Transforming the ABS in the 21st Century

Keynote Address to the Australian Business Economists, Sydney, 9 September 2015

David W. Kalisch, Australian Statistician

Introduction

Good Afternoon, I would like to thank the organisers for this opportunity to speak on transforming the Australian Bureau of Statistics in the 21st century and what this might mean for economic statistics.

I would also like to acknowledge the Gadigal of the Eora Nation as the traditional custodians of the land where we gather today, and pay my respect to Elders past and present.

Today I will briefly provide some context around the ABS before speaking about transforming the ABS.

Relationship between Economics and Statistics

There is a long standing relationship, built on mutual dependency, between economists and the ABS. In 1933 the Commonwealth Statistician at the time, E.T. McPhee, stated:
      It is ... I think obvious that as economic opinions must rest largely on statistical evidence some knowledge of economics is essential to the proper selection of statistical data, ... I feel that statistics and economics are so closely associated that in practice they are inseparable1.

      1 McPhee to Secretary to the Treasury, 12 April 1933, AA A571, 33/1625. The joint Parliamentary Committee on Public Accounts had recommended in its Report on the General Question of Tasmania’s Disabilities, the creation of a permanent body to study federal-state financial relations with ‘a qualified economist’ under the control of the Commonwealth Statistician.
This statement was made by McPhee in the context of supporting Roland Wilson as his successor. A year earlier, in 1932, Wilson, on appointment as Assistant Commonwealth Statistician, had become the first economist employed at a senior level in the Commonwealth Public Service. In 1936, Wilson succeeded McPhee as Commonwealth Statistician, a role he was to hold for the next 15 years, before he went on to be a long-serving Treasury Secretary.

This close partnership between economists and statisticians has continued. The tools of economists have been described as “devices [which] bring together people, knowledge, and material things in ways that turn the messy, endlessly complex world into a formal, calculative order that can be used productively”. Reflecting on some of the tools, it is evident that they are shared by both economists and statisticians. The most prominent example of this is the System of National Accounts, a conceptual framework of the economy developed through collaboration between economists and statisticians.

Contemporary understandings of the ABS

The ABS is one of Australia’s iconic national institutions, providing reliable economic, population, social and other information for 110 years.

The ABS is known for its independence, transparency and rigour with an international reputation for being one of the world’s best statistical organisations.

We need to better recognise the information resource and expertise of the ABS is a central part of Australia’s key infrastructure that, if used wisely, can contribute to a more informed community, good decisions, growth and productivity enhancements, and the efficient operations of markets.

The ABS produces a very large range of statistics on a regular ongoing basis. This data provides the bedrock on which Australians build an understanding of their economy and society. Key macroeconomic statistics on income, demand, production, prices and employment inform decisions on fiscal and monetary policy. Demographic and population data inform decisions on investment, both public and private. Household income, consumption and wealth data inform the debate on fairness and opportunity. Environment accounts inform debate on sustainability. And so on.

The ABS is well known also for its conservatism, and there are some good reasons for this. We are expected to deliver quality information, and our key users expect us to be deliberate, measured and professional in what we do. We are also entrusted with sensitive information from households and businesses, and we need to treat that information with trust and respect.

One pleasant surprise for me on joining the ABS is that I now have a better understanding of the level of innovation - research and development - underway at the ABS. We are not only challenged by new international statistical standards, but are challenging ourselves to deliver more useful information for a range of purposes or find better ways of delivering statistical solutions. I will expand on this later, as this is a key area of focus for the ABS.

Also well reported is our fragile and bespoke statistical systems that have developed over many years, many of which have well exceeded their use by date for a contemporary, efficient statistical agency in the 21st century.

The range and quantity of statistics produced by the ABS has increased enormously over the years. In 2014-15, the ABS released over 500 statistical products, there were 15.2 million visits to the ABS website and 2.7 million downloads of ABS data. These statistical products form the bedrock for economic analysis and decision making across both the private and public sectors in this country.

The ABS is often unreasonably seen like a utility company, where at a flick of a switch or the turn of a tap, many users expect the delivery of timely and robust statistics to support analysis.

Expectations are high and our users have long memories. I began my term as Australian Statistician in December last year and this was one of the first things made clear in my discussions with our users - they have high expectations of the ABS and can recite from memory the handful of major quality issues with our thousands of statistical releases across the last two decades.

The ABS understands the importance of these national statistics and we need to have a zero risk approach to the quality of our main economic indicators and key population statistics that are crucial to many important choices and decisions.

Over the past fifteen years the Australian population has grown by about 25%, the economy (as measured by GDP volumes) by 60% and Commonwealth Government outlays, in real terms, by around 90%. So by any measure the statisticians’ job is getting bigger.

And over the same period the number of ABS staff has fallen by almost 25% - we have one quarter fewer employees now than we did in 1998. In addition, the ABS has, over time, provided information with greater detail to users in response to the expanding user demands. These figures provide some indication of the challenge the ABS has faced to measure a dynamic economic and social environment, and the greater efficiency of our processes.

