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1993 Feature Article - The Australian and New Zealand Standard Industrial Classification
The ABS has published an information paper Introducing the Australian and New Zealand Standard Industrial Classification (ANZSIC) ABS cat. no.1298.0. It provides further detail on the differences between the ASIC and the ANZSIC.
An information paper on the ANZSIC has also been produced by the NZDOS. This paper includes information on the implementation of the ANZSIC in New Zealand statistical series.
The objective in developing any national industrial classification is to identify groupings of businesses which carry out similar economic activities and which satisfy conditions such as economic significance. These groupings can be used to define an industry. An individual business can then be assigned to an industry on the basis of its predominant activities.
The term "business" is used in its widest sense to include any organisation which provides goods or services and includes companies, non-profit organisations, government departments and enterprises.
The ABS has used industrial classifications for over thirty years. In the late 1960s, when it was known as the Commonwealth Bureau of Census and Statistics, it used several distinct industrial classifications across its many collections. The ABS developed the original 1969 edition of the ASIC and it became the first standard industrial classification to be used throughout the ABS.
Although essentially based on the International Standard Industrial Classification (ISIC), the other classifications in use were drawn upon to produce the first ASIC. This allowed for some element of comparability with those previously used classifications. Extensive investigations were undertaken into activity mixes that were typical of Australian business at the time. The information gathered contributed to the inclusion of an Australian dimension in the determination of the finer level composition underlying the broad international (ISIC) structure.
Revised editions of the ASIC were released in 1978 and 1983. The first revision took about three years to complete and resulted in numerous changes, mostly at the lowest (Class) level. This meant that the integrity of the classification at the three higher levels, (Division, Subdivision and Group) remained virtually intact. The second revision was focused entirely on the Transport and Storage Division of the classification and, apart from this area, the classification remained unchanged.
In 1985, a comprehensive review of all aspects of the ASIC began. This coincided with the review of the ISIC being undertaken by the UN Statistical Commission. Drafts of this third revision of the ISIC indicated that it would be more in tune with the Australian industrial situation than previous versions.
While the ASIC had been revised as described above, the basic structure and content of the classification had not been fundamentally reviewed since its inception in 1969. Consequently, the principal objectives of the review were to align the revised ASIC with ISIC Revision 3 and to reflect the changed characteristics of Australian business. The revision concentrated on enhancing the statistical treatment of the services sector. It included the effects of technological progress and reflected the changing structure of Australian industry.
The review of the ASIC began with the collection of information, together with the issue of an invitation for submissions from the statistical user community. The ASIC was then divided into a number of segments and at least two reports were compiled on each segment. These analysed the existing classification and proposals submitted for changes in the light of the principles established for the review (see below). Recommendations were made and the reports circulated for comment as widely as possible, both inside and outside the ABS.
In New Zealand, the first New Zealand Standard Industrial Classification (NZSIC) had been based on the 1948 version of ISIC. Three revisions of the NZSIC were produced. The first was in 1970, the second was in 1975 and contained a more detailed classification in some areas. The third edition was produced in 1987.
The Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) came into effect on 1 January 1983. It is the most recent of the economic agreements that have operated between the two countries since 1922.
The statistical agencies of both countries have, for a number of years, monitored the progress of economic relationships. They have shared experiences and explored common interests. Joint working relationships have been arranged to harmonise statistics wherever possible.
In May 1990, the NZDOS and the ABS considered the possibility of developing a common industrial classification for use by both countries. New Zealand endorsed the principles being followed in the ASIC Review, with the proviso that a Class would be established in the classification if it was economically significant in either country and satisfied the other criteria listed below. An agreement on a strategy for developing a new, single classification was formulated and work began in 1991.
Principles employed in the review
The principles applied in the review which resulted in the production of the ANZSIC included the requirement that the Classes in the ANZSIC (the finest level of the hierarchy) should:
The first principle relates to the need to represent realistically the way activities are actually organised within establishments, which are the statistical units upon which the ANZSIC classification is based. In the Australian statistical system, businesses are represented by a hierarchy of units reflecting differing complexity in the operating structures. The lowest level unit in this hierarchy for which business accounts are kept is referred to as the establishment. The establishment is made up of one or more locations from which the business operates.
The homogeneity requirement reflects the need to form Classes which are made up of units that undertake similar economic activities. Homogeneity of Classes is measured by specialisation and coverage ratios.
