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Economics Legislation Committee
21/10/2015
Estimates
TREASURY PORTFOLIO
Australian Bureau of Statistics

Australian Bureau of Statistics

[22:28]

CHAIR: I now welcome the officers from the Bureau of Statistics. Mr Kalisch, welcome. Are you settling in all right?

Mr Kalisch : Settling in very well, thank you. It is not quite a year but it is coming up very soon.

CHAIR: Over the last 15 minutes, we have been talking about you, what you have been doing and what we are going to talk about. You have an opening statement which you have tabled. Do you want to go through that? We are very happy for you to.

Mr Kalisch : It is up to the committee.

CHAIR: We honour your work, so please, go right ahead.

Mr Kalisch : This is just a very short statement to update the committee about our census preparations. It is just under a year to go until the 2016 Census of Population and Housing, which is taking place on 9 August, 2016. As you know, the census provides a five-yearly snapshot of Australia's people and their housing. It helps estimate Australia's population, which is used to distribute government funds and plan services and infrastructure for all communities across all sectors, including housing, transport, education and health. The ABS has a long and proud history of census taking which spans more than 100 years. In 2016, we are seeking to maintain our reputation as a world leader in census taking and demonstrate ongoing innovation with our first predominantly digital census.

Our preparations are on track and momentum is building as we accelerate preparations to count close to 10 million dwellings and approximately 24 million people in Australia on census night. This is set to be one of the biggest online events in Australia, with 65 per cent of households, or more than 15 million people, expected to do the census online. Our transformed operations will see most households across Australia receive an online login code in the mail. Of course, we will also provide the option to people to request a paper form. We will send reminder letters to give people as much opportunity to respond as possible, and only after this will census field staff follow up with non-respondents. For the first time, our field staff will carry mobile devices that will allow them to receive and communicate information in real time. All of this will make the census considerably more efficient and accurate and save significant taxpayer dollars. It will also be easier for people to complete.

We have tested this new approach extensively with 100,000 households in 2014 and again with 35,000 households this year. The tests have confirmed our strategies and assumptions. The 2015 test also informed the final design of our household letters and envelopes, which are obviously critical to our new approach. I would like to highlight our collaboration with the CSIRO to apply behavioural economics principles to the contact material, making us one of several agencies leading the way in this field in Australia and among other national statistical organisations. This is just one of many partnerships and collaborations being built and nurtured through the 2016 census. The ABS is working with the ATO on the census telephone inquiry service, partnering with IBM to develop the online census form, working with the Department of Communications on the address register and with the National Archives to digitise the 99-year retention of census data for those who opt in.

The next stage of our preparations is the development of a public communications campaign. High levels of public awareness of the new, fully digital model for the 2016 census will be key to achieving our targets for a lower-cost, high-quality census outcome. This will capitalise on the already high levels of trust in the ABS, as revealed in a recent independent Community Trust in ABS Statistics survey released just yesterday by the ABS as part of our contribution to World Statistics Day. We can rely on a high degree of community goodwill and support to ensure required rates of census participation next August, and we look forward to the 2016 census continuing to chart Australia's history and shape its future. Perhaps just one final comment: if we were meeting yesterday, I would have said, 'Happy statistics day!'

CHAIR: Beautiful, that is terrific. There is no mention in there of what the efficiencies are that you reckon you might find. I think the old way was $124 million from memory.

Mr Kalisch : We expect to save just over $100 million from approaching this first digital census. Undertaking a census is very expensive. I think last time it cost the bureau in excess of $450 million to mount the census.

CHAIR: So a 25 per cent saving.

Mr Kalisch : Yes.

CHAIR: Or more. Wow: that is good.

Senator KETTER: We are looking at 15 million people completing the census online. Can you tell us what arrangements you have put in place for people who are unable to complete the census online? Will they have to request the paper version?

Mr Kalisch : They can request a paper form and we can either mail it out to them or have someone drop it off. We are printing quite a number of paper forms, obviously, for the 35 per cent of the population that we do not expect to be working online. In some areas—particularly Aboriginal and Torres Strait Islander communities, for example—and in engagements with homelessness services we will have paper forms available for those agencies and in those areas directly. So we will not anticipate an online code as the first option.

Senator KETTER: Perhaps just generally, can you tell us how you will ensure that, say, senior Australians, those in regional Australia and people from culturally and linguistically diverse groups are able to effectively participate in the census.

Mr Kalisch : There are a couple of things. One is that some of the testing we have been doing has been testing out those particular aspects. The public communications activity, particularly the multicultural communications and public awareness campaign that we are also running as part of that, will certainly target particular ethnic groups and make sure that they have a good understanding of the census. One of the challenges with the census is that it only comes around every five years, so there are people that have forgotten that they did it five years ago and there are new people that have come to Australia who are not aware about the census. So we need to keep refreshing and working with those local communities. Community awareness is a very big thing in the census.

Senator KETTER: Do you have a time line for releasing the first results from the 2016 census?