In addition, the importance of information is increasingly being recognised, across government and elsewhere. In recognition of today’s changing information environment and the needs of government, business and community, the Government will invest $250 million over five years in the ABS for critically urgent upgrades to our business processes and ICT systems.

This significant Government investment will provide the infrastructure required by the ABS to continue delivering timely and quality economic, demographic, environmental and social statistics for Australia. Of interest to many in this room will be that this Budget funding also secures the production of annual Input-Output tables. However aside from the Input-Output tables, the funding does not provide for any increases to the ABS work program.

We expect that the investment will reduce our costs, help manage some quality risks in our processes, and position the ABS to improve the range of potential statistics it is able to provide in the future. However, at this stage, any new statistical enhancements will only be possible through the provision of additional funding or through substitutions within our existing statistical program. Key users of information may need to more directly contribute to ABS resources if they want particular data enhancements.

The historic $250 million Government investment in the ABS’ core infrastructure is an important step, but the ABS must go much further in transforming to meet the challenges of remaining relevant. We are conscious that the information needs of our users are constantly evolving, and that developments in information technology provide exciting new opportunities.

Challenges

Quality information and changing economy and society

At the ABS, we are up for, and committed to, meeting the challenges which confront us. So in this information age, what are the challenges facing the ABS, and how is the ABS responding?

One of these challenges is the expanding task of measuring the growing and changing economy and society which presents new measurement challenges for continued delivery of high quality official statistics. This was noted by Treasury Secretary John Fraser at the recent Conference of Economists.

The ‘functions of government’ and ‘complexity of social structures’ demand the continual expansion of statistical inquiry; and certainly there has been no reduction in the ambitions or interests of economists.

The challenge faced by the ABS is to continue to get the key numbers as right as possible in a resource constrained public sector environment, and in a world of constant economic and social change which measurement must respond to. The economy is, to quote Alan Greenspan, “getting lighter”. An ever growing portion of GDP doesn’t weigh anything - services of all descriptions, online information and content, intangible assets and so on. All of which provides measurement challenges and requires changes to measurement approaches.

To confront these challenges we need to not only change our measurement approaches. We also need to update and adopt the underlying conceptual frameworks and standards and be transparent around our methodologies. This infrastructure, maintained internationally, is critical to the production of coherent and robust statistics. These processes seek to balance how measurement needs to keep up with changes in the real and financial dimensions of the economy with the desire by many users to maintain the comparability of time series.

To provide some examples of activity currently underway:
    • we are in the early stages of the development of health and education accounts to support better output and productivity measurement in these sectors, drawing upon some progress made by overseas statistical organisations over recent years;
    • we are implementing the new IMF Government Finance Statistics Manual, to be done by 2017-18;
    • we are investigating ways to improve our information on household consumption spending for services that fall outside the scope of the retail trade survey;
    • we are developing a government payment calculator that can improve the quality of reporting by households on key government payments (traditionally understated).

These are just a few examples of the development work underway at the ABS.

Changing information environment

The changing environment also presents exciting opportunities for statistics.

With the information age, there is an expanding range of potential sources of data from the government, commercial entities and the community, which can be linked across economic, industry, population and social statistics. These have not yet been fully utilised and potentially require new techniques to make the data meaningful.

Private sector commercial data is already utilised in the compilation of the Consumer Price Index. From key retailers we now receive weekly ‘scanner’ data of their complete set of sales. This has replaced our traditional reliance on ABS field officers collecting shelf prices for a quarter of the items priced in the index. We are investigating how this scanner data and other data sourced from commercial purposes could be used more extensively in the future by the ABS for a range of purposes, such as updating information on household expenditure.

Alongside this, there is a desire from the community and governments to reduce the burden on respondents of collecting information and there is an assumption that information already collected is being fully utilised.
The ABS is participating actively with the Australian Government’s digital transformation agenda and is collaborating with other departments and agencies to better connect users with information, make digital transactions for our providers easier, and improve access to information for all Australians. Two examples include our work with the Bureau of Infrastructure, Transport and Regional Economics to improve the quality and timeliness of freight data, and collaborating with APRA to simplify business to government reporting from the financial sector for a range of purposes.

Consistent with this agenda, ABS plans to make it easy and convenient for businesses and households to complete ABS surveys online. Over the past three years, the ABS has already introduced electronic forms to replace paper forms, and has moved to digital data collection for most of its business surveys and some of its household surveys.

The ABS plans to make further improvements to enhance the online survey experience for users, and to introduce smarter and more adaptive electronic forms, while also ensuring information quality. The ABS is engaged with the Australian Taxation Office to plan for the implementation of a Standard Business Reporting gateway for financial reporting by businesses.

More effective use

The community also have greater expectations that they can access more information which is more granular in detail and more timely.

