- Email: [email protected]
Organizing official statistics for the 21st century
Organizing Official Statistics for the 21 st Century
Len Cook* Sandra McDonald
Official statistical offices are often included in government moves to charge users for services. In New Zealand, the change from operating a public statistical service fully funded by government to competing in a contestable economic market has presented a wide range of challenges. Statistics New Zealand-the country’s national statistics office-has found that this change has tested its ability to provide services that users will pay for. It has also caused the service to look closely at the interaction between the commercial market and the other, more traditional markets of the service. It is the government and public markets that drive the values of national statistical offices throughout the world. However, it is the move into the commercial market that is now leading to greater consumer responsiveness in both commercial and publicly-funded services, more effective rationing by price and other determinants, and greater promotion of services.
Industrialized countries with similar democratic traditions to New Zealand recognize that official statistics are needed for a variety of purposes and markets, mainly: l
l
l
l
By citizens, to ensure that government (central and local) is subject to democratic accountability; For informed and efficient policy formulation and decision making by government, commercial enterprises, research scholars, and others; As part of the community infrastructure needed for the informed conduct of business and usual activities; and To provide objective measures of the social and economic situation of the nation, in order to meet the international political and commercial obligations of government and to assist those who trade with or in it.
* Direct al~eo~resp~ndence to: Len Cook, Government Statistician, Statistics New Zealand, Aorangi House, 85 Molesworth Streei, P.O. Box 2922, Welling&on, New Zealand.
Government Information ISSN: 0740-624X.
Quarterly, Volume 13, Number 3, pages 275-283.
276
GOVERNMENT
INFORMATION
QUARTERLY
Vol. 1 ~/NO. 3/l 996
Statistics New Zealand is the national statistics office in New Zealand. Our prime objective is concerned with providing and efficiently distributing accurate and professionally produced statistical information about the economic, demographic, social, and environmental circumstances of New Zealand. These include: . . .
Key economic measures such as balance of payments, national accounts, and price and wage indexes; Key demographic measures such as population, vitals, and migration; and Other measures, such as employment and unemployment levels.
Statistics New Zealand also works with other government agencies involved in producing official statistics to ensure their continued relevance to the evolving information needs of government, business, and the community. The Ministry of Health, which produces most health statistics; the Ministry of Education, responsible for education statistics; and the Ministry of Justice, which publishes justice statistics, are among the major agencies in New Zealand that have responsibility for contributing to the collection of official statistics. Whether Statistics New Zealand and a particular policy agency produce statistics reflects historical arrangements more than any logical development. As well, Statistics New Zealand is responsible for providing sound advice to government on statistical policy matters, promoting greater public appreciation of the value of statistical information, and promoting the use of standard statistical concepts, procedures, and classifications. These activities have, in recent years, been greatly affected by public service reform, including concepts of user pays, introduced to the public sector in 1986 to ensure that the operations of the public sector were carried out efficiently. Government finances are now operated on an accrual basis, as is the practice outside government. Decisions about purchases and investment are made within a more contestable market scenario than was formerly the case. The move from operating a public service on a cash basis fully funded by government to competing in a contestable economic market has presented a wide range of challenges.
THREE MARKETS There are at least three distinct markets for official statistics in New Zealand-they are the government, the public, and the commercial purchasers of statistical information. These markets are distinctly different. In the sense that the state’s interest in statistics has spanned several millennia, the government market for statistics is the original. This market primarily wants information to inform public policy and raise efficiency in business markets, commodities, finance, and labor. They also seek to minimize the cost of information gathering for public policy needs. Benefits result from the integration of information, through effective coordination of statistical standards, concepts, and definitions. Also, the efficient use of the existing information resources of government through its administrative records from taxation, health, welfare, and justice, provides critical efficiencies.
