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1301.0 - Year Book Australia, 2005  
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Is life in Australia getting better? Beyond GDP: Measures of economic, social and environmental progress

Introduction

Recent years have seen growing interest in assessing whether life in Australia and other countries is getting better, and whether the present quality of life can be sustained into the future. Although most regard gross domestic product (GDP) as an important measure of progress, there are many who believe that it should be assessed in conjunction with other measures of progress.

A national statistical agency has an important role to play in providing the statistical evidence that will allow assessments of progress to be made by users - those who formulate and evaluate policy, researchers and the community. Through its publications, electronic releases of data and other means, the Australian Bureau of Statistics (ABS) provides a rich array of statistics relevant to assessing progress. But the very size of the information base means it is not so accessible to many people. Moreover, most ABS products provide a window into one or a few aspects of life in Australia - such as health, education, income, water - whereas a comprehensive assessment of progress requires these aspects of life are examined together.

In 2002 the ABS released the first issue of a major new publication Measuring Australia's Progress (1370.0). Its objective was to equip readers with the facts to decide for themselves whether life in Australia was getting better. It was built around 15 headline indicators of national progress that spanned Australia's economy, society and environment. The second issue of the publication - now titled Measures of Australia's Progress (MAP) - was released in April 2004. It provides a selection of statistical evidence that allows Australians to make their own assessment of whether life in Australia is getting better.

This article describes ABS work in this area. It discusses why the ABS saw a need to measure progress. It describes how the MAP publication was developed and presents some of the key information included in the 2004 edition.

The need for some measures of Australia's progress

In October 1995, the Atlantic Monthly published an article entitled 'If the GDP is Up, Why is America Down?' (Cobb, Halstead & Rowe 1995). It set out the case for some new national measures of progress, and argued that in the United States of America, Republican and Democrat politicians shared an ' ... ultimate goal of national policy to make ... GDP climb steadily upward'. The article went on to describe the limitations of GDP as a measure of progress, noting ' ... GDP is simply a gross measure of market activity, of money changing hands. It makes no distinction whatsoever between the desirable and the undesirable, or costs and gain. On top of that, it looks only at the portion of reality ... involved in monetary transactions [and pays no attention to changes in] the social structure and the natural habitat upon which the economy - and life itself - ultimately depend'. The article struck a chord within the ABS, which had become concerned at the attention being placed on GDP as the indicator of national progress.

Earlier, the World Commission on Environment and Development (the Brundtland Commission) had called for the development of new ways to measure and assess progress towards sustainable development (often defined as 'development that meets the needs of the present without compromising the ability of future generations to meet their own needs') (World Commission on Environment and Development 1987). The 1992 Earth Summit in Rio de Janeiro was a further catalyst for discussion (United Nations 1992) as were calls from organisations such as the United Nations for better measures of social concerns to supplement the System of National Accounts.

The ABS commenced work leading to the development of the MAP publication in late-1999.

Developing measures of progress

There are many different views of what progress means and how it might be measured. And so there were a number of key issues that needed attention when developing the MAP publication. They included:

  • What core concept should be addressed by MAP?
  • What presentational model should the ABS adopt?
  • On what basis should the selection and presentation of statistical evidence be decided? How should the ABS decide what aspects of national life should be included, and what statistical indicators should be used to encapsulate those aspects?

The core concept

Answering the question 'Is life in Australia getting better?' is not straightforward. It is clear, however, that to understand progress one must examine many aspects of people's lives - their health, the quality of their environment, their incomes, their work and leisure, their security from crime, and so on. Progress is multidimensional. Moreover, the dimensions of progress are intertwined. To earn more income, people may need to work longer hours and so have less leisure time. Increased industrial activity may generate more money to spend on health care, but it might also lead to more air pollution and hence to poorer health.

Progress was adopted as the primary concept in the MAP publication. Progress here encompasses more than improvements in the material standard of living or other changes in the economic aspects of life; it also includes changes in the social and environmental circumstances. It encompasses:
  • The major direct influences on the changing wellbeing of the Australian population.
  • The structure and growth of the Australian economy.
  • The environment - important both as a direct influence on the wellbeing of Australians and the Australian economy, and because people value it in its own right.

