This week, the Bureau of Statistics realised its latest series of Measuring What Matters in an attempt to assess things beyond the mere economics. It comes off the back of the bureau’s first attempt to measure productivity in the non-market sector. Both raise questions of what we value and also whether our focus is where it should be.
In 2020 the then shadow treasurer, Jim Chalmers, announced an ALP government would develop a wellbeing framework that would seek to “measure what matters”. It was a worthy goal mocked by the then treasurer, Josh Frydenberg.
As Patrick Commins has explained, the wellbeing framework looks at a vast array of life – well beyond GDP. Unfortunately, the framework has not lived up to its promise. Rather than driving policy, it is now little more than a data dump. And unfortunately, much of it is out of date.
For example, one measurement included is experience of discrimination. The most recent figures are from 2020, which the ABS noted are probably suspect because they were done during the period of Covid restrictions:
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Until the government actually funds the ABS to regularly measure what matters, the wellbeing framework will be irrelevant to policy discussion.
And measuring things matters because you can’t know what you don’t see (or count). But equally important is recognising that not everything can be measured as accurately as we might like (or suppose).
Productivity, for example, has been the big topic of the past few months.
It is essentially measured by GDP per hour worked. But we already know that GDP misses large swathes of the economy – it doesn’t measure housework, it doesn’t care about distribution. And yet we divide it by hours worked and, before you know it, we have five reports from the Productivity Commission, a productivity roundtable and masses of writing on the issue (including by me), most of which ignores that our measurement of productivity is pretty ropey.
Given the value of a thing produced is quantified by its price, this essentially means that if you to do one activity that provides a more expensive product in the same amount of time it would be more productive to do that expensive thing.
If we all went off to work in the mines, Australia’s productivity would increase. Would that make us a better society? I doubt it, but it is essentially the (unstated) conclusion of the Productivity Commission’s reports.
But while productivity is easy to measure when counting goods produced, once we get to services, things get very fudgy. Service quality is hard to measure and more services in the same time is not always good.
This is important because Australia is much more of a service economy than in the past, so measuring productivity is harder than in the past:
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Services are also less productive because it takes more people to do a service than it does to make a good, so again if you want to raise productivity we could just stop people doing services and get them to start making things.
Sounds great unless you need a firefighter or a nurse or a teacher.
These jobs come from what is classed as the “non-market” sectors of education, health and social care and public administration and safety. And those sectors have also become more prominent – not just across all work, but even within services:
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This is a problem for measuring productivity because, while measuring services is hard, measuring non-market services is even harder because often the services are not paid and more of them might actually be worse.
The Bureau of Statistics has for the first time attempted to count non-market productivity in the most recent GDP figures.
It also has pointed out the huge difficulties.
For example, it explains that because heart surgery costs more than repairing broken bones “each open-heart surgical procedure carries more weight than each broken bone treated in the emergency room. The heart surgery costs more to perform, so it is assumed to be more valuable.”
You can see the problem.
If hospitals were doing more open-heart surgeries than fixing broken bones they might be more productive – but is that a good for society? Do we want policies that encourage more open-heart surgeries rather than other less productive surgeries?
Similarly care work is counted as less productive than surgeries – but would it be good for society to encourage fewer age care workers?
The issue is that non-market sector productivity is falling:
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That is weighing down overall productivity.
But the reality is much of the fall is just a hangover from the Covid period when there was an abnormal increase. Non-market sector productivity rarely grows much – except, as occurred in the 1990s, due to the huge IT improvements.
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I am glad the ABS has taken on this unenviable task, because it highlights just how much we should not get caught up on productivity figures.
Do we really think education and health and social care are only as good as they were 20 years ago, or that productivity in those areas is 9% lower than it was in 2021?
And is that even bad if, for example, it means more care workers per patient?
That’s not to say we shouldn’t improve productivity in services and the non-market sector. But what are we improving? Is our measurement of it just a good guess and not really something that matters? And is non-market sector productivity “almost” everything?
Measuring what matters is important but also is realising that not everything we measure matters as much as we might think.
• Greg Jericho is a Guardian columnist and policy director at the Centre for Future Work
