To build a comprehensive economic debate in policy we test hypothesis with real data to: determine trends, explore the reality of theory, and predict how individuals will respond to incentives (positive and regulations). Facts allow for the development of evidence-based policy that ideally should lead to welfare improvement. Data allows for the evaluation of policy decisions.
But evidence based policy is undesirable by those politicians who trust their feelings. The media game of pointing out falsehoods (Fact Check) appears to be running out of steam as it has little to no impact on individuals future statements. However, those same individuals who spruik feelings can influence public expenditure. They also know that without data, rational arguments are easier to defeat.
A critical provider of data to the policy debate is the Australian Bureau of Statistics (ABS). The ABS 's desire to increase the speed of reporting on the CPI reporting from a quarterly basis to a monthly basis sounds like they are doing alright.
However, if you type the words ‘ABS funding Cuts’ into your search engine, you end up with a raft of stories detailing funding cuts, staff layoffs, the delays in upgrading infrastructure, etc. The recent report by the ABS has the following chart
While the funding looks fairly constant, I believe the data is nominal and not real values. So using the RBA Inflation Calculator that $350 million in 2000-01 equates to $544.4 million in 2017 values. Or putting it in another way what the ABS received in 2016-17 is only 64% of their budget in 2000-01.
Budget slashing comes with a cost. Its not just the people, the skills, the infrastructure that helps create costs savings, but it’s the reduction in data. This reduction in data comes with real social costs, it allows feelings and not facts to dominate, reducing economic welfare.
The lack of data was noted in the 2007 Water Act where funding was allocated to collect data. A quick cut from my PhD
The Water Act legislated the roles of:
The MDBA was allowed to commission external parties to fill knowledge gaps. A principal knowledge gap was undertaken by the Commonwealth Scientific and Industrial Research Organisation (CSIRO), who were given the responsibility for determining the MDB’s sustainable water yields, and quantifying the risks climate change posed to the SDL (CSIRO 2008).
While the Basin Plan isn’t perfect, this data (while not perfect, and this is a long debate for a later post) has definitely helped enable the policy debate. When no data existed before, imperfect data provides a starting point for discussion.
However, the decommissioning of processes designed to collect data and the decommission of data sets comes at a cost. This cost is ultimately born by society.