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8129.0 - Business Use of Information Technology, 2004-05  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 17/03/2006   
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EXPLANATORY NOTES


INTRODUCTION

1 This publication presents results from the 2004-05 Business Use of Information Technology (BUIT) survey. This survey measured the use of computers, Internet and web technologies by Australian businesses. It also collected data relating to ordering of goods and services via the Internet or web and supporting business systems.


2 Since 1999-2000, the BUIT survey has been conducted on an annual basis. Prior to this, the BUIT survey was conducted twice, initially in respect of the 1993-94 financial year and then for 1997-98. The survey has a set of core items for which data is collected each year. The remainder of survey content is dynamic and is updated each survey cycle to reflect emerging and changing uses of IT.



SCOPE AND COVERAGE

3 The scope of the BUIT survey is all employing businesses in Australia with the exception of businesses classified to:

  • SISCA 3000 General government
  • SISCA 6000 Rest of the world
  • ANZSIC Division A Agriculture, forestry and fishing
  • ANZSIC Division M Government administration and defence
  • ANZSIC Division N Education
  • ANZSIC Sub-division 97 Private households employing staff
  • ANZSIC 9610 Religious organisations

4 The frame for the BUIT survey, like most ABS economic collections, is taken from the ABS Business Register. The register provides a list of employing businesses, primarily based on registrations to the Australian Taxation Office's (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 publication include an allowance for the time it takes a newly registered business to get on to the survey frame.



CHANGES TO THE ABS BUSINESS REGISTER

5 The introduction of The New Tax System (TNTS) has a number of significant implications for ABS business statistics. These are discussed in Information Paper, Improvements in ABS Economic Statistics [Arising from the New Tax System] (cat. no. 1372.0). The replacement of the Group Employer registration process by PAYGW registration resulted in a number of changes to most business survey frames. The changes included the statistical units model; update of industry for some businesses by the ATO; and availability of different measures of business size.



STATISTICAL UNITS DEFINED ON THE ABS BUSINESS REGISTER

6 The ABS uses an economic statistics units model on the ABS Business Register to describe the characteristics of businesses, and the structural relationships between businesses. The units model is also used to break groups of related businesses into relatively homogenous components that can provide data to the ABS.


7 In mid 2002, to better use the information available as a result of TNTS, the ABS changed its economic statistics units model. The new units model allocates businesses to two sub-populations. The vast majority of businesses are in what is called the ATO Maintained Population, while the remaining businesses are in the ABS Maintained Population. Together, these two sub-populations make up the ABS Business Register population.



ATO MAINTAINED POPULATION

8 Most businesses and organisations in Australia need to obtain an ABN, and are then included on the ATO Australian Business Register. 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, and the ABN unit is used as the statistical unit.



ABS MAINTAINED POPULATION

9 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 each business. These businesses constitute the ABS Maintained Population. This population consists typically of large, complex and diverse businesses. The new statistical units model described below covers such businesses.

      Enterprise Group: This is a unit covering all the operations in Australia of one or more legal entities under common ownership and/or control. It covers all the operations in Australia of legal entities which are related in terms of the current Corporations Law (as amended by the Corporations Legislation Amendment Act 1991) including legal entities such as companies, trusts, and partnerships. Majority ownership is not required for control to be exercised.
      Enterprise: The enterprise is an institutional unit comprising (i) a single legal entity or business entity, or (ii) more than one legal entity or business entity within the same Enterprise Group and in the same institutional sub-sector (i.e. they are all classified to a single Standard Institutional Sector Classification of Australia sub-sector).
      Type of Activity Unit (TAU): The TAU is comprised of one or more business entities, sub-entities or branches of a business entity within an Enterprise Group that can report production and employment data for similar economic activities. When a minimum set of data items are available, a TAU is created which covers all the operations within an industry sub-division (and the TAU is classified to the relevant sub-division of the ANZSIC). Where a business cannot supply adequate data for each industry, a TAU is formed which contains activity in more than one industry sub-division. Where a TAU has significant activity in more than one industry, the ABS will 'split' the TAU to maintain industry homogeneity.


IMPACT ON BUIT OF CHANGES ARISING FROM TNTS

10 The changes arising from the TNTS were introduced to the BUIT survey for the 2002-03 reference year. The main effect of the introduction of the new ABS business register, for the BUIT survey, was a changed population from which the survey frame was drawn. The changes to the population resulted in a high survey rotation rate which in turn impacted on the accuracy of estimates for 2002-03. Users are cautioned against making comparisons between 2002-03 and subsequent estimates with those for earlier periods. For more information, please contact the person named on the front of this publication.



