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Economics Legislation Committee
17/10/2012
Estimates
TREASURY PORTFOLIO
Australian Bureau of Statistics

Australian Bureau of Statistics

[22:30]

CHAIR: I welcome Mr Sutton and officers from the Australian Bureau of Statistics. Do you have an opening statement, Mr Sutton?

Mr Sutton : I do, Chair.

CHAIR: We only have 15 minutes.

Mr Sutton : I will be very brief. As you are aware, senators, the census of population and housing is the largest statistical undertaking by the ABS and one of the most important for our nation. You will also be aware that the first release of the census information occurred on 21 June, containing a range of core demographic information such as small area counts, dwellings, families and a core range of sociodemographic data around income, religion, language and ancestry. It is worth noting that the 2011 census achieved a 98.3 per cent response rate, one of the highest in the world and an improvement on 2006. There was also an overall improvement in the population count and, whilst that was very pleasing, I would like to bring your attention to the fact that we were particularly pleased with the overall improvement in the Indigenous count, due, I guess, to a range of factors, including a better collection methodology and additional resources provided by the government which were very strategic and helped us to pull off that big improvement in the Indigenous count.

Relating to that, I also bring to the attention of the committee that the second release of the census is due on 30 October. It will contain information on labour force participation, occupation in industry employment, highest level of educational attainment, place of work, and usual address one year ago and five years ago, which is obviously very important in understanding mobility in the Australian community.

Finally, I bring the committee's attention to a new ABS app—actually our first app—for iPhones and iPads. It is freely available and allows users to type in their postcode and receive key socioeconomic information about the place they live based on the 2011 census data. I encourage everyone to have a look and download that app by typing in ABS Stats. Thank you.

CHAIR: I am sure we all will.

Senator WHISH-WILSON: Thank you Mr Sutton. You are probably aware that my party is interested in non-GDP measurements of prosperity, wealth and economic production. You have outlined 17 criteria in your report Measures of Australia's Progress. Could you tell us a little bit more about how you selected those criteria, obviously not individually, but what sort of work went into that in your census process?

Mr Sutton : I will provide some opening comments around that and perhaps pass to my colleague Jill Charker, who may fill in some more detail. I assume that senators are aware of the fact that the ABS over a decade ago engaged in this pathfinding work, which is later being used by a range of international institutions including the UN and the OECD. The ABS was actually breaking ground in this area well over a decade ago. We have been developing Measuring Australia's Progress since that time with a number of releases. We have recently undertaken a range of consultations with the broader community, with various experts providing advice to us, in order to review what the next version of that might look like. In answer to your question, we consult very widely, from the non-government sector through to business and to various levels of government, to inform the ABS of what those sectors of the community believe are important to them in understanding progress in Australian society. Based on that wealth of information that we draw into the ABS, we make a final decision about what is reflected in those areas.

Senator WHISH-WILSON: Do you think it will ever evolve into a wellbeing index that is published on a regular basis and updated using census information? Do you think it will ever get to that stage?

Senator Wong: You might also want to ask these questions of Treasury tomorrow.

Mr Sutton : Treasury has a framework that it assesses policy against, which is broader than simply an economic framework. As the minister has indicated, you may well be interested in that as well. In terms of measuring Australia's progress, the idea of an index has been around for a little while. We are involved with various groups that are looking at indexes. We do not particularly support the ABS going down that path of publishing an index at this stage. There are a range of reasons behind that. We prefer an approach where there is a dashboard, and where there are a range of social, economic and environmental indicators that people can look at and come to their own judgement about how they might want to weight those various measures of progress in Australia's society, and about whether they think Australian society is progressing across those key areas of interest.

Senator WHISH-WILSON: I can see how that will be useful. I suppose the issue for people's expectations is that these need to be published fairly regularly and that they need to become mainstream before people start adjusting their behaviour or before all their happiness is connected to the index in question. I know there are some fairly advanced benchmarks in other countries, and I was wondering specifically whether your Australian progress report would be evolving to that stage.

Mr Sutton : We are very interested in that whole area and we are working with a range of groups both in Australia and overseas around indexes. At this stage we are not intending to publish an index. Having said that, we are still exploring all the various aspects of how you might go about putting together an index. Whilst a particular senator might believe that to be a copout, I do not believe that it is.

Senator CAMERON: Oh, come on!

Mr Sutton : It is really a judgement call we are making at this point in time. The difficulty is recognised by all of the people involved in these indexes—the difficulty of trying to weight those things in a way that reflects some sort of average view in Australian society of the importance of those things. It is not an easy thing to do and it is quite difficult, methodologically, to do that. It may well be that in the future someone comes up with an approach that we think is robust and reliable, and will actually measure things in a transparent way that you can understand without having to go back and unpick an index in order to understand which things are moving in which direction. To give an example, it can be very confusing sometimes to have an index that might look like is improving but is, in fact, improving on two dimensions but not the third. It is very important to understand that while we might be improving in the economy and in various social areas, like health and education, we might be going backwards in the environment. An index would disguise that fact.

