Save the Stats

Just to echo what other economists have already said, the mooted cuts to the Australian Bureau of Statistics budget seem to me a false economy. As economist Barry Hughes told SMH journalist Jessica Irvine:

This is a very bizarre time to be cutting back your statistical indicators at a time when, if we’re not sailing through a fog, we’re certainly sailing through a period of reduced visibility

I’m informed that one of the ways the ABS plans to get $20 million in savings is by scrapping the Employee Earnings and Hours Survey, which has been running since 1976. If true, the 5-yearly census will be the only source of information on union membership and earnings by occupation. Want to know how the gender pay gap has changed? Or how teacher earnings compare with other professions? Under the new regime, the ABS won’t be able to tell you until the next census, due in 2011.

If anyone is putting up a petition, just let me know where to sign.

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16 Responses to Save the Stats

  1. hc says:

    What are the benefits compared to costs of $20 million? Is it really essential to have annual data on such things as gender gaps and unionisation.

    I don’t know but how can you make an a priori judgement?

  2. Matt C says:

    Andrew,
    Many, many other government agencies (both State and Commonwealth) have made formal and informal submissions to the Australian Statistician protesting the proposed abolition of the EEH survey.

    As an aside, gender pay gaps are sometimes calculated using the trend estimate AWOTE figure for full time adults. Also, as far as trade union membership goes, is this not covered in 6310.0 – Employee Earnings, Benefits and Trade Union Membership?

    [Notwithstanding the above, I do agree that scrapping EEH would be a disaster].

  3. Seneca says:

    I notice this is just “one” of the ways it is going to meet the cut. It’s not a Washington Monument is it? It seems designed to draw criticism from an important client group (economists like Andrew).
    Generally you would hope that organisations would do a review of priorities and also look for efficiencies rather than just cutting a particular service (especially since the ABS can actually sell their stuff can’t they, through subscriptions etc).

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  5. Jennifer says:

    Me too. Although in my case it is somewhat selfish. I just love dipping through the ABS website – the information you can find there is amazing. Although, to hc above, the fact that any citizen can get free information about the age, sex, household size, dwelling size etc of pretty much any cut of their local area is very helpful in local politics.

    I find myself playing with the stats to refute points made by beauracrats who have made simple mistakes (like adding two adjoining neighbourhoods together thus completely missing a trend in one).

    Excellent, free, statistics, are the kind of public good even a libertarian should love.

  6. Kevin Cox says:

    This is what happens when you get these “arbitrary” calls for government departments to find savings. What tends to happen is that the department in question says – well we have to cut something so let us see what will get the most flack. Now I am not saying the Bureau of Stats is doing this but we have seen a few recent examples such as the current brouhaha over the National Capital development authority.

    A much better solution to keeping organisations like the the bureau of stats lean and mean is to open it up to a bit of competition. Why not let other organisations do some of its work or why not let other organisations bid to some of its work but under its direction and control.

    My business is asked to fill in two surveys every two months and I can assure you that our organisation could do the same job for a lot less than the way it is currently administered – both for the Bureau and for us. My guess is we could do it for about 1/10th the cost using electronic forms instead of paper forms and that have almost all the same information each two months. I would also make it worthwhile for the businesses to fill in the forms by offering to give them group statistics as they get compiled.

  7. Leopold says:

    Shocker of a decision. Absolute shocker.

  8. Thinking in old ways says:

    It is my understanding that the the survey they are proposing not doing is the EEH – this is the employer based survey of earnings and hours (and is usually undertaken every two years – so there will now be a four year gap.) The EEH is the only employer based survey that provides some information on the distribution of earnings – from the perspective of the employer’s pay records.

    The EEBTUM – which is a household based survey will, as I understand it, continue to be collected on an annual basis – and will give the details on hours worked and pay, as well as trade union membership. (By the way the most recent EEBTUM was released a week ago and is up on the website as 6310.0.) That is the data that Andrew is referring to will still be available.

    Suspending the EEH is a pity as, despite varying ways in which ABS have published the data, it is most probably more accurate in reporting low incomes (the EEBTUM data, as can be expected from a household survey, is a little bit noisy).

    Seneca – some years ago ABS recognized that the statistics they produce (and the information for which is provided free of charge by Australian individuals and companies) are a public good and have released most of the data they produce free on their website – the only exceptions are some Confidentialised Unit Record Files from household surveys – which Universities get under some agreement and special tabulations – which can get quite pricey. (It was also a matter that the charging regimes resulted in them spending most of their time charging government departments.)

    Kevin – I am not sure if you are talking subcontracting out bits of work – or competing agencies. The main competition that ABS have tended to face on the academic side was the HILDA survey – and their response has been mainly on the quality and client service side – they have lifted their game. As far as other data is concerned competition is limited – Roy Morgan have been running an alternative unemployment rate series – but this does not seem to have got much traction, while most of the other contested data is between different private groups – again Roy Morgan and Melbourne Institute have competing consumer confidence measures.

  9. conrad says:

    Perhaps the idea is that people will be happier not knowing things — people will be able to complain about pay gaps between professions, gender, cities etc. based on the latest data forever!

    It will interesting to see what happens if they really do cut them back a lot. Perhaps they can simply save money by doing a shoddy job like has happened to the universities — given the average level of statistical knowledge people have, I doubt most people would notice. Even when people got decisions wrong due to shoddy data, the ABS wouldn’t need to take responsibility, since it would be very hard to check historical data never collected and the ABS appears to only be a provider of information to other agencies.