Presentational model

Having decided to focus on progress, a model was needed to present information. It was decided to use a suite-of-indicators approach that sets out key aspects of progress side-by-side and discusses the links between them; readers make their own evaluations of whether the indicators together imply that a country is on balance progressing and at what rate. The approach makes no overall assessment about whether the array of statistical indicators presented implies that life is getting better or worse. Instead, the suite of indicators leaves each individual reader to apply their own values and preferences to the evidence, and to arrive at their own overall assessment of national progress.

There is an irreducible element of subjectivity in such an approach. The choice of indicators cannot be made using statistical criteria alone; it requires some judgment both in choosing the dimensions of progress to include and in choosing the statistical measures for those dimensions of progress.

Selection and presentation of indicators

Selecting the aspects of progress to be measured was arguably the most difficult part of the project. The task was to recognise and minimise the inherent subjectivity in choosing dimensions. It was also important to recognise there are many ways of looking at the world, other than the way in which statisticians might see it.

MAP's progress indicators were chosen in four key steps:
  • Three broad domains of progress were identified - social, economic and environmental.
  • A list of potential progress dimensions within each of the three domains was developed.
  • A subset of dimensions for which indicators would be sought was chosen.
  • An indicator (or indicators) to give statistical expression to each of those dimensions was identified.

This was an iterative process and several steps were revisited after hearing the views of the many people consulted during the development of the MAP publication.

Dimensions of progress

To identify the major dimensions, the three broad domains - economic, social and environmental - were considered in detail and partitioned into a number of dimensions of progress to ensure that the important aspects of progress were considered.

Once a list of dimensions of progress that might be presented had been compiled, the subset of dimensions to be presented was selected. A balance had to be struck - if too many indicators were shown, readers would not be able to assimilate them; if too few were chosen, important aspects of progress would be omitted, and the overall picture might be biased. Ten to twenty indicators seemed about right, and the choice of those headline indicators and dimensions was guided by a wide variety of opinions of people from inside and outside the ABS.

During the design of MAP, the selection of aspects of life and indicators were guided by past and current ABS consultations. The ABS has a systematic program of consulting users of statistics about its statistical frameworks, surveys, products and analyses. Through this program, many government agencies, academic researchers, businesses and business councils, community organisations and individual Australians have told the ABS what they think it is important to measure. The initial choices were tested through several further rounds of consultation undertaken specifically for MAP.

The final choice of indicators was made by the ABS after taking account of the full spectrum of views. In so far as such selections are value-driven, they were distilled from the values and emphases expressed by the user community.

Indicators of progress

The next step was to find indicators to express these dimensions of progress. The selection of indicators was guided by expert advice and by a set of criteria developed for appropriate indicators of progress.

It was recognised a small set of indicators would not paint a full picture of progress, and so supplementary indicators were included. Some supplementary indicators give more information about dimensions of progress that were already represented by a headline indicator; others extend beyond the dimensions covered by the headline indicators.

The set of headline indicators plays a special role in MAP, and particular considerations of values and preferences arise. MAP presents several hundred indicators overall. To assist readers in gaining a quick understanding of the bigger picture about national progress, MAP presents a more compact suite of 14 headline indicators, covering the 15 dimensions (some dimensions have more than one indicator and some have none) (table S29.1).


S29.1 MEASURES OF AUSTRALIA'S PROGRESS: Headline dimensions and indicators of progress - 2004