Organizing Official Statistics for the 2 1st Century
277
Statistics produced by Statistics New Zealand are based on surveys designed for government needs; also used are administrative records that were rarely designed for statistical purposes. Because all uses are not anticipated, the statistical survey designs for government surveys need high response rates to enable uses to be met that are outside design criteria. The second market for statistics in New Zealand is the public. Governments have evolved into sophisticated democracies, with large amounts of government being carried out not only by central government but also within communities and local government. Trust in the integrity of government in its policing, taxation, and management of courts, and in the processes which determine the practices and conventions of society, is a vital element in social cohesion and economic and social stability. Fundamental to this is trust in the public information collection, and equity of access to that information by all in the community. The national statistical office has a very important role in the release of public information which is relevant to the many things which ultimately are perceived as showing the effectiveness of government. Governments’ statistical offices act in economic terms as preferred suppliers, and in those areas where government has a concern that alternative sources of information could lead to uncertainty and instability, there is a prime interest in providing information. Government’s interest in public access is to ensure that statistical services, such as an official yearbook and a public inquiry system, are made available. It may also choose to subsidize particular services that would otherwise be too costly for many groups to purchase in the market. Community organizations, therefore, gain access to statistical information, and, in the long run, the government gains advantages from having enabled educational processes that increase the informed understanding of New Zealand through good statistical data. The main indicator of performance is the spread of access to information that is trusted by the public. This is difficult to measure. These two markets, the government and the public market, are well established in the statistical offices of democratic societies. It is these two markets that drive the values of national statistical offices and the consistency of those values across major statistical offices throughout the world. The commercial market is a relatively new one. In New Zealand, it began a little over a decade ago. The market exists for several reasons. One is the desire to expand the funding base of government by increasing the return on public assets that exist in databases in statistical systems and, thus, increase government revenue. At the same time, it increases the focus on the competitiveness of the national statistical office in all its operations, and improves the assessment of priorities. The commercial market for statistics provides a plethora of signals as to the nature of user needs for statistical information. Finally, it helps to enliven the marketing ethos within the national statistical office across all its three markets. In the commercial market, the statistical office is a fully competitive supplier with other information sources. The commercial market for statistics is one which extracts untapped economic value from the fundamental asset base of the national statistics office. Economic properties of our commercial products are that of private market goods, and obtaining further capital contribution through joint ventures or other commercial
arrangements occurs here more than with other parts of the services that the statistical office provides. Parliamentary funding is needed when business losses occur, or where external funding from profitable market charges is insufficient for necessary investment, assuming such investment is a priority for government. The core values of the organization are not determined by the commercial services but these core values do, in fact, limit the scope and form of commercial services. Impartiality of access, for example, makes it impossible to provide an exclusive service. The need to maintain the integrity of any information supplied means that statistics which have some chance of breaching the con~dent~a~ity of respondents, wiii not be supplied. Similarly, specific arrangements which could jeopardize the irnpart~~~ty of the release of statistics cannot be undertaken. INTANGIBLE
ASPECTS OF A C~MM~NI~
INFU~ATl~N
SERVICE
Of the three markets, the market for public statistics is perhaps the most difficult to define. The government market is managed by the national stat.istical office meeting the needs of Cabinet and major public agencies, working with them to help identify those needs, and applying frameworks for integrating government information that fits the contemporary policy environment. Commercial activities are those where there are profitable services that draw on the untapped use of data collected and organized for meeting these government needs. Parts of the value chain will often be contributed by a third party-under hcence, under contract, or some other means-so that those services may be finally delivered to the consumer. Government is a competitive supplier of commerciaf statistics and, in practice, operates in the areas where a small investment in some particular component, by the purchase of some asset or obt,aining its use through some kind of arrangement with a third party, leverages existing assets to give a profit for the Crown. The public market reflects a variety of judgments and is less clearly bounded. The range of information that is needed for the public to have confidence and trust in public policies, depends on the times, For example, if issues between different cultures affect social cohesion, then it will be important for government to give priority to information that can be trusted on cultural matters. If concerns with income distribution and poverty become issues, then more information on income disir~but~on and poverty witi be needed in the public domain. Of course, it is possibfe to produce an infinite amount of public statistics. The funding of the national statistical office ultimately sets the ceiling on what we can deliver. In Statistics New Zealand, we are seeking to be clear about how much of our parliamentary funding is set aside for this particular market. The product mix needs to be focused on as intently as the product mix of the commercial market, or the government market for statistics. Participating with us in servicing the public statistical market are public libraries, the media, other government agencies, professional associations, commissions of enquiry, and local government. To this end, the effective servicing in the public market for official statistics is a complex partnership between a diversity of bodies which all seek to provide impartiality and obj~tivity~ and a high standard in the release of infarmation.
Organizing
Official
Statistics for the 2 Jst Century
REVENUE AND PROFITABILITY
279
IN THE THREE MARKETS
Revenue is earned in all markets, but profit influences price differently in each of the three markets. Unless there is market analysis relevant to each market before establishing revenue targets, the priorities set by revenue may be in a perverse conflict with the government’s overall priorities and expectations. Government is the prime funder of Statistics New Zealand through direct parliamentary funding; it is also the most important market. Government is satisfied when official statistics are relevant to public policy. Where we carry out surveys for specific agencies of government, such as the health survey in 199211993 for the Ministry of Health, that funding comes from a parliamentary appropriation to the other agency. We act essentially as a renter of a survey capability and all charges are borne by the consuming government organization. There is no market price as such, and our “profit,” or net contribution to the revenue target, depends on the extent to which fixed overheads are included in the charge. Statistics New Zealand also acts as a broker, organizing a collective of survey sponsors, as we have done recently with the Disability Survey where 10 other organizations have combined to fund the total survey. In terms of commercial profit, we get a return on the infrastructure and other assets of the organization that are used in these surveys, as well as to directly cover the immediate cost, which is offset by any explicit contribution to the costs. On such occasions, Statistics New Zealand is a sponsoring partner in a government survey that it also undertakes, in order to recognize a public interest in having this information available and accessible. This contribution is a charge on Vote: Statistics, and is part of the public statistical information base funded out of Vote: Statistics. Government is also satisfied when the public statistics it has funded provide good access to public information in those areas where equity of access and an informed community are of value to government in maintaining trust in the integrity of government. Because this area is very difficult to define, direction may be somewhat pragmatically determined in the short run, where funds are limited. A large part of public statistics are directly funded by Parliament through Statistics New Zealand as the preferred supplier of government. Where possible, for any of these services, there will be some charge to consumers. For example, where there is a market for a component of a public service, such as the print material rather than its content or the computer time component being provided to deliver free data, we will aim to charge for that part in full. The commercial market for statistics is one in which we seek to operate for profit. Recent governments in New Zealand have determined that funding for Statistics New Zealand will not be based exclusively on parliamentary appropriation and they now demand a cash return on the public assets. The organization is achieving this through widening the markets that it services by becoming a competitive supplier of information in the commercial world, in partnership with the information industry. Where services exist because they provide a profit, the charge is a complex balancing of demand, product quality, and the long-run average profit to the organization for carrying out the task. In fact, the difficulty of determining the market price for many statistical services means that we continue to be driven by cost-recovery. The difficulty
280
&~~~RNM~NT
INFOR~TIQN
QUARTERLY
Vol. 1 S/No.