SURVEY METHODOLOGY

11 The 2004-05 BUIT survey was conducted by mail. It was based on a random sample of approximately 9,000 businesses which was stratified by industry, state/territory and number of employees. All manufacturing businesses with 500 or more employees and all other businesses with 200 or more employees were included in the sample.



ORDERS FOR GOODS AND SERVICES VIA THE INTERNET AND INTERNET INCOME

12 The concept of Internet income presented in this publication relates to income resulting from orders received via the Internet or web for goods or services, where an order is a commitment to purchase. Like previous surveys, the 2004-05 BUIT survey has highlighted issues which affect the quality and interpretation of estimates of Internet income and the proportion of businesses receiving orders for goods and services via the Internet or web. Readers should consider these issues when using these estimates.


13 The ABS uses the Organisation for Economic Co-operation and Development (OECD) definition of an Internet commerce transaction and therefore measures the income resulting from Internet orders for goods and services. For the purposes of the BUIT survey, this definition has been refined to only include orders (and resultant income) where the commitment to purchase is made via the Internet or web. An important element of the definition remains that payment and the ultimate delivery of the good or service is not relevant, that is, either or both may be conducted off line. ABS experience in collecting data for receipt of orders and Internet income continue to highlight the difficulty of defining an Internet commerce transaction in a way which is understood by businesses and suits all forms of Internet commerce. For instance, for some businesses, the Internet transaction initiates and completes the purchase, while for others the Internet transaction finalises details of a purchase which was initiated by a non-Internet based agreement or contract.


14 Over several cycles of the BUIT survey, the definition of "order" has been progressively refined and now includes those transactions where the final commitment to purchase occurs via the Internet or web only. While care is taken to address the impact of these changes, there may be impacts on final estimates of proportions of businesses receiving orders via the Internet or web. Factors influencing the accuracy of estimates include more stringent application of the definition through better question wording and improvements in ABS quality assurance procedures during survey processing. Final estimates of proportions of businesses receiving orders via the Internet or web are also subject to variations in reporting by businesses, such as redevelopment of web functionality, which can limit receipt of orders during the reference period or abandonment of this e-business process. Amongst businesses, the receipt of orders via the Internet or web is still a relatively rare event, therefore, changes in the sample such as rotation can have a significant impact on estimates.


15 Some orders for goods and services are initiated over the Internet and are then subject to ongoing payments. Ongoing payments may occur over a long period of time and via non-Internet based media. For consistency in compiling the income measure and to ensure that it covers all income flowing from the initial order over the Internet, the ABS would ideally like to include ongoing payments via the Internet, but recognises that most businesses are unable to track these payments. Estimates of Internet income for the 2004-05 survey and previous collections may be understated due to this measurement issue.


16 As in previous surveys, many businesses in the 2004-05 survey did not maintain records on the basis of the Internet income measure described in paragraph 13 and therefore needed to estimate its value. For some large businesses, the estimation of Internet income continues to be difficult and in some instances responses were inconsistent with those of previous surveys. While the ABS has reduced this error through analysis of responses and consultation with businesses, this form of error cannot be completely eliminated.



COMPARABILITY OF BUSINESS COUNTS

17 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)


18 The BUIT survey is not designed to provide high quality estimates of numbers of businesses for any of the output classifications (for example, state and territory or industry) and the number of businesses in this publication are only included to provide contextual information for the user. A more robust source of counts of Australian businesses is available from Australian Bureau of Statistics Business Register, Counts of Businesses (cat. no. 8161.0.55.001).



OUTPUT CLASSIFICATIONS

19 For output purposes, businesses are classified to employment and income size groups based on actual data reported in the survey. For other output groups (industry, state or territory, capital city/other areas) the classification is drawn from information held about the business on the ABS Business Register. The head office location of a business determined the state or territory or region the business was classified to.



COMPARISONS WITH OTHER COUNTRIES

20 For tables 5.1 and 5.2, data for other countries has been provided courtesy of the OECD and were originally sourced from individual country reports to the OECD. Australian data are from the 2004-05 BUIT survey and the scope has been adjusted to show estimates for businesses with 10 or more employees. See paragraph 3 in these Explanatory Notes for more information about BUIT scope.