Mr Kalisch : This is somewhat contentious in the bureau. Perhaps, with the person who is mainly responsible for the census being out of the country, I can safely say—

CHAIR: It is a long way to go to get out of Senate estimates.

Mr Kalisch : He is actually engaging with other people that also undertake censuses. There is an international community.

CHAIR: So they are talking censuses?

Mr Kalisch : They are talking censuses.

CHAIR: I hope they come to consensus!

Mr Kalisch : And I am sure they are talking a lot of sense!

Senator KETTER: Based on international experience, do you have any concerns over the shift to the digital census and how that might affect response rates?

Mr Kalisch : We are still targeting close to 100 per cent. Last time we had close to 100 per cent; we received just a bit north of 98 per cent last time, and that is certainly the target rate we are expecting this time. Certainly, the technology we have that enables us to follow up more immediately and to have more accurate information on people that have completed or not completed the census from different addresses gives us the option to follow up in a very targeted way.

Senator KETTER: I have a series of questions on labour force survey and unemployment figures if we can move on to those.

CHAIR: Knock yourself out. We are going to be leaving at 11, though.

Senator KETTER: There was a recent article in the Financial Review which was entitled 'Don't trust the jobs data, says ex-chief statistician'. I am sure you are aware of the article, Mr Kalisch. The former chief statistician accuses the ABS of dropping 'strict methodological and operational practices' established over half a century. Are you able to detail what these practices are and why they were dropped?

Mr Kalisch : Perhaps I can comment on two aspects. One is certainly the comment about the current status and purpose efficiency of the labour force statistics. We have heard from other key stakeholders that use our labour force estimates, such as Treasury, the Reserve Bank, other economic experts and labour market analysers, and they have all provided us a perspective that our labour force estimates viewed over the last few years are consistent with their analysis of the economy and other indicators such as the level of economic growth, population changes, wage increases and hours of work. There was certainly an issue with our labour force statistics in August and September last year that the ABS recognises. We commissioned an independent review by a former ABS employee—an employee of the OECD—and he provided us with a report that had a number of recommendations that we have accepted and are in the process of implementing. Some of the issues raised by Mr McLennan, the statistician from 1999 to 2000, go to probably three aspects. The first one was around the introduction of eForms in around 2012; a change to the target response rates in the bureau in early 2014; and then the process we use to adjust for changes to our supplementary survey program.

On the first and second one, Mr McLennan suggested that I engage the services of a former ABS employee to check out those issues, which I did actually follow up. I engaged someone with considerable ABS methodological experience and also senior legislative experience from the ABS from a more contemporary period and received a report. It did not highlight that there was conclusively a problem in those areas, and we are still doing some further work to follow up in those areas.

On the other issue that I think was the primary dimension around the approach of adjusting for supplementary surveys, the approach used by the ABS uses an algorithm developed by the United States Census Bureau. That algorithm is internationally recognised and used widely within times series analysis. This prior correction technique, as it is known, has also been applied to historical labour force series so the supplementary survey effects are now separated from seasonal factors used to reduce the seasonally adjusted series. The considerable professional view of the ABS endorsed in an external peer review of the application by an academic expert is that this is the best approach. It is a technique that has considerable regard and it does actually deal with the issue that Mr McLennan thought was an issue—and certainly that the bureau recognised was an issue—that needed to be dealt with. It is our professional view of the ABS that this is the best approach.

Senator KETTER: Whilst, Mr Kalisch, I can understand why you would seek to involve people who have a deep understanding of the ABS's operational methods, can you understand why there might be claims that this has diminished the independence of this independent review?

Mr Kalisch : The independent review did talk about some of the particular approaches that could be used in improving our labour force estimates. We have adopted those recommendations and, as I said, are implementing them—and I think we have implemented nearly all of them now. We also report transparently to the community on progress with implementing that independent review, and I think the last update was even in our August or September bulletin.

Senator KETTER: Just going back to the article, it mentions some figures about the proportion of your budget that is spent on the labour force survey. I am not quite clear whether the figures are contradictory or not but it talks about six per cent or $14 million of your annual budget. Are you able to clarify that?

Mr Kalisch : Yes, they are the numbers that I received.

Senator KETTER: So those are correct?

Mr Kalisch : Yes.

Senator KETTER: Will the computer systems upgrade help to improve the accuracy of the ABS's labour force surveys and unemployment figures?

Mr Kalisch : There are probably two aspects around that. One is that the transformation program is primarily around re-engineering our statistical systems and our business processes. They are not expected to predominantly change the accuracy or the efficacy of our labour force survey. They will certainly improve our labour force systems that are used in those areas. That will certainly mitigate a number of the risks that we are managing through using old systems.

There are probably two pieces of work that are underway at the moment. One is that we are looking at our entire population statistics program and looking at potential opportunities to change the way in which we collect information for our Labour Force Survey. That is a very large exercise, and at this stage it is not clear that we have the funding to make substantive changes to the sampling approach or the other dimensions.

