens. Democracy is not an uncontroversial subject (even if widely supported in principle) and there may be many different views about the choice of indicators necessary to measure progress in this dimension. There are many possible indicators that relate to governance, democracy and citizenship but aspects that are measured in MAP include: women in parliament, voter enrolment and turnout as well as invalid voting, the proportion of Australian residents who are citizens, participation in civic groups and organisations, women in other decision-making positions, environmental citizenship, and Indigenous participation in democracy and governance. THE ECONOMY AND ECONOMIC RESOURCES National income: Our measure of national income would ideally have a comprehensive coverage of real net disposable income (i.e. the amount that Australians can consume in aggregate, without reducing real national wealth). The measure used in MAP embodies only some of the adjustments for the depreciation of wealth that should ideally be made. It is adjusted for the depreciation of machinery, buildings and other produced capital used in the production process, but not for the consumption of environmental assets for example. National income does not take account of some non-market activities (such as unpaid household work) that contribute to material living standards. Economic hardship: An ideal indicator would identify changes in the extent to which people fall below minimum living standards, and the numbers of people that fall below. The problems of definition aside, measurement is difficult because it requires information about people's living standards. Such data are not available. The headline indicator focuses on changes in the average disposable (after tax) income of households close to the bottom of the income distribution. People in economic hardship are likely to have relatively low income and low wealth. The headline indicator provides no information about the number of people living in economic hardship. But it does provide information about how the income of those in hardship is likely to be changing. National wealth: Our measure of national wealth would ideally have a comprehensive coverage of real net worth (i.e. the value of Australia's assets less the value of Australia's liabilities to the rest of the world). Assets would include all financial and non-financial assets over which ownership rights can be enforced and from which economic benefits can be derived by owners holding or using them. The measure used in MAP excludes some assets which might ideally be embraced by this comprehensive definition (such as human capital and consumer durables) owing to measurement difficulties or to our decision to conform with the 'asset boundary' concept used in the Australian national accounts. A future wealth measure might include some of these further assets. Housing: An ideal indicator might measure people's access to decent, affordable housing. At present, however, there is no single headline indicator to show whether housing circumstances have been getting better or worse. Instead we discuss the importance of this dimension using a variety of other measures including investment in housing, house prices and occupancy. Productivity: Our measure of national productivity would ideally be derived from a comprehensive measure of output divided by a comprehensive measure of input. The measure used in MAP is not as comprehensive as this ideal measure. The numerator includes only the output of the 'market sector'; and the denominator includes only labour and capital inputs (not 'intermediate inputs' such as materials, services and energy used in the production process). A future productivity measure might have broader scope. THE ENVIRONMENT The natural landscape: An ideal indicator might consider all Australian biodiversity - the diversity and abundance of micro-organisms, plants and animals, the genes they contain and the ecosystems of which they form a part. Such a measure would reflect changes in the health of Australia's ecosystems including our land and water. But to measure change as comprehensively as this would be difficult, if not impossible. Instead we use a suite of indicators to discuss progress in three key components of the landscape: biodiversity, land and water.
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