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Getting the data right: Geoff Bascand comments on the value of statistical information to New Zealand and to global development and the work of Statistics New Zealand.

Official statistics have two broad roles. The first is to contribute to policy development and operation and the second is to facilitate public debate and enable accountability. Statistics are used to establish specific policy settings. They capture the impact of specific policies on outcomes. New Zealand has an effective statistical system m and internationally it punches above its weight. It participates in numerous international statistical organisations and has been a leader in developing a broader set of dials on countries' well-being that also include environmental and social dimensions. The importance of such work was highlighted on World Statistics Day, 20 October 2010.

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The United Nations mandated World Statistics Day, 20 October 2010 (20-10-2010), in recognition of the critical importance of official statistics to community, national and global development. In keeping with that intent, I want to convey the international and historical significance of statistics. I will provide some examples that illustrate the influence of statistics, and the work of Statistics New Zealand in helping New Zealand to grow and prosper. I will then discuss the global statistics system. I will quickly go over some aspects of the New Zealand statistical system, before finishing off with challenges and opportunities ahead.

The collection of data is nearly as ancient as recorded civilisation itself. Early censuses were typically conducted in response to the desire by rulers for more efficient tax gathering or to better assess the state's readiness for war. Only in the last few hundred years has there been significant development of sophisticated analytical methods for interpreting data -and the burst of creative advancement in presentation and dissemination is a modern phenomenon.

The origins of estimating national income can be traced to the 1660s, propelled by a desire to illustrate options around more efficient and equitable forms of taxation. By the early 1800s there was an acute awareness among social reformers of the potential benefits of employing statistical analysis to advance programmes for change. The reformers' research was wide, covering mortality rates, incidence of different diseases, living standards, demographics, relative national economic prowess and much more. Status quo defenders also used data, driven by a countervailing desire to map progress and allay any emerging social unrest or undue demands for radical social reform.

Many early reformers, anxious for a new scientific tool to better tell the stories they wanted to highlight, thought that they were on the cusp of unlocking an all-encompassing predictive science of society. Over-exuberance, in time, bowed before a sober refocusing of statistics as a method of analysis in the service of humanity.

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We now understand statistics to be an applied mathematics-based empirical discipline involving the systematic collection, analysis, interpretation, presentation, and distribution of relevant data. We also recognise official statistics for their specific role in providing impartial, trustworthy, high-quality and relevant knowledge.

Statistics' power

The statistical fruit of this discipline is the most powerful type of information around. Statistics help to shape people's lives, communities, our country, and our world. They inform attitudes, and decision-making. Statistics, then, measure the impacts of the actions taken. They tell us how we are doing as individuals, as families, communities and countries. The ancient Greek physician Hippocrates summed it up nicely--statistics 'declare the past, diagnose the present, foretell the future'.

I want to refer briefly to two complementary but slightly different roles of official statistics. The first broad role is the use of statistics in policy development and operation. In many ways this is our bread and butter--providing data that offers evidence to policy-makers as they design policy and evaluate its effects on well-being. The second broad role of official statistics in fostering progress is to facilitate public debate and enable accountability.

Let me elaborate on the policy and decision-making role. Official statistics are used extensively for monitoring and developing public policies, for determining the delivery of services, and for decision-making in the public and private sectors, including the business, voluntary, and community sectors. They are applied in four main ways. Statistics give a picture of where we stand as a society at a fairly high level of aggregation; for example, if our rate of economic growth is lower or higher than similar economies, if inequality is growing or declining, how our population is changing. These indicators shape policy settings and provide prima facie evidence of success or 'problems'. Statistics are required by policy-makers for insight into the potential drivers of the aggregated picture. Policy analysis requires both understanding of how the economy and society is functioning and dis-aggregation that informs the nature and causal factors at work.

Valuable information

Statistics are used to establish specific policy settings, be they minimum wages, indexation of benefit rates, regional and socio-economic allocations of health and education funding, or the number of Maori seats in Parliament. Statistics capture the impact of specific policies on outcomes. In this category, statistics vary from high-level indicators to more detailed tables supporting research and evaluation studies to microdata based analyses on the behaviour and dynamics of firms or individuals affected by a specific policy, as well as others not directly affected.

From the Republic of Korea to Mozambique and from Tonga to Norway, data on real GDP, the CPI, and trade patterns are critical inputs into monetary, fiscal, and regulatory policies. These data have major impacts on governments' spending, on budget projections, and on financial and economic markets.

The importance of statistics can be gleaned from some New Zealand examples of use. The consumers price index, or CPI for short, is our inflation measure. The government uses it to adjust about $19 billion of New Zealand superannuation, unemployment benefits, and other payments each year. The figures that the CPI influence are large and mean it is critical that we get the statistics right. A 0.1 per cent over-estimate in the CPI would lead to annual government spending increasing by about $16 million, as well as impacting on interest and exchange rates. Accuracy is truly valuable.