Headline dimensionsHeadline progress indicatorsSupplementary progress indicators

HealthLife expectancy at birthProportion of people surviving to ages 25, 50 and 75 - Infant mortality rate - Avoidable deaths - Incidence of all cancer - Incidence of heart attacks - Burden of disease
Education and trainingPeople aged 25-64 with a vocational or higher education qualificationEducation participation rate for those aged 15-19 -Year 7/8 to Year 12 apparent retention rate - Education participation rates and attainment levels for those aged 15-64 - Human capital stock - OECD literacy rates, science, reading and mathematics - Indigenous to non-indigenous attainment ratios - Female students as a proportion of all students
WorkUnemployment rateExtended labour force underutilisation rate - Proportion of people working - Long- term unemployment rate - Retrenchment rate - Unemployment to population ratios
National incomeReal net national disposable income per personReal gross state domestic income per person - Real gross domestic product per person - Population in work - Terms of trade - Real final consumption expenditure per person - Net national saving as a proportion of GDP
Financial hardshipAverage real equivalised weekly disposable income of households in the second and third deciles of the income distributionPeople with housing stress
National wealthReal national net worth per personReal national assets and liabilities per person - Real net capital stock per capita - Economically demonstrated resources (minerals and energy) per capita - Real net foreign debt - Real gross fixed capital formation per person - Average household net worth
Housing(No headline indicator) -
ProductivityMultifactor productivity Labour productivity - Expenditure on research and development - Managers and professionals, as a proportion of total employment - Investment in software, as a proportion of GDP - Proportion of businesses with web site or home page -
Hours worked and quality adjusted hours worked
The natural landscapeThreatened birds and mammals - Annual area of land cleared - Salinity, assets at risk in areas affected, or with a high potential to develop, salinity - Water management areas, proportion where use exceeded 70% of sustainable yieldThreatened species trend - Mammalian extinctions - Area of land in conservation reserves - Species- threatening invasive animals - Exotic mammals established in the wild - Weeds of national significance, distribution - Native forest area - Net water use - Dams greater than 100 gigalitres - Water diversions: Murray-Darling Basin - River condition (biota) index - River environment index
The human environmentFine particle concentrations, days health standards exceeded, selected capital citiesHighest one hour averages of SO2, selected regional centres - Days when ozone concentrations exceeded guidelines, selected capital cities - Recycling, Australian Capital Territory
Oceans and estuaries(No headline indicator)Estuarine condition index - Oil spills
International environmental concernsNet greenhouse gas emissionsGreenhouse emissions, net, per person and per $ GDP - Carbon dioxide measurements - Consumption of ozone depleting substances
Family, community and social cohesion(No headline indicator)Children and divorce - Children without an employed parent - Social participation - No participation in selected activities - Voluntary work - Suicide and drug- induced death rates - (indicators in the Work dimension are also relevant)
CrimeVictims of personal and household crimesHomicide rate
Democracy, Governance and citizenship(No headline indicator)Proportion of eligible overseas- born residents who are citizens - Voter turnout and informal votes cast - Women in Federal parliament - Volunteering rates for management, committee and coordination work


Headline progress indicators are distinguished from others by their capacity to encapsulate major features of change in the given aspect of Australian life. An additional criterion was applied to them - namely, that most Australians would agree that each headline indicator possessed a ‘good’ direction of movement (signalling progress, when that indicator is viewed alone) and a ‘bad’ direction of movement (signalling regress, when that indicator is viewed alone). This good-direction / bad-direction distinction raises unavoidably the question of values and preferences.

The treatment of values and preferences

Once the ABS had drafted its initial list of candidate headline indicators, it undertook extensive consultation to test whether the list accorded with users' views. Some commentators disagreed with the choice of headline indicators in the first release of MAP, usually on the grounds of 'knock-on' effects or interactions - that is, the good/bad direction of change may be ambiguous when one takes into consideration the real-world associations between movements in the headline indicator and movements in other indicators. Whether a reader agrees with the ABS choice of headline indicators or not, he or she is free to peruse the whole suite of several hundred indicators in MAP and to assign high weight, low weight or no weight to each, as his or her own values and preferences dictate.

Some readers of MAP have tried to infer an ABS view about the relative importance of the different aspects of Australian life from the number of aspects discussed under the social, economic and environmental headings, or from the number of headline indicators or the number of indicators overall. No such inference can or should be drawn. It is not for the national statistical agency to say what relative importance should be accorded to, say, changes in health, income or air quality. The ABS based its decision about how many indicators to present not on relative value but on statistical grounds - is it possible to find one or a few indicators that would encapsulate the changes in the given aspect of life? Is it possible to sum or otherwise combine indicators? To illustrate - changes in national wealth can be summarised well in one indicator (real national net worth per person), whereas five indicators are needed to depict significant changes in knowledge and innovation.

