CHAIRPERSON'S LETTER REGARDING ABS RESOURCING
Hon Michael Sukkar MP
Assistant Minister to the Treasurer
Member for Deakin, Victoria
PO Box 232
MITCHAM VIC 3132
cc: Hon Scott Morrison MP, Treasurer
Senator the Hon Mathias Cormann, Minister for Finance
Mr David W. Kalisch, Australian Statistician
Congratulations on being assigned responsibility for the Australian Bureau of Statistics (ABS) and the Australian Statistics Advisory Council (ASAC). I look forward to meeting you when convenient to tell you about the role and work of ASAC.
My purpose in writing now is to alert you to concerns, formed over the twelve months that I have been Chairperson of ASAC, about deficiencies in the resourcing of the ABS and the impact these are having on its potential contribution to the Australian community. These concerns were crystallised in a meeting of the Council last week, part of the agenda of which was devoted to this issue.
As you well know, Australia’s society and economy have been changing at an unprecedented pace. Capturing these changes in a systematic way through national statistical collections is increasingly vital to government, business and the community. The ABS is the pre-eminent independent public institution providing the statistical infrastructure and essential data on which Australians rely. If anything, recent trends in social media have heightened the value of the Bureau’s authoritative statistics.
While budgetary restraint obviously remains necessary across the public sector, ongoing reductions to the ABS’s appropriation, including through uniformly applied ‘efficiency dividends’, are jeopardising key statistical assets and curtailing opportunities for valuable data enhancements.
This is not to deny the importance of productivity improvements and obtaining maximum value from taxpayer funds. It is clear that the ABS recognises the importance of enhancing organisational efficiency: over the years it has identified and implemented significant budgetary savings. But there are inherent limits to productivity gains for public institutions such as the ABS that rely intensively on human capital; at some point, quality inevitably falls with funding. And short-term budgetary gains can prove deleterious in the longer term. True productivity gains come from getting more output from the same inputs, not less from less.
The evidence bears out that the ABS is a comparatively low-cost organisation. And by international standards it is currently funded at a significantly lower level than the national statistical agencies of comparable countries (see Appendix).
Notwithstanding the commitment shown to making operational savings and, where feasible, obtaining user-funding for specific collections, real declines in its annual appropriation have reached the point where the ABS has had to terminate or curtail statistical series. There are no programs left that do not meet strong community needs. Any further rationalisation will threaten core national statistical assets over the next 2-3 years, including key economic indicators.
It is therefore important that achieving sustainable funding for the ABS become a priority for Government in its budget deliberations and other funding decisions. The Functional and Efficiency Review of the ABS conducted in 2016 by David Tune AO, former secretary of the Department of Finance, independently confirmed the need to place the resourcing of the ABS on a more sustainable footing. It considered that if the ABS cannot maintain the continuity and quality of its core statistics, public trust in the institution and its statistical services will be eroded.
I recognise that significant funds have recently been made available for what is known as the ‘ABS transformation agenda’ – involving investments essential to maintaining its viability – as well as for the ‘Data Integration Partnership for Australia’. The Government is to be commended for this. However, I understand that transformation expenditures have had to be met in part from within the ABS appropriation, further compounding budgetary pressures. Moreover, while these investments can be expected to yield a good return over time, the requirement that the ABS deliver an immediate 10% budgetary saving in 2020-21 poses a significant challenge.
The majority of social statistics produced by the ABS now rely on user funding, the bulk of which comes from Commonwealth departments. Such collections are increasingly vulnerable, given these departments’ own budgetary pressures. Providing public funding directly to the ABS through its annual appropriation would bring much-needed stability to these nationally important collections.
Moreover, while there is clearly a place for user funding of certain statistics, public sector staffing rules have prevented any such additional funds being drawn on to employ extra staff needed to produce requested data. This has compounded the pressures on the ABS arising from decreased central funding. (I understand, however, that there has been useful engagement with the Bureau on this issue.)
In addition to increased demands for data, there is a need for greater coherence in the data that are being produced across governments within our Federation. The ABS has played a useful coordinating and advisory role in the past (leading the National Statistical Service) but budgetary constraints have obliged it to step away from this important work, including much of its support for state/territory statistical requirements. The consequent loss of national statistical capability is clearly contrary to what we should be striving to achieve.
In short, I believe that early supplementation of the ABS’s resources has become an imperative.
In particular, following discussions with Council, I recommend that the Government provide additional funding to the ABS to allow further improvements in the measurement of labour force and productivity (without having to make offsetting cutbacks elsewhere). In addition, the ABS should be funded directly to undertake collections of essential social statistics, rather than relying on funding through government agencies. I would also encourage the Government to reconsider the (ongoing) ten per cent budget cut on completion of the ‘transformation’ investments, or at least allow any savings to be delivered over time in line with realised benefits.
I look forward to meeting you and would be happy to respond to any questions you may have on these important matters.
Prof Gary Banks AO
Australian Statistics Advisory Council
20 February 2018
APPENDIX : The ABS funding position in two charts
The ABS’s appropriation is reducing in real terms due to continuing efficiency dividends, whole-of-government savings and reduction in new policy proposals over the years.
ABS Funding Profile - Constant Terms
(Exclusing Census, SBTP and Departmental Capital Budget)
The 2016 Functional and Efficiency Review
of the ABS revealed that its appropriation as a proportion of national budget funding is significantly lower than for national statistical organisations in comparable countries.
Percentage of 2014-15 national budget provided to national statistics bodies