CFO Forum

Presentation: ABS Delivering Public Value, Canberra, 18 May 2016

David W. Kalisch, Australian Statistician


Introduction

First, I would like to acknowledge the Gadigal people of the Eora Nation, the Traditional Custodians of the land we are meeting on today and pay my respects to their Elders both past and present, and to acknowledge members of the Aboriginal and Torres Strait Islander community who may be attending this forum today.

I would also like to thank each of you in this room who are a contributor to official statistics – either in your role in business or as a private citizen completing the Census or our other surveys, or for the support we receive from you and your companies through the tax payments you make. I expect that each of you are big users of information the ABS produces, to help you and your organisations make sound decisions.

It is a pleasure to be here today to talk about the value of statistics for decision making by governments, businesses and the community. The title of today’s forum – ‘Harnessing Change, Navigating Complexity’ is something the Australian Bureau of Statistics understands well and must manage in our rapidly changing environment.

Today I want to talk about the value of official statistics and the role of the ABS. I will also talk about what the ABS is doing to transform and position itself for the future.

The value of official statistics

In a set of advertisements for a prominent, internationally-accepted credit card several years ago, we were presented with an idyllic scene from a family holiday or some other prominent time in someone’s life journey.

The plot runs something along the lines of use of this credit card is really helpful to make a purchase of a good or service, but the happiness and enjoyment received by the person or their family overall is much greater than the actual monetary cost. The outcome is truly “priceless”.

To cut to the chase, my conjecture is that the value of quality, relevant, timely statistics to governments, to business and the community is truly priceless. The value of ABS statistics to informed government decision making, to critical business decisions and to community awareness that is essential for democratic processes is, on any reasonable assessment, worth much more than the cost to taxpayers of funding ABS products and services. We provide public value far in excess of our annual budget cost.

To give some sense of value, I cannot think of any major decision made in Australia that did not have any regard to at least some quality information produced and provided by the ABS.

To provide you with just a few examples of how ABS data is used:

  • for government policy (macroeconomic settings, through to distribution of GST and federal financial grants, planning key infrastructure such as schools, hospitals and roads according to timely population projections, our electorate boundaries, policy choices from industry assistance through to education, employment services, immigration and the environment, as well as regulatory arrangements to give just a few examples)
  • for businesses deciding whether to enter markets, expand their business operations or divert into different activities
  • for a range of community and NGOs delivering services or advocating to governments or the community, and
  • for households or individuals seeking to understand job opportunities in particular locations, comparative house prices or change in the cost of living in our capital cities and the socio-economic features of respective communities and how Australia compares internationally.

These are just a few examples of how official statistics, and information derived from them, are essential to economic and social progress and community awareness in Australia.

Value of the ABS

The ABS plays an important role in delivering official statistics, such as our population estimates, national accounts, CPI and labour force statistics.

Every year the ABS delivers 500 to 600 statistical releases, and in the past year there were over 15 million visits to the ABS website and nearly 3 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.

In addition, the ABS has a legislated role to oversight and encourage consistency of standards across Australia’s national statistical system, recognising that official statistics are contributed by other organisations, such as the Australian Institute of Health and Welfare and the Bureau of Meteorology, to name but two.

To give you a few metrics of the ABS:

  • we have an annual budget of around $250 million a year (excluding the five-yearly population Census)
  • we have on average around 2,800 FTE staff across our organisation, including our field interviewers
  • our staff are located across Australia undertaking national activities
  • on top of this, we conduct the five-yearly population Census which costs the nation an additional $500 million for each Census, and
  • about 10% of our revenue comes from project user funding.

For some comparisons, the ABS Appropriation in 2016-17 (a peak year in our Census cycle) represents approximately 0.1 per cent of estimated total general government sector expenses for the Commonwealth Government (of $450.6 billion).

In terms of another comparison, with the overall size of the economy, ABS represents around 0.03 per cent of this measure of economic activity. This does not make any allowance for the further contribution that the ABS and our key statistics make to wellbeing and other dimensions that matter to the community.

From these comparisons, I would argue that taxpayers, governments, business and the community get extraordinary value from the ABS and its services. But I would be the first person to also recognise that the ABS also needs to be vigilant to drive increased public value.

Many of the challenges faced by the ABS are not unique to the ABS, but to a greater or lesser extent are faced by all national statistical offices, especially in developed economies, including:

  • the challenges and opportunities of delivering official statistics in an information age
  • the necessary choices made by national statistical offices in an environment of growing expectations and constrained resources, and
  • inevitable choices made by governments around budget allocations made to national statistical offices and to other government services and costs, especially in the context of prevailing pressures for fiscal consolidation.

Delivering official statistics in an information age

We are all familiar with the reference to living in an information age.

There are a number of features, such as the increased amount of information now available from a variety of sources, increasing access to information via mobile devices, and the increased power and reduced cost of computers. The democratisation of data increases the opportunity for many organisations and individuals to store and analyse very large amounts of information, and introduce new information beyond that produced by official statistics. And individuals and businesses expect that new information is used effectively, reducing survey response burden wherever possible.