3/‘1995
Table f
Statisticai l~forma~j~~ Markets Government
Direct Parliamentary Funding
Public
For all SNZ surveys All major statistics
Public information processes
Commercial
Business loss continnencv Investment in potentially profitable services
fndirect Parliamentary Funding
Program specific needed by other departments
Occasionally part of an output program of a survey or statistic
Services sold to government departments for profit
Extcma~ Funding
None
User Charges for puMIir, services
Market services-for
surveys
profit
with cost-recovering is that where we are inefficient, that inefficiency is passed on to a consumer. Profit is not maximized in such a thinned market and, until costs are managed well, the preferred choice may be ta build a market but make a, perhaps significant, loss an the product, or not supply the product at all. Where there are profitable services, we should expand our investment in them. Since investment funds are unavailable or significantly constrained, we have had to seek thirdparty suppliers. Investment funds for marketing have been crowded out by the imperatives of core statistical developments and technology in recent years in Statistics New Zealand, and this may well mean that we would provide an unusualIy high return to a third partner. Such a partner would receive not only a return reflecting a market return on its part of the value chain but also a bonus for providing scarce capital that would, in a nongovernment rational market, come from the investors in Statistics New Zealand. Funding sources for each of the three markets are shown in Table 1. TYPES OF PRODUCTS Having just undertaken our 30th five-yearly census, it is interesting to took at some of the different products that we produce from census data for each market. The government market would be satisfied by the successful completion of the census. Public programs that require knowl~ge of population dynamics, social groups, and the regionai distribution of people gain an appropriate base for estimation and analysis. The population census also gives statistical surveys a more relevant benchmark, as well as a measure of critical sub-groups of the population and their characteristics. For the public market, we plan to produce media releases at a national and regional level. These will provide highlights on the key topic areas of wide public interest. Tables will be available on request covering most topic areas and regions and, for the first time, we are planning to make some tables available via Internet. After the last census in 1991, a new series of basks was created to provide an overall picture of the social conditions in New Zealand. The New Z&and Now series was specifically designed in an accessible style with easy-to-follow graphs and tables. Each book in the series focuses on a different topic. Titles include ~~~~oo~~r~ (tooking
Organizing Off;c;a/ Statistics for the 2 Ist Century
281
at the characteristics of the group of the population that resulted from the baby boom after the World War II-those ages 25 to 44 in 1991), 65 Plus (profiling the elderly), Families, and Children (both looking at the characteristics of these distinct groups). A similar series is planned for the 1996 census results. The annual New Zealand Official Yearbook carries an extensive array of census data and is widely used particularly by people in public and educational libraries. Whereas users in the commercial market will obviously benefit from these products, they also look for more specialized products to meet their specific needs. Once again, we will be updating Supermap, our CD-ROM product. Supermap was first introduced for the 1986 census. It provided a comprehensive range of census data down to meshblock level-the smallest regional unit for which data are produced. Using the mapping software packaged with the product, users could easily create a profile of a selected area. A decade ago, CD-ROM technology was in its infancy in New Zealand and our sales people often found they were selling the hardware to run the product as well as selling the product itself. A year after its introduction, it was estimated that 95% of the CD readers in the New Zealand market had been sold for use with Supermap. The next version-Supermap 2, produced for the 1991 census-was a superior product. It ran under Windows but essentially provided the same functionality. Supermap 3, which is being developed for the 1996 census, will have increased userfriendliness and a higher level of integration with other regional data. It is also intended that there will be the option of a components approach where we will customize CDs to suit users’ requirements. This will be particularly useful for local gove~ment, which will be able to choose the data relating to local areas. Customers of Supermap include local government, educational institutions, libraries, and commercial businesses, particularly those that are interested in regional analysis of their clients. Other new products that will deliver 1996 census output to the commercial market include customized services using in-house databases specifically developed to allow staff to produce quickly and easily sophisticated queries. Databases involved are Supercross, SAS, and Sybase. While customers can ask Statistics New Zealand staff to produce their requests for them, an increasing number are accessing data directly through our public database, INFOS.