Senator WHISH-WILSON: In terms of the environment and environmental valuations, is insurmountable that we will ever be able to value non-cash flow based valuations for our environmental assets? I know you have done a bit of work on that in your Environmental accounting in practice reports. Is that going to be abandoned or is that going to be progressed?

Mr Sutton : These areas are developing areas, and I would not want to rule out anything at the moment. It is something we will continue to work with and see how far we can go.

Senator CORMANN: Back on 25 July 2012 the ABS issued a statement in the context of the release of the CPI data for June 2012. You said:

The ABS will not be able to quantify the impact of carbon pricing, compensation or other government incentives and will not be producing estimates of price change exclusive of the carbon price or measuring the impact of the carbon price.

You further stated:

The ABS is unable to measure the impact of the carbon price. It is therefore not known if the changes in prices are a one-off impact or continuing into future quarters.

Who made the decision not to quantify the impact of the carbon price or price changes exclusive of the carbon price? Was it the ABS or the government?

Mr Sutton : I might just pass this question to Mr Hockman. He has expertise in this area. I will ask him to address that question.

Mr Hockman : The Statistician made that decision on the advice of the staff of the prices branch. It was based very much on our experience with the introduction of the GST, where we did attempt to measure that and separate out those effects. The complication is that you never fully know the counterfactual situation of what underlying movements in prices were actually occurring. The real complication comes in measuring what you might call the second-round or downstream effects of such a change. The indexes are designed to measure overall movements in prices. We are confident that we will get the full impact into the measures of all of our price indexes, both the CPI and the producer price indexes, but we do not believe that we can meaningfully separate out the various factors that in any particular quarter or any particular period impact upon those price movements. The job is to measure the movement, not the reasons for the movement.

Senator CORMANN: I refer you to a statement in February 2009 by the Governor of the Reserve Bank. In relation to the carbon tax, he said that the Reserve Bank 'should be able to look through the initial increase in inflation' when assessing the consequences for monetary policy. If the ABS cannot or will not measure what the RBA is supposed to be looking through, how will the RBA actually be able to look through what has not been measured and focus on the carbon price exclusive change in the consumer price index?

Mr Hockman : They face a different issue. They are not looking at, perhaps, the precision that we need when we are producing an index. We would need to be able to measure it at each and every component. They know directionally what is going on. We believe that, at least if people are interested in those things, they should be free to try to model those movements, and then the RBA can focus on the things they think matter to them, in terms of trying to predict where inflation will be heading post-carbon tax.

Senator CORMANN: But it is too hard for the ABS?

Mr Hockman : With the resources we have, certainly, Senator.

Senator CORMANN: There is the ABS wheat publication, Stocks of grain held by bulk handling companies and grain traders, Australia, which you have been undertaking on a consultancy basis to assist the wheat industry, and it will cease from 17 October 2012, with the final release to be on 9 November 2012. Can you talk us through the reasons for that?

Mr Hockman : The reason is simply that the survey was, in fact, a user funded survey. The user has ceased to fund the survey, so the survey will also cease.

Senator CORMANN: Who was the user?

Mr Hockman : The principal founder of the survey was Grain Growers Limited.

Senator CORMANN: A private operator?

Mr Hockman : A private operator was funding us to conduct that survey. They have withdrawn the funding, so the survey will not continue without some other source of funding.

Senator CORMANN: Yesterday, on 16 October, you released 'Government Financial Estimates, Australia, 2012-13'. It has a series of figures in terms of the operating statement 2012-13—all levels of government. It has figures for the Commonwealth, the states et cetera. Are they just lifted from the budget papers and reported as such or do you do anything else with them?

Mr Hockman : We receive information from the Commonwealth department of finance and from state treasuries. We compile those based on the information we receive from those sources.

Senator CORMANN: So, essentially, you are like a letterbox: you get information from different spots and you just put it in one coordinated document?

Mr Hockman : For a lot of our publications we do some editing to make sure that there is some quality control over those estimates but, eventually, in the final analysis, with the answers we receive—be it from, in this case for this particular publication, the governments or when we are talking to business—we end up taking the advice from the people who are compiling the data at source.

Senator CORMANN: When you say editing, you mean the numbers presumably.

Mr Hockman : The editing means, in this context, quality control.

Senator CORMANN: Of what?

Mr Hockman : If we do find that there are large movements, we will at least try to understand what is behind those large movements and to test them against other sources of information.

Senator Wong: Testing.

Senator CORMANN: How often do you release this sort of report?

Mr Hockman : Is that a quarterly? I would have to check on the detail of that.

Senator Wong: Which sort of report? This one precisely?

Senator CORMANN: The Government Financial Estimates, Australia. After every round of budget papers, MYEFOs, did you keep putting out one coordinated document? I am intrigued by the fact that you think that there is a need to edit, evaluate and scrutinise any large movements. I suspect that there have been some large movements in budget outcomes and deficits, in particular, under this government, so you would have been quite busy with editing. I am not sure you would have been able to edit the most recent movements.

Senator Wong: Have you finished making your point that you know the ABS is not going to be able to respond to, Senator?

Senator CORMANN: Thank you, Chair.

CHAIR: Thank you, Mr Sutton, and thank you to your officers for their assistance this evening.