The other aspect that we are working on is looking at our population survey results against the other indicators of employment. The ABS also receive other information about employment in the economy through surveys of businesses and through other surveys across industry, so we are looking at ways in which we can, in effect, confront that data more effectively.

Senator KETTER: Are there any other ongoing steps that you will be taking to improve the accuracy of the Labour Force Survey?

Mr Kalisch : As with our main economic indicators, it is an area that we keep under regular review and we look to enhance as we can in some of those areas.

Senator KETTER: Do you continue to have any concerns about the volatility of the monthly employment data produced by the ABS?

Mr Kalisch : Over recent months—and this goes to one of the recommendations of the independent review—we have investigated the monthly volatility of our labour force estimates. The results that came out of that work—which was at least partly using a methodology that was developed by Statistics Canada, where they had some similar concerns in the public about their labour force estimates—showed that the monthly labour force estimates, particularly at a national level, were no more and potentially less volatile over the recent years than they were over past decades. I have some experience actually analysing labour force statistics from the 1980s and 1990s, and I can remember the considerable volatility from month to month in the seasonally adjusted series from that time. I think perhaps people have very short memories, or perhaps they have forgotten what it was like.

Senator KETTER: I am just going to ask you quickly about Project Archer, your computer system upgrade. Can you give us an update on that?

Mr Kalisch : There are probably two or three broad dimensions that we can say at this stage. It is a few months since we received the money in the budget. Probably the main work has gone into much more detailed planning. We had already prepared a business case for government to consider that spelt out in some detail the work that was required. We are now putting a lot more detail around that proposal—well, not just the proposal but the detailed planning. We are also fairly advanced in some of the procurement stages, and we have put in place a governance board.

Perhaps I will also take this opportunity to inform the committee that we have taken some steps to get some external expertise within that governance board. We have David Borthwick, a former secretary of the environment department and also formerly, before that, a very senior Treasury official, who has had a lot of experience with the ABS and our statistics. The second person we have managed to encourage onto our governance board is David Whiteing, the Chief Information Officer of the Commonwealth Bank—just looking for someone from outside government who has had some experience with transforming systems and transforming business while still delivering the business. That is the objective we have. We are looking to transform the business while not stopping the delivery of regular statistics.

CHAIR: Are they contributing already?

Mr Kalisch : Yes, they have already participated in a number of meetings. In fact, the partnership with the Commonwealth Bank is bearing more fruit, in that we are getting better understandings of their systems, their processes and some of the innovations that they are progressing that are not available elsewhere in the marketplace, so it has been a very good partnership.

Senator KETTER: Is it too early to ask you what, in broad terms, are the critical features of the upgrade?

Mr Kalisch : The critical features of the upgrade are where we are really massively re-engineering our entire statistical process, as well as putting in place—

CHAIR: It is a new system.

Mr Kalisch : It is a huge change. It is not just an ICT refresh. We are actually looking at our whole collection, processing and dissemination processes as well. It will take us five years.

Senator KETTER: Is the $250 million allocated in the 2015-16 budget sufficient to complete the entire upgrade to your satisfaction?

Mr Kalisch : Yes, that is the $250 million over five years. It is 2015-16, 2016-17 et cetera. We believe that that is sufficient for the process. We will probably put in some of our own internal money as well.

Senator KETTER: How does that upgrade interact with the shift to the digital census in 2016?

Mr Kalisch : We are certainly using some of the features that we are progressing through the census, and we hope that they will be able to be reused.

CHAIR: But you have run a full test, virtually, already with 100,000 people, haven't you?

Mr Kalisch : Certainly for the census.

CHAIR: And you have ironed a lot of the bugs out?

Mr Kalisch : We believe so.

CHAIR: Were there many? What were the main issues? Was it capacity? Step up, Mr Palmer; I would love to hear from you.

Mr Palmer : No, there were not really any major bugs. The e-form is software that is being modified for this census. There are some minor changes, but it is essentially the same technology we used for the census before, so it is very well proven.

CHAIR: That is good.

Senator KETTER: Finally, I will just ask about ministerial responsibility. There were some reports that there was some confusion as to which minister the ABS reports to. Has that confusion been removed?

Mr Kalisch : We have certainly been talking and engaging with the newest Assistant Minister to the Treasurer and have been for a number of weeks.

CHAIR: Are you confused, Senator Ketter?

Senator KETTER: So that has been sorted?

Mr Kalisch : We are in the Treasury portfolio. Ultimately we report to the Treasurer as well.

Senator KETTER: So were those reports that the ABS was not aware of which minister it was supposed to report to inaccurate?

Mr Kalisch : I think there was a bit of journalistic licence there.

CHAIR: We are done, so thank you for coming when you did. Thank you for being patient when we pushed ACCC over time. Thank you for being such wonderful people and doing the great work that you do. It is terrific. Thank you very much. Thank you very much, Senator Sinodinos.

Committee adjourned at 22:52