Australian Bureau of Statistics
1370.0 - Measures of Australia's Progress, 2004
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 21/04/2004
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To assist in selecting measures of progress it is often useful to use some sort of framework to sketch out the territory one is trying to measure. Frameworks are a tool to support statistical measurement, data analysis and analytical commentary.
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?', one can use a presentational 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 presentational convenience; the view is a tool to help choose areas of progress and identify progress indicators, but it does not have to purport to be a model of a world in which the environment, economy and society 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, a framework can provide a theory of the way the world works. These frameworks also 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. National statistical agencies are usually uncomfortable making such statements.
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 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.
The rest of this essay describes the ABS approach to answering these questions.
Question 1: What is 'progress'?
Throughout this publication, three principles are key when considering progress.
With these three principles as a starting point, the ABS set out to develop a framework within which progress could be measured. This framework has been developed in consultation with a broad cross section of Australian society. It provides a basis from which the measures of progress in MAP were selected: guiding both the selection of dimensions of progress (those aspects of life seen as crucial to progress) and the statistical indicators of progress for each dimension. More detail is included in the essays Measuring Progress - an ABS approach and How the progress indicators are presented.
We have chosen three domains of progress, and described what constitutes progress overall. But what constitutes progress in each domain?
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.
Whether there has been progress overall will depend on each reader's own assessment of the relative importance of progress in each domain. Moreover, progress in any one domain might go hand in hand with progress in another. That is, progress in one area can reinforce progress in another: economic growth for example might provide more money for government to spend on environmental protection. But progress in one domain might also require some trade-off against progress in another: economic growth in certain sectors might create more greenhouse emissions.
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?'
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: 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.
Human settlements have an impact on the landscape and seascape that surrounds them. They can also provide a home for native plants and animals. But the environmental quality of settlements is perhaps most important because it has an influence on those who live and work within them.
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.
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.
Housing provides people with shelter, security and privacy. Having a suitable place to live is fundamental to people's identity and wellbeing.
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 democracy and the extent to which the citizens of Australia participate actively in their communities or cooperate with one another.
Economic progress equates to enhancing Australia's national income (broadly Australians' real per capita levels of consumption) while at least maintaining (or possibly enhancing) the national wealth that will support future consumption.
In order to assess progress, what dimensions (aspects) of this domain should be considered?
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.
National income, reflects Australians' capacity 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.
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: land, water and biodiversity.
The human environment: There are a range of environmental concerns associated with human settlements. It is difficult to conceive an ideal headline indicator which might measure progress against each and so we choose one. For about a decade, the Australian public has been more concerned about air pollution than about any other environmental problem. Ideally, a headline indicator would encapsulate all aspects of air quality. But pollution takes many forms and there is, as yet, no agreed way in which different pollutants could be combined into just one measure. The headline indicator considers the concentration of fine particles in the atmosphere, a measure of the form of air pollution about which many health experts in Australia are most concerned.
Oceans and estuaries: A wide range of environmental concerns are associated with our oceans and estuaries. It is difficult to conceive of a single headline indicator that might measure the health of our marine ecosystems other than some measure of the total biodiversity within them. We present a range of information about this dimension of progress but there is no headline indicator.
International environmental concerns: Australia's actions influence a range of global environmental concerns. Global warming is perceived as perhaps the most significant threat to the world's environment and our greenhouse gas emissions are the focus of the headline indicator. Ideally, the headline indicator would assess Australia's total greenhouse emissions. But it is difficult to measure emissions from some sources accurately, especially emissions from land clearing and agriculture. The headline indicator looks at Australia's net emissions (including those from land use change).
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. But although such indicators have been developed they are not available as a time series. 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 here measure the attainment of formal non-school qualifications, and the levels of participation in education and training. The main 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.
Housing: An ideal indicator might measure people's access to decent, affordable housing. But there is no single headline indicator to show whether housing circumstances have been getting better or worse. No such current data are available and so we discuss the importance of this dimension without using a headline indicator.
Financial 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 financial hardship are likely to have relatively low income and low wealth. The headline indicator provides no information about the number of people living in financial hardship. But it does provide information about how the income of those in hardship is likely to be changing.
Family, community and social cohesion comprises several parts
Crime: Measuring the full cost of crime might provide an ideal single measure of progress in this area. But there is no well established means of doing this nor are there comprehensive data sources. Another way, albeit limited, of measuring progress in this dimension is to look at criminal offence victimisation rates. We focus on personal and household crimes.
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. However, the strength and health of our democracy in practice 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 they 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 include: voter turnout and invalid voting, women in parliament, and the proportion of Australian residents who are citizens.
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.
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.
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.
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