Through high quality statistics, the ABS aim to inform decisions on important issues. To do this, the ABS has a role to ensure the sensitive and effective use of data.

To achieve this, the ABS needs to become a better partner to maintain the trust and support of government, business and the community. At the same time, there is a responsibility on users to be informed when using statistics. We know that no information is perfect, and the ABS provides considerable guidance to users around the quality of the information we report.

I am aware that there is a widely held view that the ABS has not done enough to make data available. I held this view before I joined the ABS, and I would note that we have already made some clear improvements over the past six months.

Our legislation (largely dating back to the mid-1970s) does have some clear constraints, but it also expects that we maximise the use of data balanced against privacy requirements. We have the opportunity to develop workable solutions, obviously within our existing legislative framework, that make use of contemporary technology and confidentialisation tools. That process is underway now, and tangible improvements have already been achieved.

The Government has also given us the opportunity to come back with proposals to revisit the legislative framework for the ABS - an update not just for today but also for coming years. As with any legislative change, this will not be a quick process as it is critical to get this right including through drawing on effective consultation with our extensive stakeholders. Nonetheless, it is an important step in ensuring the ABS is able to meet the challenges of the future.

A particular focus will be on access to micro-data. This data offers enormous analytical opportunities but any access arrangements must be navigated with care in order to respect the confidentiality and privacy expectations of our citizens and data providers. We intend to navigate this path, to find the right balance between realising the potential of data and respecting the legitimate privacy concerns of the community, using new technology and statistical tools to help deliver this balance.

The ABS is making more use of data integration, which safely brings together existing data sources to create new datasets through the use of advanced technology and statistical tools, and to create new data sources for statistical, policy and research purposes.

The ABS was the first agency to be accredited as an Integrating Authority in April 2012 and the ABS Centre for Data Integration has progressed projects including migrant settlement outcomes, early childhood education participation, understanding the characteristics of those who use mental health services, a longitudinal labour force dataset, and a business longitudinal dataset.

Of particular interest for economic analysis is the business longitudinal datasets. This comprises several datasets containing characteristics and financial information about small and medium businesses and it has already provided new information about business innovation, efficiency performance and likelihood of business survival.

Most recently, in conjunction with the Department of Industry and Science, the ABS has developed a new integrated firm level dataset, the Expanded Analytical Business Longitudinal Database, which links financial and characteristics data for all active businesses in the Australian economy from 2001-02 to 2012-13.

The ABS is developing an experimental Linked Employer Employee Data (LEED) Analytical System which safely links Personal Income Tax data with Business data from a range of administrative and survey sources. It is intended to provide an integrated analytical environment for cross-sectional and longitudinal data. The ABS is evaluating the potential use of the LEED Analytical System for providing key insights for a range of challenging analytical problems in the areas of firm-level productivity, labour market dynamics, and regional economic activity.

The ABS is a key player in the elaborate, inter-connected and dynamic information environment.

Unleashing the Power of Statistics for a Better Australia

In meeting these challenges I see three areas of focus for the ABS to “Unleash the Power of Statistics for a Better Australia”, the new ABS vision statement.

These are:
1. Continuing to deliver high quality official statistics
2. Strengthen our partnerships to improve the availability and use of data
3. Drive high performance.

These three areas must remain a focus during the ABS transformation program.

We will prioritise both the ongoing delivery of robust information with necessary innovation around what we do and how we work. This requires the ABS to adapt its own processes and operations.

As an organisation in transformation, we are making sure we are alert to the changing environment, have clear strategy and priorities, sound and agile governance, a diverse workforce, a culture focussed on high performance and infrastructure that is fit for purpose.

In this information age, the opportunities for sources of data are almost endless. There are a number of exciting developments that the ABS is progressing.

As part of this initiative, the ABS is investigating a proposal to bring all of its population surveys into a single integrated survey. We are also considering how to effectively leverage the partnerships with all data custodians, to unlock the potential opportunities from existing government administrative data resources.

Technology is also opening up many more information opportunities for us, such as the potential use of satellite imagery to measure agriculture crop yields to reduce the need to survey farmers.

This is indicative of a broader move from a traditional focus on collections, to being solution-centred. Official statistics of the 21st Century should be defined by the information needs of Australia and the best solutions for meeting those needs, more than the mechanics of how data are collected or acquired.

In conclusion

The ABS has the capability to pursue greater improvements to what it does and how it works. The rate of innovation needs to accelerate, in order to seize the new information opportunities and to meet the emerging policy questions and dilemmas facing governments, business and the wider community.

I am committed to leading the organisation through the next set of challenges and transformations.

The ABS will continue to provide the extensive range of robust and timely information which guides economic decision making.

But it also needs to be an organisation which is more innovative, seizing opportunities and meeting both contemporary and emerging information needs.

And an organisation which better values and pursues partnerships to fully realise the potential of the nation’s data and our information requirements.

Back to top of the page