Where does all this product development spring from? Since 1988, Statistics New Zealand has had a Marketing Section. The size and function of that section have changed over the years, reflecting the lessons learned about what has worked and what has not. While the focus of the marketing section tends to be on the for-profit products developed for the commercial market, the section also needs to be strongly aware of activities in the other markets. In order to ensure that the public sector of the community did not suffer from a lack of resource and investment a Community Information service was created three years ago. This section’s role is to ensure that products and services are developed and delivered that satisfy the particular needs of the public market. Activity is focused on supporting public libraries in servicing their clients, servicing the casual “off-the-street”
282
GOVERNMENT
INFORMATION
QUARTERLY
Vol. 13/No. 311996
customer, and more recently, specifically developing products that assist schools in teaching about the value and use of statistical information. DISSEMINATION As well as differentiated products, we have had to develop different dissemination methods to deal with different markets. Traditionally, the provision of information to customers was through Information Officers who searched through the books that were available or a user, who knew a staff member could then deal directly with the subject matter expert. Throughout the years, too, the government in New Zealand ran a depository library scheme whereby the main public libraries were provided with a free copy of every book that was produced (whether they wanted it or not!). This scheme has been upgraded to ensure that it continues to meet the libraries’ needs. Information officers and depository libraries are still servicing the needs of our various customers, but they have been joined by a raft of other options. The original INFOS, our publicly accessible database, was a world leader in its day. As early as 1981, external organizations could access the time-series information held in the public database. Government departments, universities, and multinational companies were among those which took advantage of being able to have the data appear on their screens as soon as they were released publicly. Unfo~unately, the innovation that saw INFOS up and running did not extend to keeping it up with the times and, until recently, customers were still using the same, now relatively unfriendly, interface. Investment in an upgraded window to the database has meant a much friendlier approach. Plans for the future are to extend the type and range of information that is available through INFOS. INFOS is unlikely to be the answer to everyone’s needs. Often, too much information is just as annoying as not enough. To cater for the casual information user we are planning to widen our electronic dissemination options primarily through the Internet but also through other multi-media presentations. All this activity creates a most un-government-like atmosphere in some parts of the organization that influences the way the organization as a whole operates. A sales team is now an inevitable part of our day-to-day operations. Information consultants are allocated as account managers to organizations that are, or should be, significant users of statistical information. Their role is to build up a relationship with the customer that is mutually beneficial. We also use a direct marketing database of customers that allows us to advise them of newly developed products. A relatively recent approach has been to enter into third-party arrangements with distributors. The bookshops were the traditional example of this but today we have a variety of organizations that are incorporating our statistics into their products. Often, we come to an agreement for them to pay us a royalty on what they sell. Joint ventures are entered into for the development and marketing of products. For example. we are currently working with a private sector Geographic Information System (GE) vendor to supply packages for Windows 95 users.
Organizing Ofiicral Statistics for the 2 1st Century
283
LINKS TO COMMERCIAL ACTIVITIES As well as changing the underlying way of funding the organization other changes have affected the way in which Statistics New Zealand operates. The principles that drive the organization derive from its main role in servicing the government and public markets. This constrains the nature of the service that we can provide to the commercial market. The three main areas affecting this are impartiality of access to statistical information, objectivity of interpretation, and the need to protect confidentiality. Impartial Access A key principle of a statistical office is to ensure access to statistical information is available to everyone. We, therefore, cannot take advantage of the immense commercial value of, for example, releasing the Consumers Price Index to a selected audience in advance of its general release. Not even our politicians get advance access to data releases. For market goods, the purchaser is usually the beneficiary, where the exclusivity of access increases the value. For public goods, the value to every individual can be enhanced by access by all, and, therefore, rationing through pricing is not practical. Objective lnterpr~tation The amount of interpretation that can be provided is constrained by the need to remain objective in our analysis. In effect this means that other organizations take our data and comment on it more freely than we are able to. This also has the effect of markedly reducing potential publicity as the media are more likely to seek comment from another agency when data are released. Confidentiality Privacy is an important public issue and Statistics New Zealand has found the conflict between consumer responsiveness and confidentiality protection has reduced its potential product range significantly, not always with complete understanding on the part of the consumer. Like other statistical offices, con~dentiality is the cornerstone of the way that Statistics New Zealand operates. Successive management has recognized that the quality of the output is strongly linked to the quality of the data collected from respondents. In order to retain the trust of our respondents in providing data Statistics New Zealand operates very conservatively. CONCLUSION Official statistical offices are often included as government moves to a user pays environment. In New Zealand, we have found that this has challenged our ability to provide services for which users will pay. It is now leading to greater consumer responsiveness in commercial and publicly-funded services, more effective rationing by price and other determinants, and greater promotion of the services we can offer, however they are funded. The organization is more relevant, busier, and more selfcritical and informed in its decision making.