Annual figures

We released the annual balance of payments figures in September, including tables on our country's external debt--which totalled $116 billion--and how much was hedged (93.3 per cent). A credit rating agency said that we have high external debt for such a well-rated country. The agency said a factor in New Zealand maintaining its rating is that its high hedging behaviours protect the debt from risk of escalation. That is just one statistic, but it is critical to an agency making a decision that could hit New Zealanders in the back pocket. It is really important that credit rating agencies, as well as other influential international bodies, do not just see our statistics, but that they have trust and confidence in their accuracy and independence.

Official statistics underpin decisions around billions of dollars of spending on public services. For example, the New Zealand Transport Agency oversees $2.1 billion per year of central and local government spending on infrastructural roading and bridge projects. Contracted prices for these projects are adjusted for cost fluctuations, using 'cost indices for infrastructure' published by the transport agency. Seven of the eight cost indices--five business price indexes, one labour cost index and the CPI--are compiled by Statistics New Zealand. The transport agency reports that contractors become very vocal when they find that the cost indices do not reflect changes in their input costs, and there have been cases where contractors have been at significant risk of going out of business when changes in the cost indices have not sufficiently covered increases in their input costs.

Turning to how statistics encourage transparency and accountability, former prominent American essayist Simeon Strunsky said that 'statistics are the heart of democracy'. Statistics are vital to facilitate informed debate and to encourage transparency and accountability within societies. Statistics help debunk myths while simultaneously acting to shape awareness and cultivate agendas for change. Consider the role of official statistics in the measurement, and therefore the promotion, of the human rights commitments that almost every nation has agreed to. To give substance to international declarations on human rights there needs to be agreement on how human rights and democratic governance might be uniformly measured. These are issues being tackled, for example, by Metagora, a collaborative OECD and Paris21 project. For this project Metagora focused its early work on methods, tools and frameworks for measuring human rights and democratic governance.

Important lessons

Lessons from its 2004-06 pilot phase include the conclusion that measuring human rights and democratic governance is technically feasible using statistical tools. That means it is possible to provide information and indicators on relevant issues. Simply put, official statistics are the feedback loop on a country's progress. They are the means by which citizens hold governments to account. Is the country progressing satisfactorily? Is it pro-gressing as promised or required by law? Is it doing so as told by government ministers?

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Whereas the policy needs for statistics are arguably specified by the government of the day, the transparency and accountability role is as much for the parliamentary opposition, interest groups, the general public, and future policy debates.

Some examples will illustrate my remarks. In New Zealand, Pacific development groups have used official statistics on the numbers of speakers of their language to highlight the need for more targeted language programmes. They have worked with language providers and the government to ensure more Pacific people learn their language, strengthen their identity and enrich our country.

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Released on 20 October, a joint Treasury and Statistics New Zealand paper on labour productivity comparisons between Australia and New Zealand contributes to the on-going debate about economic differences between the countries and what should be done about them. The paper shows that the gap in economy-wide labour productivity levels, which favours Australia, has remained roughly constant for the past decade at around 30 per cent, after opening up significantly in the late 1970s and early 1980s. On the official measured-sector basis, New Zealand's average annual labour productivity growth rate (2.2 per cent) exceeded Australia's (2 per cent) over the 1978-2008 period.

Statistical systems

On that New Zealand-Australia note, let me turn to the international statistical system. The United Nations through the UN Statistical Commission is the highest policy and standard setting body. There, statistical reporting requirements are set and harmonisation of population, national accounts and environmental measures achieved. The Statistical Commission is supported in this role by subordinate and specialist international bodies for specific subject matters. For example, the ILO is responsible for specifying employment, unemployment and wage statistics, WHO for health statistics, and the IMF for balance of payments, financial and government fiscal reporting. The OECD has become increasingly influential through its research and policy functions in contributing to the development of new measures, as well as in the dissemination of statistical reporting.

The United Nations has a number of regional bodies that provide technical development assistance, knowledge building and co-ordination. A promising recent development has been the re-establishment of the Economic and Social Commission for Asia and the Pacific (ESCAP) Statistics Committee as an active statistics body in the Asia-Pacific region. New Zealand is an active participant in these international fora. We gain and share knowledge and capability, benefit from and contribute to standards setting, and conform to international reporting requirements.

High regard

Internationally, we punch above our weight. We are seen as running on the smell of an oily rag, yet we are highly regarded. Our statistical experts are sought after to advise on other countries' projects, speak at conferences and so on. Recently one of our principal statisticians led the Technical Advisory Group for ESCAP in defining the core set of economic statistics that should be produced by ESCAP members. Likewise, we participated in the statistical review of Chile as part of the process of its entry to OECD membership.

We often contribute to international work of New Zealand officials, through the provision of statistics that support activity such as trade agreements. Much like other sectors, we need to support certain regional areas, for example our Pacific neighbours. We are just about to provide Tokelau with support for carrying out its 2011 census. The Pacific Islands countries are increasingly aware of the importance of good information to support their development and help good decision-making. And like other government agencies, we know a stable Pacific is desirable.