To give you a sense of the increasing information, as this slide shows, there is an unimaginable amount of data created every minute of every day (1). For example, Google alone processes 20 petabytes of information per day (2). It would take 223,000 DVDs to store a single petabyte (3).

But not all of this data is structured in a way that can be easily used to understand individuals, businesses, and communities.

From the perspective of a national statistical office, this information age can be perceived as a benefit or a curse, and it probably has elements of both:

  • To some extent, national statistical offices benefit from the new and expanding data sources, as some information can be available to us in more timely and cheaper means than our current processes, and available as key inputs to processes of compiling official statistics. However we need to be judicious about the quality of these potential inputs, and a cost-benefit lens is applied in these circumstances. One example is the ABS has replaced the direct collection of a quarter of prices in the CPI with already collected retail scanner data, in a manner that is not compromising the commercial value of this data to supermarkets.
  • We recognise that some of these new information sources can be seen as competing with official statistics, where users then need to make a judgment call around the overall utility of competing information. That is their choice, but they should be well informed around the data they use and ensure it is fit for purpose.
  • In some instances, national statistical offices might choose not to continue to deliver some statistics in the future if there is a reputable, valued alternative supplied by the market, allowing the statistical office to divert its scarce resources to the production of higher priority statistics where no feasible alternatives are available or where it is essential for certain statistics to come from an official source.
  • The ABS has benefited from the reduced cost of computing and technology, and we now have many new opportunities to do more with the data and manage larger data sets very efficiently, which previous technology would have only allowed at prohibitive cost.

The information age also presents another key challenge for official statistics, that I would call the ambidextrous desire – where users want consistent reliable time series data and also want us to introduce innovative measurement that better captures new features of our economy and society.

Many users of official statistics want to get information produced in a consistent way for a long period of time to allow for ready comparisons. National statistical offices do this very well. Estimates are prepared according to statistical standards (often international, to assist with robust international comparisons).

The international official statistics community regularly reassesses the suitability of international statistical standards in the light of the uses of the information and the ability to improve measurement, such as revising the System of National Accounts and updating international labour statistics standards.

Official statistics do need to be able to measure changes in the real economy and society. Over its history the ABS has improved the way it collects information on our economy and population and has broadened the range and complexity of the statistics we produce on industries and our social conditions.

Reconsideration of the breadth and depth of our statistical program is a constant for us, as we consider the need to better measure, for example, the productivity of the important health and education sectors of our economy and the growing sharing and digital economy.

There are undoubtedly pressures to deliver more information in more creative ways. However, many users of official statistics are not willing to compromise at all around the quality of information, in say national accounts or CPI estimates, for some modest improvements in timeliness.

Overall, my assessment is that the new information age provides more opportunities and more benefits than concerns.

These are not simple choices as they require national statistical offices to consider a range of factors, such as information uses and requirements, priority setting, the nature of internal data acquisition and processing approaches including technical methodological challenges, dissemination opportunities, and potential integration of new information sources with other official statistics.

Ultimately, it is the modern reality that national statistical offices need to be aware of the rapidly changing information landscape and make good judgments on where and how to (as well as when not to) utilise new information and new approaches for official statistical purposes.

Necessary choices made by National Statistical Offices

I suspect that all national statistical offices, in Australia and elsewhere, both now and throughout their history, have been confronted by the challenge of having more demands for information than they can afford to provide.

Efficiencies have been achieved by the ABS over past years, with a budget around a quarter smaller in real terms than in the year 2000 and we have fewer staff measuring an increasing society and economy.

For example, the economy (as measured by Gross Domestic Product) is 50% bigger than 15 years ago, and our national Government overall is larger than it used to be, measured in terms of outlays and employees.

The ABS and key stakeholders regularly discuss what new statistics are required to meet current and emerging needs. This includes what investments or research and development activity are necessary to position the ABS to be able to respond effectively to future information requirements so we can deliver in a timely manner and/or avoid greater costs of playing catch up.

Thriving in this changing environment will require the ABS to be more ruthless about its priorities. While we recognise the broad-based support for extensive statistical releases, we also recognise that our current resources are not sufficient to fund all of the desires of our user community, nor will this ever likely to be the case. In the future, it may be that the ABS will not have the resources to produce the current suite of statistical products within our base funding.

We need to constantly review our statistical priorities and resource allocations, drawing upon extensive stakeholder engagement, ensuring we can deliver quality, timely, relevant official statistics in our priority areas and investing in ABS capability that positions us well for the future challenges.

A few years ago, the ABS embarked on a major exercise with its key stakeholders to identify priority statistics for Australia. This culminated in the publication in March 2013 of the document “Essential Statistical Assets for Australia”. The approach used four criteria of

  • application in public policy and service delivery
  • importance to key national progress measurement
  • domestic legislative requirement and
  • international reporting obligation and/or critical for international comparability.