Len Cook* Sandra McDonald
Official statistical offices are often included in government moves to charge users for services. In New Zealand, the change from operating a public statistical service fully funded by government to competing in a contestable economic market has presented a wide range of challenges. Statistics New Zealand-the country’s national statistics office-has found that this change has tested its ability to provide services that users will pay for. It has also caused the service to look closely at the interaction between the commercial market and the other, more traditional markets of the service. It is the government and public markets that drive the values of national statistical offices throughout the world. However, it is the move into the commercial market that is now leading to greater consumer responsiveness in both commercial and publicly-funded services, more effective rationing by price and other determinants, and greater promotion of services.
Industrialized countries with similar democratic traditions to New Zealand recognize that official statistics are needed for a variety of purposes and markets, mainly: l
l
l
l
By citizens, to ensure that government (central and local) is subject to democratic accountability; For informed and efficient policy formulation and decision making by government, commercial enterprises, research scholars, and others; As part of the community infrastructure needed for the informed conduct of business and usual activities; and To provide objective measures of the social and economic situation of the nation, in order to meet the international political and commercial obligations of government and to assist those who trade with or in it.
* Direct al~eo~resp~ndence to: Len Cook, Government Statistician, Statistics New Zealand, Aorangi House, 85 Molesworth Streei, P.O. Box 2922, Welling&on, New Zealand.
Government Information ISSN: 0740-624X.
Quarterly, Volume 13, Number 3, pages 275-283.
276
GOVERNMENT
INFORMATION
QUARTERLY
Vol. 1 ~/NO. 3/l 996
Statistics New Zealand is the national statistics office in New Zealand. Our prime objective is concerned with providing and efficiently distributing accurate and professionally produced statistical information about the economic, demographic, social, and environmental circumstances of New Zealand. These include: . . .
Key economic measures such as balance of payments, national accounts, and price and wage indexes; Key demographic measures such as population, vitals, and migration; and Other measures, such as employment and unemployment levels.
Statistics New Zealand also works with other government agencies involved in producing official statistics to ensure their continued relevance to the evolving information needs of government, business, and the community. The Ministry of Health, which produces most health statistics; the Ministry of Education, responsible for education statistics; and the Ministry of Justice, which publishes justice statistics, are among the major agencies in New Zealand that have responsibility for contributing to the collection of official statistics. Whether Statistics New Zealand and a particular policy agency produce statistics reflects historical arrangements more than any logical development. As well, Statistics New Zealand is responsible for providing sound advice to government on statistical policy matters, promoting greater public appreciation of the value of statistical information, and promoting the use of standard statistical concepts, procedures, and classifications. These activities have, in recent years, been greatly affected by public service reform, including concepts of user pays, introduced to the public sector in 1986 to ensure that the operations of the public sector were carried out efficiently. Government finances are now operated on an accrual basis, as is the practice outside government. Decisions about purchases and investment are made within a more contestable market scenario than was formerly the case. The move from operating a public service on a cash basis fully funded by government to competing in a contestable economic market has presented a wide range of challenges.
THREE MARKETS There are at least three distinct markets for official statistics in New Zealand-they are the government, the public, and the commercial purchasers of statistical information. These markets are distinctly different. In the sense that the state’s interest in statistics has spanned several millennia, the government market for statistics is the original. This market primarily wants information to inform public policy and raise efficiency in business markets, commodities, finance, and labor. They also seek to minimize the cost of information gathering for public policy needs. Benefits result from the integration of information, through effective coordination of statistical standards, concepts, and definitions. Also, the efficient use of the existing information resources of government through its administrative records from taxation, health, welfare, and justice, provides critical efficiencies.