Measuring progress

A hot topic both in New Zealand and internationally is the need for broader measures of a country's progress than we have had. The UN Millennium Development Goals indicators, the OECD Global Project on Measuring the Progress of Societies and the Stiglitz-Sen-Fitoussi Commission on the Measurement of Economic Performance and Social Wellbeing (known as the Stiglitz Report) are notable international initiatives in this arena. Domestically, Conservation Department chief executive AI Morrison recently stated that trashing our environment was good for our economy, as measured by gross domestic product. He said this pointed to problems with the GDP measure. Likewise, after the Canterbury earthquake, commentators pointed out that the disaster was highly likely to show up positively in GDP, notwithstanding its destruction of capital.

GDP is one of a suite of measures of economic performance and provides a good dial on economic activity. What is increasingly recognised is the need to have a broader set of dials on a country's well-being that also include environmental and social dimensions. New Zealand is a leader in this arena. New Zealand signed the 1992 Rio Declaration promoting sustainable development. In the following decade, Statistics New Zealand worked on a sustainability framework and produced pilot studies which, in July 2009, culminated in the landmark report 'Measuring New Zealand's Progress Using a Sustainable Development Approach: 2008'. It provides an overarching view of the state of New Zealand's environmental, economic, and social position through time, and in terms of the resources available in the future. It permits meaningful insights into that performance within an internationally agreed conceptual and measurement framework.

This report is a great start, but we need to sustain this endeavour. Measuring progress and independently providing information about the health of a nation is the most important task a national statistical agency can undertake. Official statisticians must enter public debate about the necessary measures of progress, and normative lists of 'critical national statistics' may be an important tool in their armoury. Defining Tier 1 statistics may serve this purpose in New Zealand, and I shall elaborate on these below.

Global recession

The global recession has highlighted a number of key features of international statistical reporting, marked by continual debates about the relevance, accuracy, timeliness and utilisation of statistics. There has been considerable international debate around whether statistics could have done more to predict the global recession. The question was even posed whether bad, or the absence of, statistics caused it. (The answer I hasten to add was no).

In New Zealand, we came under pressure to produce more timely statistics as policy-makers attempted to respond quickly to the dynamic international situation unfolding. The following quote from former American economist and statistician W.A. Wallis perhaps sums up why: statistics may be defined as 'a body of methods for making wise decisions in the face of uncertainty'.

It is often a dilemma between producing statistics more often or more quickly after collection dates--and accuracy/ quality. In recent times we have managed to produce a number of our releases more quickly to meet customer needs. But for others, customers tell us accuracy is paramount. We need to keep engaging with our users to strike the right balance.

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The international conclusions were to provide clearer advice on the statistical treatment of some features, like financial derivatives. Extended and more frequent measures of assets and liabilities are proposed. Greater effort by statistical offices is neeed to report information in insightful ways, such as greater reference to trends and ratios that may illuminate imbalances.

Local system

New Zealand's statistical system operates under the umbrella of the UN Fundamental Principles of Official Statistics and our own Statistics Act, put in place in 1975. This legislation gave the role of the Government Statistician statutory independence amongst other things.

There was a significant update to our system in 2004 when Cabinet endorsed the Top Down Review of Official Statistics and gave the Government Statistician a renewed mandate to step up leadership of the official statistics system. This is the system that co-ordinates government-wide production of statistics.

The Cabinet-directed tasks included establishment of the list of Tier 1 statistics--the group of statistics that are our most important performance measures for New Zealand -and consultation by the Government Statistician with his public sector colleagues to develop a set of principles and protocols to ensure the quality and independence of these Tier 1 statistics. In 2010, we have really stepped up our leadership of the system. The key activity is that we are currently revising the list of Tier 1 statistics, looking at whether we have got the right measures included, and whether there are any gaps in statistics that should be reported in the economic, social, cultural and environmental domains. We have also been asked by the government to look for opportunities to rationalise statistics public sector wide, as part of the value for money drive.

On World Statistics Day, given the many achievements of official statistics, it is easy to celebrate. Given the history of statistics, the first ever World Statistics Day has been a long time coming! Looking ahead, there are lots of challenges and opportunities for statistical life in New Zealand, and internationally. On 8 March 2011, we conduct our biggest survey--the 2011 Census. It will provide a crucial lens on changing life in New Zealand.

There will be continuing debate about broader measures of progress. I am looking forward to the challenge and opportunities inherent in Statistics New Zealand's aim to increasingly give New Zealand the information it needs to grow and prosper.

Geoff Bascand is the Government Statistician. This article is the edited text of an address he gave to the NZIIA in Wellington on World Statistics Day, 20 October 2010.
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Author:Bascand, Geoff
Publication:New Zealand International Review
Geographic Code:8NEWZ
Date:Jan 1, 2011
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