In addition to prioritisation, current efforts are focussing more on the efficiency gains possible through greater collaborations, innovation and other ways to improve the performance of the organisation (that also help improve the effectiveness and outputs of the ABS).

Our current fragile, ageing statistical business processes will be transformed through an investment of over $250 million over five years. This is partly to reduce the current statistical risks inherent with our patchwork systems, despite the best efforts of our dedicated and skilled staff. These new systems will also make us more efficient and we will then have a further 10% reduction in our recurrent operating budget.

This is being complemented by an extensive transformation of our internal operations, with a focus on our partnerships, strategy, governance, people, culture and our property infrastructure. These aspects driving organisational efficiency and effectiveness receive ongoing vigilance and refinement. We are cognisant that taxpayers fund our services and we are determined, as much as possible, to continually improve the value to taxpayers from our stewardship of their resources.

Effective, informed use of official statistics

If you were to look at any one of the ABS’s key statistical releases, you would see a number of common features:

  • a summary of the headline results
  • tables of data and some charts of key information, and
  • considerable explanation of the methods we use and the caveats/understandings around the data, including quantifiable confidence ranges

It is concerning that many people who use our statistical products do not get beyond the first stage of the headline results without an understanding of the more detailed information provided and the caveats and methods. ABS staff tell me that when they get a query from a data user, the first thing they do is go to the Explanatory Notes of our publication and in many cases are able to answer the query directly from the publication!

We at the ABS need to get better at communicating statistics and making this information more easily found. The recent changes to the ABS website is the start of a new and better approach to communication, as is the improved commentary around the monthly employment and unemployment figures and the data visualisations created for recent surveys such as the health survey.

The ABS transformation will see improvements to the ABS processes, reduce risk to key economic and population statistics but also improve access to our statistics that does not compromise the privacy and confidentiality of sensitive personal and business information.

More effective use of data

I want to leave you with some recent ABS developments where we have been producing new data insights.

We have already demonstrated, through combining existing data, how new information can be produced in a timely cost-effective way, without any additional burden on individuals and businesses – producing new valuable insights at modest additional cost through integration and analysis of existing data.

For a longitudinal view of the outcomes of individuals, the Australian Census Longitudinal Dataset integrates a sample from the 2006 Census with the 2011 Census. The ABS will also link the 2016 Census with the 2011 Census. This dataset provides insights into the changes between each five year period for individuals and families. Examples of analysis using this dataset include understanding housing transitions for older people, transitions for recent migrants, and changes in family and individual situations.

The ABS has also built an expanded analytical business longitudinal database combining administrative tax data with business survey data. One of the purposes of the dataset is to understand the productivity of medium and small business over time – and it has already provided insights into the innovation and growth potential of small and medium businesses.

A brand new data compilation is a linked employer and employee dataset which opens up a source of new insights into employment. This brings together personal income tax data with business data and has already provided a better understanding of multiple job holding. Over time, this will provide more insights into job creation and job destruction as industries change over time.

The ABS is also working with other Commonwealth Government Departments with existing large administrative datasets to demonstrate how an integrated data resource can be used to measure the outcomes and impacts of policy and services, in a timely manner. We have already brought together Census data with administrative data on government health, social security and tax data, and this enduring linked data can be extended to other domains of activity.

Concluding remarks

Ultimately, the key focus for the ABS is all about maximising public value from the resources we get from taxpayers through the Australian Government.

We understand the value of official statistics for all key decisions in Australia, by governments, but also by businesses and households.

We are working to achieve greater use of our information and evidence, contributing to good decision making by governments, business, households and across the community, while naturally protecting the confidentiality of the sensitive information provided to us by households and businesses.

With the inevitable challenge of limited resources, expanding user demands and keeping ahead of measurement challenges with a dynamic economy, society and environment, we will need to make difficult choices around our priority statistics and respective effort.

One way for us to better deal with this dilemma is for the ABS to transform our business, progressing further efficiencies through step change in what we do while also carefully managing the key risks around the quality of our core statistics.

Iterative change will not be sufficient, and the additional investment in new statistical processes and systems is a critical enabler of this transformational change, alongside cultural change to how we work.

The other critical part of our change is for the ABS to improve our partnerships with key stakeholders, to draw not only on their understandings and in some cases their resources, but to co-design new statistical solutions that provide greater insight than is currently possible from our current statistical program.

In conclusion, it is an exciting but demanding time for the ABS – we are harnessing the changes occurring during this information age and navigating in the new complex world of unimaginable data – to provide governments, businesses and the community the information required so key decision makers can make the best possible decisions.

Thank-you.

1. Business Insider Australia, 19 Aug 2015, accessed 2 May 2016 (http://www.businessinsider.com.au/infographic-heres-how-much-data-is-created-on-the-web-every-minute-2015-8)

2. Abid

3. Computer Weekly, accessed 2 May 2016 (http://www.computerweekly.com/feature/What-does-a-petabyte-look-like)


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