The place of values and preferences in MAP is well illustrated by its treatment of income distribution and equity. Many Australians believe a more even distribution of income would represent progress; some would argue that, other things equal, any shift to more even distribution would be an improvement; others would argue only for a somewhat more even distribution than at present - say, one that reduces extreme disparities between high and low incomes. Other Australians would not accept that more even distribution of income would represent progress. Thus, when developing MAP, the ABS decided that measures of income distribution should not appear as headline indicators. For example, the focus for financial hardship was on the average income at the bottom of the income range (the second and third decile of income), not the full distribution. Likewise, MAP compares and contrasts the circumstances of different groups in the population for several other dimensions of progress.

Measures of Australia's progress at 2004

MAP is intended to help Australians address the question, ‘Has life in our country got better, especially during the past decade?’. Answering the question is far from easy. Indeed there can be no definitive answer, because individuals have their own views about what is most important to them and to the life of the nation. But the ABS hopes that Australians use these headline indicators to form their own views of how the country is progressing.

The suite of indicators presented in the second, and latest, edition of MAP focus on the period 1992 to 2002. They suggest progress in some areas of Australian life and regress in others. What follows is a very brief summary of information embodied in the headline indicators. Overall progress, as explained above, should not be assessed by simply counting the numbers of areas getting better and subtracting those getting worse. Some aspects of progress (especially aspects such as national income and national wealth) are more easily encapsulated in a small number of indicators, than are some social and environmental aspects of progress. And some readers will give greater importance to some progress indicators than others.

Progress: Individuals

Three headline indicators are associated with this area of progress. All three suggest progress during the past decade.

Health

During the past decade Australians' health improved - children born in 2001 were expected to live three years longer than those born in 1991 (graph S29.2). Indigenous Australians, however, have a life expectancy that is considerably lower than other Australians.

Graph S29.2: LIFE EXPECTANCY AT BIRTH



Education and training

During the past ten years the Australian population became more educated - between 1993 and 2003 the proportion of persons aged 25-64 years with a vocational or higher education qualification rose from 45% to 55%.

Work

Since the last recession in the early-1990s the unemployment rate has gradually declined, and the unemployment rate in 2003 was 5.9%.

Progress: The economy and economic resources

Five headline dimensions are presented, although indicators are only available for four (National income, Financial hardship, National wealth, and Productivity). There appears to have been progress in these dimensions.

National income

Australia experienced significant real income growth during the past decade. Between 1992-93 and 2002-03, real net national disposable income per person grew by around 2.8% a year.

Financial hardship

Between 1994-95 to 2000-01 the real income of less well-off Australians (those in the second and third lowest deciles of the income distribution) grew by 8%. But the incomes of better-off groups increased by proportionally more.

National wealth
Graph S29.3: REAL NATIONAL NET WORTH(a) PER PERSON



National wealth, as measured in Australia's balance sheet, grew during the 1990s. Real national net wealth per person increased by about 0.6% a year between 1993 and 2003 (graph S29.3).

Housing

Housing is generally good in Australia, although poor or inadequate housing is a problem for some groups, especially for Aboriginal and Torres Strait Islander peoples living in remote areas. No headline indicator is presented.

Productivity

In recent years Australia has experienced improved rates of productivity growth. During the decade 1992-93 to 2002-03, Australia’s multifactor productivity rose 1.3% a year on average.

Progress: The environment

It is difficult to obtain national time series data that encapsulate the changes in Australia's natural capital. Several headline indicators suggest regress for some aspects of the environment during the past decade.

The natural landscape

Biodiversity cannot be measured comprehensively, but some experts, such as those on the State of the Environment Committee, believe Australian biodiversity declined during the past decade. This is partly encapsulated in a rise in the numbers of threatened birds and mammals (graph S29.4). Land clearance, one influence thought to be reducing biodiversity, decreased by about 40% between 1991 and 2001 (graph S29.5). The area of land protected in national parks and the like increased.

Graph S29.4: BIODIVERSITY: EXTINCT, ENDANGERED AND VULNERABLE BIRDS AND MAMMALS(a)


Graph S29.5: BIODIVERSITY: ANNUAL AREA OF LAND CLEARED


In 2000 about 5.7 million hectares of land were affected by, or at high risk of developing, dryland salinity, a widespread form of land degradation.

Detailed national time series data are not available. But a variety of partial evidence points to a decline in the quality of some of Australia's waterways. In 2000 about a quarter of Australia's surface water management areas were classed as highly used or overused.