  10. Kevin Cox says:

    Thinking in old ways,

    I am only basing my comments on my observations of my contacts with the ABS as a business and as a individual who occasionally interacts with them. I have little knowledge of the statistical work they do or how they operate. My observations are about their interactions with the public in obtaining much of the information on which they base their statistics.

    If they subcontracted several groups to try out different data collecting methods I believe they could get a much better datasets for lower costs.

    For example, the business survey forms I fill every few months can be “automatically” filled out from information we keep in MYOB, from our tax returns, from our board reports etc. If instead of doing a survey they simple asked us to report certain figures and changes to our status on a regular basis then it would be easier for us, cheaper for them, and give more reliable figures.

    I went to a seminar the other day organised by the ACT government on “wellbeing” measures. The information that might come from these measures will be of great interest to many readers of Andrew’s blog and it is likely that the ABS will be asked to design surveys to get the stats. The problem with all these sorts of measures and surveys is not designing it the first time and getting the first lot of surveys filled out but it is the ongoing effort in keeping the measures up to date. This can be is done in other ways than a regular survey. For example getting the data from transactions that people do for other reasons. I would have no worries about passing on the details of transactions on my bank account providing I or the business was only identified by my characteristics – and not linked to me. This could be “sold” to people and to businesses as an aid to their normal accounting operations.

    I would have no concerns about passing on any electronic information about any of my transactions as long as i do not have to do any work and it all happens in the background and is private – and I expect most people would feel the same.

    This is the sort of thing I am talking about. This approach would save the ABS heaps and yet give better stats. They are unlikely to do it “inhouse” because it is off their radar and would be too risky. This is what I mean by opening up the ABS to competition.

    This applies to most government departments for many of their administrative systems. I can give you dozens of examples where the processes of government departments are at best archaic. I think part of the problem is that when a person in a department puts in a system it cannot “fail” and so they do not take risks. I would like to see departments able to take risks and that is best done through a market where the suppliers are permitted to fail. The great thing about markets is not success but possibility of failure as that fosters innovation.

    In defense of many government departments things are getting better. We will be putting in a tender response for a system to do bus ticketing in the next couple of months where the tender specs are not meant to “give the solution” but give the functionality. We will go in with a system that not only does ticketing but will be integrated with other demographic facts so that the people running the system will have information on passenger numbers and the characteristics of the passengers all in a privacy friendly way. We also hope to integrate bus ticketing with car pooling and so find out about people who do not use public transport. Of course we may not get the full tender but we may get the information part of the system.

    To give another idea on how competition (or rather choice) can be used to get better systems – if Mr Rudd wants to investigate new ways of taxing then I would suggest he pays several external groups to come up with the details of how a new tax system might work – instead of the government trying to figure it all out with or without external consultants and then setting the ATO to implement it or go out to tender for a system.

  11. Even I am against this cut in government spending. Apparently the ABS is going to axe the Year Book as well. I never use the Year Book because I can find the original data source. But for most people the Year Book is the easiest way to find commonly requested numbers.

    The National Library has been hit as well.

    This really is ridiculous. They are cutting services only governments are likely to provide to save small sums of money while spending billions paying people to do things they would do anyway.

  12. ChrisPer says:

    Kevin Cox, thanks for a spot-on comment. Bedtter than 99.99% of what we have seen from the 2020 wnakfest.

  13. Dave Bath says:

    Aaaah. I smell a rat.

    Without data from an independent and reputable ABS, politicians get to support their proposals using data from a consulting house, without publishing the details for close deconstruction.

    Now, more than any time in the past, a trusted source for detailed and timely datasets is essential for good decisions. If anything, the budgets for agencies like the ABS should be expanded considerably.

    Information is power. Decrease the trustworthiness and amount information available to people and, …

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  15. Bill says:

    Independent, reliable, continuous and timely data is fundamental to making or defending [for that matter] good public policy.

    Where’s that petition?

  16. Josh Healy says:

    If it is the May EEH survey being targeted for elimination or supension, and not also the August EEBTUM survey, there will still be annual data available on employee earnings, hours, and union membership (and also a CURF every two years which can be used to construct an hourly wage measure).

    The main consequences of scrapping EEH would be:
    1) what TIOW has said already – that earnings data collected from employers’ payroll records would no longer be available. This might not matter much for the estimation of the key aggregate statistics, like median weekly earnings, but would reduce the quality of information available at disaggregated levels (e.g., within industries) and for the bottom end of the earnings distribution. Household surveys, such as the Survey of Income and Housing or EEBTUM, and the Census, would be poor substitutes for the large employer sample on which EEH is based. This is because individual employees are not as accurate as employers in separating out the various elements of weekly earnings, such as overtime, casual and leave loadings, and other common forms of compensation supplementing their ‘base’ pay rate.

    2) the other consequence would be the loss of data on methods of setting pay. None of the other commentators have mentioned this, but the ability to compare earnings for employees on awards vs collective and individual agreements remains a critical input to minimum-wage fixing decisions and to other pay-setting negotiations. There is no other place that these data are collected currently, and to my knowledge the ABS has not proposed to shift this component into another of its existing surveys. How will members of the Fair Pay Commission determine whether their increases are actually ‘fair’ without having clear evidence on how minimum pay rates compare to the rest of the wage structure?

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