Organizing Official Statistics for the 2 1st Century
277
Statistics produced by Statistics New Zealand are based on surveys designed for government needs; also used are administrative records that were rarely designed for statistical purposes. Because all uses are not anticipated, the statistical survey designs for government surveys need high response rates to enable uses to be met that are outside design criteria. The second market for statistics in New Zealand is the public. Governments have evolved into sophisticated democracies, with large amounts of government being carried out not only by central government but also within communities and local government. Trust in the integrity of government in its policing, taxation, and management of courts, and in the processes which determine the practices and conventions of society, is a vital element in social cohesion and economic and social stability. Fundamental to this is trust in the public information collection, and equity of access to that information by all in the community. The national statistical office has a very important role in the release of public information which is relevant to the many things which ultimately are perceived as showing the effectiveness of government. Governments’ statistical offices act in economic terms as preferred suppliers, and in those areas where government has a concern that alternative sources of information could lead to uncertainty and instability, there is a prime interest in providing information. Government’s interest in public access is to ensure that statistical services, such as an official yearbook and a public inquiry system, are made available. It may also choose to subsidize particular services that would otherwise be too costly for many groups to purchase in the market. Community organizations, therefore, gain access to statistical information, and, in the long run, the government gains advantages from having enabled educational processes that increase the informed understanding of New Zealand through good statistical data. The main indicator of performance is the spread of access to information that is trusted by the public. This is difficult to measure. These two markets, the government and the public market, are well established in the statistical offices of democratic societies. It is these two markets that drive the values of national statistical offices and the consistency of those values across major statistical offices throughout the world. The commercial market is a relatively new one. In New Zealand, it began a little over a decade ago. The market exists for several reasons. One is the desire to expand the funding base of government by increasing the return on public assets that exist in databases in statistical systems and, thus, increase government revenue. At the same time, it increases the focus on the competitiveness of the national statistical office in all its operations, and improves the assessment of priorities. The commercial market for statistics provides a plethora of signals as to the nature of user needs for statistical information. Finally, it helps to enliven the marketing ethos within the national statistical office across all its three markets. In the commercial market, the statistical office is a fully competitive supplier with other information sources. The commercial market for statistics is one which extracts untapped economic value from the fundamental asset base of the national statistics office. Economic properties of our commercial products are that of private market goods, and obtaining further capital contribution through joint ventures or other commercial
arrangements occurs here more than with other parts of the services that the statistical office provides. Parliamentary funding is needed when business losses occur, or where external funding from profitable market charges is insufficient for necessary investment, assuming such investment is a priority for government. The core values of the organization are not determined by the commercial services but these core values do, in fact, limit the scope and form of commercial services. Impartiality of access, for example, makes it impossible to provide an exclusive service. The need to maintain the integrity of any information supplied means that statistics which have some chance of breaching the con~dent~a~ity of respondents, wiii not be supplied. Similarly, specific arrangements which could jeopardize the irnpart~~~ty of the release of statistics cannot be undertaken. INTANGIBLE
ASPECTS OF A C~MM~NI~
INFU~ATl~N
SERVICE
Of the three markets, the market for public statistics is perhaps the most difficult to define. The government market is managed by the national stat.istical office meeting the needs of Cabinet and major public agencies, working with them to help identify those needs, and applying frameworks for integrating government information that fits the contemporary policy environment. Commercial activities are those where there are profitable services that draw on the untapped use of data collected and organized for meeting these government needs. Parts of the value chain will often be contributed by a third party-under hcence, under contract, or some other means-so that those services may be finally delivered to the consumer. Government is a competitive supplier of commerciaf statistics and, in practice, operates in the areas where a small investment in some particular component, by the purchase of some asset or obt,aining its use through some kind of arrangement with a third party, leverages existing assets to give a profit for the Crown. The public market reflects a variety of judgments and is less clearly bounded. The range of information that is needed for the public to have confidence and trust in public policies, depends on the times, For example, if issues between different cultures affect social cohesion, then it will be important for government to give priority to information that can be trusted on cultural matters. If concerns with income distribution and poverty become issues, then more information on income disir~but~on and poverty witi be needed in the public domain. Of course, it is possibfe to produce an infinite amount of public statistics. The funding of the national statistical office ultimately sets the ceiling on what we can deliver. In Statistics New Zealand, we are seeking to be clear about how much of our parliamentary funding is set aside for this particular market. The product mix needs to be focused on as intently as the product mix of the commercial market, or the government market for statistics. Participating with us in servicing the public statistical market are public libraries, the media, other government agencies, professional associations, commissions of enquiry, and local government. To this end, the effective servicing in the public market for official statistics is a complex partnership between a diversity of bodies which all seek to provide impartiality and obj~tivity~ and a high standard in the release of infarmation.