21 There are different definitions, reference periods and scope for the data included in these tables and these are:

  • The ABS defines broadband as an 'always on' Internet connection with an access speed equal to or greater than 256kbps. Most other countries define broadband in terms of technology (e.g. ADSL, cable etc) rather than speed. However, Iceland only includes connections with a bandwidth equal to or greater than 2Mbps.
  • The definition of Internet Selling and Purchasing varies between countries, with some explicitly including orders placed by conventional email (for instance, Australia and Canada) and others explicitly excluding such orders (e.g. Ireland, the UK and some other European countries). Most countries explicitly use the OECD definition, that is, goods or services that are ordered over the Internet but payment and/or delivery may be off line.
  • Estimates are for businesses with 10 or more employees unless otherwise stated. For most European countries, the following industries are included: Manufacturing, Construction, Wholesale and retail, Hotels and restaurants (part), Transport, storage and communication, Real estate, renting and business activities and Other community, social and personal service activities (part). Korea includes: Agriculture and Fisheries, Light Industry, Heavy Industry, Petrochemicals, Construction, Distribution, Finance and Insurance, and Other services. For Mexico, data refer to enterprises with 50 or more employees and include: Manufacturing, Services and Construction. For Switzerland, data refer to enterprises with 5 or more employees, and include the Manufacturing, Construction, Electricity, gas and water, and Services industries. For Canada exclude: Agriculture, fishing, hunting and trapping, and Construction - specialist contractors. For Japan, data refer to enterprises with 100 or more employees and exclude: Agriculture, forestry, fisheries and Mining. For New Zealand exclude: Electricity, gas and water, Government administration and defence, and Personal and other services; the New Zealand survey also excludes businesses with five or fewer full time equivalent (FTEs) employees and those with turnover of less than NZD 30,000.
  • For Table 5.1, data for France, Iceland, Japan, Luxembourg, Mexico and Spain were collected in 2003. Data for Switzerland were collected in 2002 and data for New Zealand were collected in 2001.
  • For Table 5.2, data for Iceland, Italy, Japan, Luxembourg and Mexico were collected in 2003. Data for Switzerland were collected in 2002 and data for New Zealand were collected in 2001.


RELATED PUBLICATIONS

22 The most recent issue of other ABS publications on the use and production of information and communication technologies in Australia are listed below:
      Government Technology, Australia, 2002-2003, cat. no. 8119.0
      Household Use of Information Technology, Australia, 2004-05, cat. no. 8146.0
      Information and Communication Technology, Australia, 2002-2003, cat.no. 8126.0
      Innovation in Australian Business, 2003, cat. no. 8158.0
      Internet Activity, Australia, March 2005, cat. no. 8153.0
      Use of Information Technology on Farms, Australia, 2003-04, cat. no. 8150.0


ABS WEB SITE

23 The summary of findings from this publication are published on the ABS web site <www.abs.gov.au>. Other information relating to information and communication technologies can be found on the web site, see the Innovation, Science and Technology Home page under Themes/Industry.



DATA AVAILABLE ON REQUEST

24 As well as the statistics included in this publication, the ABS may have relevant data available on request. The availability of more detailed data are subject to confidentiality and quality checks. Inquiries should be made to the National Information and Referral Service on 1300 135 070.



ROUNDING

25 Estimates of proportions shown in the tables are rounded to a percentage point.


26 Where figures have been rounded, discrepancies may occur between the sum of the component items and the total. In addition, percentages have been calculated using the unrounded figures.



UPCOMING CHANGES TO THE BUIT SURVEY VEHICLE

27 The collection of all business characteristics data by the ABS has been reviewed. These data have generally been collected through a variety of survey vehicles which included the BUIT survey. Due to the differences in survey scope and content definition, data produced from the range of characteristics surveys were not directly comparable and minimally integrated. A decision has been made to introduce a new survey vehicle, the Business Characteristics Survey, which will collect an extensive range of characteristics data using integrated concepts and best practice methodology. This survey will be introduced from the 2005-06 reference year. There will also be a longitudinal component to this new survey. For more information, please write to the contact shown in paragraph 28.



COMMENTS

28 The ABS welcomes comments and suggestions from users regarding future surveys of IT use by businesses. These comments should be addressed to the Director, Innovation and Technology Business Statistics Centre, Australian Bureau of Statistics, GPO Box K881, Perth, WA, 6842, or email mike.scott@abs.gov.au.


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