The human environment

Australia's air remains relatively clean by the standards of other developed nations. The available indicators, such as the incidence of fine particle pollution in several cities, suggest that Australian air quality has improved during the past decade, despite increased motor vehicle use.

Oceans and estuaries

No headline indicator is presented although the commentary discusses a range of information about the pressures on - and state of - Australia’s marine ecosystems.

International environmental concerns

Total greenhouse gas emissions in 2001 were about 4% higher than they were in 1991 (graph S29.6). Per person, Australia has one of the world’s highest levels of greenhouse gas emissions, although per person emissions are decreasing (as are emissions per $ of GDP). The heavy reliance on fossil fuel burning for energy rather than other forms of power (such as nuclear or hydro-electricity), the structure of the economy and changes in Australian land use are three influences behind the high rate of emissions.

Graph S29.6: NET GREENHOUSE GAS EMISSIONS(a)



Progress: Living together

Three dimensions of progress are covered here, although there is no attempt to assess overall progress in two of them.

Family, community and social cohesion

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, and where fewer people 'fall through the cracks'. Rather than present a single indicator, this commentary presents some measures which illustrate aspects of family and community life in Australia, particularly those that are important to social cohesion.

One such measure is the youth suicide rate. For young people aged 15-24 years, the suicide rate showed a period of steady increases in the late-1980s through to the peak of 19.3 suicides per 100,000 people in 1997. Since then it has declined sharply to the current rate in 2002 of 11.8 suicides per 100,000 people - a rate last experienced in 1984 (graph S29.7).

Graph S29.7: YOUTH SUICIDE DEATHS(a)



Crime

Though small, the changes in the prevalence rates for personal crimes between 1998 and 2002 showed an increase from 4.8% to 5.3%. Most of these people were victims of assault. Between 1993 and 2002 there was little change in the proportion of households that were the victim of a household crime (an actual or attempted break-in or motor vehicle theft) and it remained at a little below 9%.

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 society, the health of democracy and the extent to which citizens of Australia participate actively in community life or cooperate with one another. Rather than present a single indicator, this commentary presents some measures which illustrate aspects of democracy, governance and citizenship.

One such measure is the changing proportion of Australian residents who have lived here for at least two years (those generally eligible for citizenship) that are citizens. In 1991 about 65% of overseas-born residents were Australian citizens. This had risen to just below 73% by 1996 and by 2001 almost three quarters of overseas-born residents were Australian citizens.

Links between dimensions of progress

Most, if not all, of these dimensions of progress are linked. Changes in one dimension will be associated with changes in many others - sometimes for the better and sometimes for the worse. A few of these links are outlined in each headline commentary; but many other important links are not discussed.

Plans for the future

An updated issue of Measures of Australia's Progress is planned for mid-2005. The ABS hopes to continue to improve the publication in the future, recognising that it will doubtless evolve - important measures of progress may have been omitted, people's views about progress will change, and new data will become available.

These headline indicators form a core set of statistics for reporting on Australian progress. But the indicators chosen will change over time, because, for example:
  • Thinking may change about what is important to national progress.
  • There may be conceptual developments relating to one or more dimensions of progress (such as social cohesion).
  • There may be statistical developments that allow the measurement of aspects of progress for which indicators cannot be constructed at present (such as human capital).

The commentary accompanying each headline indicator discusses what an ideal progress indicator might be for each dimension. The conceptually ideal indicators may, in some cases, help guide the continuing development of Measures of Australia's Progress, and the statistical base that supports it.

References

Cobb, C & Halstead, T 1995, The Genuine Progress Indicator. Redefining Progress, San Francisco.

Cobb, C, Halstead, T & Rowe, J 1995, 'If the GDP is Up, Why is America Down?', Atlantic Monthly, <http//:www.theatlantic.com/politics/ecbig/gdp.htm> last viewed 10 August 2004.

Department of the Environment, Transport and the Regions 1999, Quality of life counts - Indicators for a strategy for sustainable development for the United Kingdom: a baseline assessment, Government Statistical Service, London.

United Nations, 1992, Agenda 21: The United Nations Programme of Action from Rio. United Nations Department of Public Information, New York.

United Nations Development Program, Human Development Report 2002, Oxford University Press, New York.

World Commission on Environment and Development (WCED). 1987, Our Common Future, Oxford University Press, Oxford, New York.

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