Organizing
Official
Statistics for the 2 Jst Century
REVENUE AND PROFITABILITY
279
IN THE THREE MARKETS
Revenue is earned in all markets, but profit influences price differently in each of the three markets. Unless there is market analysis relevant to each market before establishing revenue targets, the priorities set by revenue may be in a perverse conflict with the government’s overall priorities and expectations. Government is the prime funder of Statistics New Zealand through direct parliamentary funding; it is also the most important market. Government is satisfied when official statistics are relevant to public policy. Where we carry out surveys for specific agencies of government, such as the health survey in 199211993 for the Ministry of Health, that funding comes from a parliamentary appropriation to the other agency. We act essentially as a renter of a survey capability and all charges are borne by the consuming government organization. There is no market price as such, and our “profit,” or net contribution to the revenue target, depends on the extent to which fixed overheads are included in the charge. Statistics New Zealand also acts as a broker, organizing a collective of survey sponsors, as we have done recently with the Disability Survey where 10 other organizations have combined to fund the total survey. In terms of commercial profit, we get a return on the infrastructure and other assets of the organization that are used in these surveys, as well as to directly cover the immediate cost, which is offset by any explicit contribution to the costs. On such occasions, Statistics New Zealand is a sponsoring partner in a government survey that it also undertakes, in order to recognize a public interest in having this information available and accessible. This contribution is a charge on Vote: Statistics, and is part of the public statistical information base funded out of Vote: Statistics. Government is also satisfied when the public statistics it has funded provide good access to public information in those areas where equity of access and an informed community are of value to government in maintaining trust in the integrity of government. Because this area is very difficult to define, direction may be somewhat pragmatically determined in the short run, where funds are limited. A large part of public statistics are directly funded by Parliament through Statistics New Zealand as the preferred supplier of government. Where possible, for any of these services, there will be some charge to consumers. For example, where there is a market for a component of a public service, such as the print material rather than its content or the computer time component being provided to deliver free data, we will aim to charge for that part in full. The commercial market for statistics is one in which we seek to operate for profit. Recent governments in New Zealand have determined that funding for Statistics New Zealand will not be based exclusively on parliamentary appropriation and they now demand a cash return on the public assets. The organization is achieving this through widening the markets that it services by becoming a competitive supplier of information in the commercial world, in partnership with the information industry. Where services exist because they provide a profit, the charge is a complex balancing of demand, product quality, and the long-run average profit to the organization for carrying out the task. In fact, the difficulty of determining the market price for many statistical services means that we continue to be driven by cost-recovery. The difficulty
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Table f
Statisticai l~forma~j~~ Markets Government
Direct Parliamentary Funding
Public
For all SNZ surveys All major statistics
Public information processes
Commercial
Business loss continnencv Investment in potentially profitable services
fndirect Parliamentary Funding
Program specific needed by other departments
Occasionally part of an output program of a survey or statistic
Services sold to government departments for profit
Extcma~ Funding
None
User Charges for puMIir, services
Market services-for
surveys
profit
with cost-recovering is that where we are inefficient, that inefficiency is passed on to a consumer. Profit is not maximized in such a thinned market and, until costs are managed well, the preferred choice may be ta build a market but make a, perhaps significant, loss an the product, or not supply the product at all. Where there are profitable services, we should expand our investment in them. Since investment funds are unavailable or significantly constrained, we have had to seek thirdparty suppliers. Investment funds for marketing have been crowded out by the imperatives of core statistical developments and technology in recent years in Statistics New Zealand, and this may well mean that we would provide an unusualIy high return to a third partner. Such a partner would receive not only a return reflecting a market return on its part of the value chain but also a bonus for providing scarce capital that would, in a nongovernment rational market, come from the investors in Statistics New Zealand. Funding sources for each of the three markets are shown in Table 1. TYPES OF PRODUCTS Having just undertaken our 30th five-yearly census, it is interesting to took at some of the different products that we produce from census data for each market. The government market would be satisfied by the successful completion of the census. Public programs that require knowl~ge of population dynamics, social groups, and the regionai distribution of people gain an appropriate base for estimation and analysis. The population census also gives statistical surveys a more relevant benchmark, as well as a measure of critical sub-groups of the population and their characteristics. For the public market, we plan to produce media releases at a national and regional level. These will provide highlights on the key topic areas of wide public interest. Tables will be available on request covering most topic areas and regions and, for the first time, we are planning to make some tables available via Internet. After the last census in 1991, a new series of basks was created to provide an overall picture of the social conditions in New Zealand. The New Z&and Now series was specifically designed in an accessible style with easy-to-follow graphs and tables. Each book in the series focuses on a different topic. Titles include ~~~~oo~~r~ (tooking
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at the characteristics of the group of the population that resulted from the baby boom after the World War II-those ages 25 to 44 in 1991), 65 Plus (profiling the elderly), Families, and Children (both looking at the characteristics of these distinct groups). A similar series is planned for the 1996 census results. The annual New Zealand Official Yearbook carries an extensive array of census data and is widely used particularly by people in public and educational libraries. Whereas users in the commercial market will obviously benefit from these products, they also look for more specialized products to meet their specific needs. Once again, we will be updating Supermap, our CD-ROM product. Supermap was first introduced for the 1986 census. It provided a comprehensive range of census data down to meshblock level-the smallest regional unit for which data are produced. Using the mapping software packaged with the product, users could easily create a profile of a selected area. A decade ago, CD-ROM technology was in its infancy in New Zealand and our sales people often found they were selling the hardware to run the product as well as selling the product itself. A year after its introduction, it was estimated that 95% of the CD readers in the New Zealand market had been sold for use with Supermap. The next version-Supermap 2, produced for the 1991 census-was a superior product. It ran under Windows but essentially provided the same functionality. Supermap 3, which is being developed for the 1996 census, will have increased userfriendliness and a higher level of integration with other regional data. It is also intended that there will be the option of a components approach where we will customize CDs to suit users’ requirements. This will be particularly useful for local gove~ment, which will be able to choose the data relating to local areas. Customers of Supermap include local government, educational institutions, libraries, and commercial businesses, particularly those that are interested in regional analysis of their clients. Other new products that will deliver 1996 census output to the commercial market include customized services using in-house databases specifically developed to allow staff to produce quickly and easily sophisticated queries. Databases involved are Supercross, SAS, and Sybase. While customers can ask Statistics New Zealand staff to produce their requests for them, an increasing number are accessing data directly through our public database, INFOS.