The specialisation ratio measures the extent to which units belonging to a particular Class engage in the activities designated as primary to that Class. The coverage ratio measures the extent to which the activities designated as primary to a particular Class are undertaken by units belonging to that Class. For individual Classes to be recognised in the ANZSIC, it was generally required that specialisation and coverage ratios exceed 70 per cent.
The economic significance threshold was set at a minimum of $200 million turnover for Australia or $40 million for New Zealand, or employment of 3,500 for Australia or 700 for New Zealand. 1989-90 was used as the reference period for assessing significance, with no maximum conditions applying.
Alignment with the ISIC was considered to be highly desirable, but this was not followed strictly where it was considered to be inappropriate for local conditions and requirements.
ANZSIC structure and numbering
The ANZSIC, like the ASIC, has a four level hierarchical structure, made up of Divisions (the broadest level), Subdivisions, Groups and Classes (the finest level).
The Division provides a broad overall picture of the economy and is suitable for the classification of data published in summary tables in official statistics. There are 17 Divisions in the ANZSIC, each identified by an alphabetical character as shown in Table 1. This compares with 13 Divisions in the current ASIC. The Subdivision, Group and Class provide increasingly detailed dissections of the broader categories. Each Subdivision is represented by a two digit code, each Group by a three digit code and each Class by a four digit code.
TABLE 1. THE ANZSIC DIVISIONS
A completely new numbering system has been employed in the ANZSIC. Any matches with ASIC codes are coincidental.
Changes from ASIC to ANZSIC
There have been significant changes in the world economy during the last twenty years. The development of ANZSIC reflects this situation in general, but it also acknowledges particular circumstances in Australia and New Zealand. Specifically, the ANZSIC is based on recognition of:
Shift in emphasis from goods producing to service industries
There has been a significant shift from goods producing industries to service industries in terms of Class movements. The goods producing industries include most of the Classes in Divisions A to E inclusive (Agriculture, Forestry and Fishing; Mining; Manufacturing; Electricity, Gas and Water Supply; and Construction). The service industries include most Classes in the remaining Divisions.
The number of Divisions in the service industries has increased from 8 in the ASIC to 12 in the ANZSIC. This increase is reflected in the more detailed levels of the classification, with the number of Classes in the service industries showing a net increase from 237 in the ASIC to 256 in the ANZSIC. Correspondingly, the number of Classes in the goods producing industries showed a net decrease from 229 to 209. The number of Classes in Manufacturing in particular decreased, from 173 to 153.
Implementation of the ANZSIC in ABS Collections
The ANZSIC will be implemented progressively into ABS collections.
When the ANZSIC is introduced it will result in breaks to some industry time series. Information in the form of back-cast series and conversion matrices will be provided to allow users to link the series.
Table 2 provides indicative information on the timing of selected statistics to be released on an ANZSIC basis. The table includes:
TABLE 2. ANTICIPATED DATES FOR THE FIRST RELEASE OF STATISTICS USING ANZSIC
ANZSIC products and services
The ANZSIC (publication) includes the following sections:
Following the release of the ANZSIC, a range of related products will be made available. These will include:
Classification advice, training and consultation
Assistance can be provided in many ways, from general advice on classification and coding through to use of computer assisted coding systems. As part of the advisory services function, a procedure of ANZSIC Determinations will be instituted, providing clarification of the treatment of existing activities and recommended treatment for activities not already identified in the ANZSIC.
Further information on the above products and services can be obtained by contacting The Director, Economic Standards and Classifications section, ABS, by phone (02) 6252 7967.
Future reviews of the ANZSIC
Industrial classifications such as the ANZSIC tend to be revised infrequently, to allow maximum consistency and comparability in statistical series over time.
The next revision of the ANZSIC is not planned to occur until the next century. Factors that will influence the timing of the next review include shifts in the structure of the Australian economy, future revision plans relating to the ISIC and the need to take account of timing and implementation plans for major statistical activities such as the Population Census and the National Accounts.
The success of the ANZSIC project has already led to planning for a joint Australian and New Zealand Commodity Classification. Australia's participation in the Asia Pacific Economic Cooperation (APEC) initiative has recently opened up further opportunities for regional statistical cooperation. In collaboration with other APEC members, Australia is providing statistical expertise to make a range of data, particularly data relating to international trade and investment, more comparable between member countries.
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