Where does all this product development spring from? Since 1988, Statistics New Zealand has had a Marketing Section. The size and function of that section have changed over the years, reflecting the lessons learned about what has worked and what has not. While the focus of the marketing section tends to be on the for-profit products developed for the commercial market, the section also needs to be strongly aware of activities in the other markets. In order to ensure that the public sector of the community did not suffer from a lack of resource and investment a Community Information service was created three years ago. This section’s role is to ensure that products and services are developed and delivered that satisfy the particular needs of the public market. Activity is focused on supporting public libraries in servicing their clients, servicing the casual “off-the-street”
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customer, and more recently, specifically developing products that assist schools in teaching about the value and use of statistical information. DISSEMINATION As well as differentiated products, we have had to develop different dissemination methods to deal with different markets. Traditionally, the provision of information to customers was through Information Officers who searched through the books that were available or a user, who knew a staff member could then deal directly with the subject matter expert. Throughout the years, too, the government in New Zealand ran a depository library scheme whereby the main public libraries were provided with a free copy of every book that was produced (whether they wanted it or not!). This scheme has been upgraded to ensure that it continues to meet the libraries’ needs. Information officers and depository libraries are still servicing the needs of our various customers, but they have been joined by a raft of other options. The original INFOS, our publicly accessible database, was a world leader in its day. As early as 1981, external organizations could access the time-series information held in the public database. Government departments, universities, and multinational companies were among those which took advantage of being able to have the data appear on their screens as soon as they were released publicly. Unfo~unately, the innovation that saw INFOS up and running did not extend to keeping it up with the times and, until recently, customers were still using the same, now relatively unfriendly, interface. Investment in an upgraded window to the database has meant a much friendlier approach. Plans for the future are to extend the type and range of information that is available through INFOS. INFOS is unlikely to be the answer to everyone’s needs. Often, too much information is just as annoying as not enough. To cater for the casual information user we are planning to widen our electronic dissemination options primarily through the Internet but also through other multi-media presentations. All this activity creates a most un-government-like atmosphere in some parts of the organization that influences the way the organization as a whole operates. A sales team is now an inevitable part of our day-to-day operations. Information consultants are allocated as account managers to organizations that are, or should be, significant users of statistical information. Their role is to build up a relationship with the customer that is mutually beneficial. We also use a direct marketing database of customers that allows us to advise them of newly developed products. A relatively recent approach has been to enter into third-party arrangements with distributors. The bookshops were the traditional example of this but today we have a variety of organizations that are incorporating our statistics into their products. Often, we come to an agreement for them to pay us a royalty on what they sell. Joint ventures are entered into for the development and marketing of products. For example. we are currently working with a private sector Geographic Information System (GE) vendor to supply packages for Windows 95 users.
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LINKS TO COMMERCIAL ACTIVITIES As well as changing the underlying way of funding the organization other changes have affected the way in which Statistics New Zealand operates. The principles that drive the organization derive from its main role in servicing the government and public markets. This constrains the nature of the service that we can provide to the commercial market. The three main areas affecting this are impartiality of access to statistical information, objectivity of interpretation, and the need to protect confidentiality. Impartial Access A key principle of a statistical office is to ensure access to statistical information is available to everyone. We, therefore, cannot take advantage of the immense commercial value of, for example, releasing the Consumers Price Index to a selected audience in advance of its general release. Not even our politicians get advance access to data releases. For market goods, the purchaser is usually the beneficiary, where the exclusivity of access increases the value. For public goods, the value to every individual can be enhanced by access by all, and, therefore, rationing through pricing is not practical. Objective lnterpr~tation The amount of interpretation that can be provided is constrained by the need to remain objective in our analysis. In effect this means that other organizations take our data and comment on it more freely than we are able to. This also has the effect of markedly reducing potential publicity as the media are more likely to seek comment from another agency when data are released. Confidentiality Privacy is an important public issue and Statistics New Zealand has found the conflict between consumer responsiveness and confidentiality protection has reduced its potential product range significantly, not always with complete understanding on the part of the consumer. Like other statistical offices, con~dentiality is the cornerstone of the way that Statistics New Zealand operates. Successive management has recognized that the quality of the output is strongly linked to the quality of the data collected from respondents. In order to retain the trust of our respondents in providing data Statistics New Zealand operates very conservatively. CONCLUSION Official statistical offices are often included as government moves to a user pays environment. In New Zealand, we have found that this has challenged our ability to provide services for which users will pay. It is now leading to greater consumer responsiveness in commercial and publicly-funded services, more effective rationing by price and other determinants, and greater promotion of the services we can offer, however they are funded. The organization is more relevant, busier, and more selfcritical and informed in its decision making.