Presidency: Minister's Budget of Statistics South Africa

Minister in the Presidency, Trevor Manuel on Stats SA Budget

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Chairperson
Honourable Members
Ladies & Gentlemen

It is worth repeating that the collection and synthesis of data for a national statistical system is something that most people around the world take for granted. We have a sense that the way in which datasets even from Statistics South Africa (Stats SA) are received tends towards the same cavalier attitude from time to time. Part of the challenge, part of the responsibility of the statistical agency is to ensure that the detail of the compilation process is understood and the data series trusted.

In the recent past, there has been an intense debate between Stats SA as represented by the Statistician-General and a particular private agency – part of the debate is focussed on what the level of unemployment actually is. Now if we follow the arguments of the private company, then South Africa would not have a problem of unemployed people and the emphasis of policy-making could fall elsewhere. If however, the unemployment level is at 25.2% as per the most recent Stats SA release (8 May 2012) then policy must be directed towards that object. For this reason, Parliament needs to satisfy itself about the quality of statistical releases, so that the people will know.

Two weeks ago elections were held in Greece and by last night the attempt by the Greek President, Karolos Papoulias, who had invited the three largest parties each to form a coalition, collapsed. Greece now stands on the threshold of what may prove to be an even larger calamity than they are now living through. The three largest parties in Greece, New Democracy (18.85%), Syriza (16.78%), and Pasok (13.18%) together secured a mere 48.81% of the votes insufficient even to form a government in grand coalition style. The solution might be to invite the Greek electorate back to the polls in the hope that a fresh election may produce a stronger basis for the formation of a government. Whilst all of this debate proceeds, there are also questions about whether Greece will remain part of the Eurozone. This is fundamentally important because if the answer is ‘no’ then it would mean introducing or reintroducing a Greek currency and rebuilding the institution of the Greek central bank to take responsibility for monetary policy decisions. There are untold permutations of what may happen in these circumstances ranging from the level of the exchange rate of this new currency, to the deficit level, to the fundamental question of who will lend to the Greek sovereign state and who will lead the government.

But this is not the Budget Vote of the Greek government. The importance of this lies in statistics. The issues about the quality of Greek statistics date back at least for the past decade and we see a system where Eurostat accepted the statistical releases in good faith and there was no early warning system. For the past months we have watched as the Greek government attempted to negotiate what to do about the deficit and debate the extent of the austerity measures they face and the terms of the bailout. What we must recognise is that at the root of the problem lies statistical miscalculations.

In September last year, the Greek courts ordered a preliminary investigation into whether there had been a conscious miscalculation of the deficit to 15% in order to impose a harsher bailout package. Against this there was the counter argument that the calculation was actually done to correct a problem that had been there for a very long period. And while all of this was taking place, the community of Greek statisticians have been caught in a war amongst themselves, all centred on the Hellenic Statistical Authority (ELSTAT). There were claims and counter claims, it was Socialists vs. Conservatives; it was about the size of the bailout and the scale of the pain, all occasioned by an intense debate around how large the deficit actually is. And so we must understand that statistical outputs are potentially very political.

The fundamental importance of accurate, independent statistics cannot be stressed enough and so we must recognise the foresight of our leaders at this institution who ensured that this independence was written into the legislation governing official statistics, the Statistics Act, Act 6 of 1999. Section 5 of the Act only gives the Minister the power to prioritise their work on the recommendation of the Statistician-General and after having been advised by the Statistics Council. The Minister must monitor their performance and, after consultation with Cabinet, appoint members of the Statistics Council. Section 5(3) very clearly indicates that the Minister may not interfere with the work of the Statistician-General, including how and when statistical information is gathered and released. The production of statistics in South Africa is therefore carefully regulated by the Act which clearly defines the powers, duties and relationship between the Minister, the Statistician-General and the Statistics Council. While the Act in Section 5 outlines the Minister’s responsibilities, Section 6(2)(a) further strengthens the Statistician-General’s professional independence. The importance of reiterating the legislative framework governing Stats SA is essential because while it is funded by the national budget, it has an independence that we must respect. If we are to have any confidence in the foundations of our economy and in the basis of our policies, we must hold this independence dear. We should recognise the value of the quality of legislation that creates the independence for Stats SA and appreciate the oversight role of Parliament, as well as the jealous protection by Parliament of this quality of legislation

PPI and CPI re-weighting

Stats SA has to maintain the accuracy of the statistics being produced and it is important that the data on which it is based is an accurate reflection of reality. For this reason it needs to update its methodologies and surveys from time to time. A few years ago the Consumer Price Index was radically overhauled. The Consumer Price Index (CPI) is being improved through the usual periodic update of the basket of goods and services that are priced each month referred to as re-weighting as well as changing the reference period of the index, i.e. rebasing. The revised CPI will be released in February 2013. This revision of the CPI is being done to ensure that the relative expenditure weights in the CPI reflect the changing behaviour of households and remain relevant and accurate. The basket of items that form part of the CPI is derived from the Income and Expenditure Survey where the sample of 30 000 households are expected to maintain a diary of consumption for a period of 12 months.

Similarly the Producer Price Index (PPI) is being re-engineered in a process that started in 2009. This will result in a parallel set of releases. The PPI for manufacturing will be separated into two different price indices. The first PPI for manufacturing of goods for further processing only includes goods in its basket that will be used again elsewhere in the manufacturing process such as basic steel that will be used again in the manufacturing of motor vehicles. The second PPI for manufacturing of goods for final consumption will include goods that are destined for final consumption and include food items.This PPI for final goods will therefore track the CPI much closer since the items in the basket will be more similar than the current situation. So for example, an increase in fuel prices will be reflected in both the manufacturing price index as well as in the agriculture price changes. The idea is to modernise the system so that price changes are tracked and reflected more accurately at the farm or factory gate.

Business Register

Every few years, various datasets and registers have to undergo a fairly substantive review to ensure that the outputs are relevant. Honourable members would be aware that the outputs of the Quarterly Employment Statistics (QES), compiled from the results of an employer-based survey and the Quarterly Labour force Survey (QLFS), which is compiled from a survey at household level show marked discrepancies. We desire a much higher level of correlation. This will be possible through the construction of a Business Register that remains current and has both integrity and accountability. To attain a Business Register such as this, a census of all businesses throughout the country must be conducted, a register compiled and then regularly updated. This process will, by its very nature be intensive and costly. But, once such a high-integrity register exists, it will be possible to triangulate information by combining the efforts of Statistics SA with those of the Companies (and) Intellectual Property Commission (based at the dti) and the data available from the South African Revenue Service.As of now, these datasets are not yet in alignment.

In many ways, working for such alignment is a real test of the intra-governmental endeavours necessary for the construction of a National Statistical System.

National Statistics System

I turn now to this, somewhat elusive platform.

While the Business Register provides a key opportunity for intra-governmental coordination, Stats SA is tasked under Section 14 of the Statistics Act, (Act 6 of 1999), with the responsibility of co-ordinating statistics among organs of state. It is fundamentally important to note that the Act, in fact, requires the Statistician-General to certify the statistics being produced by Stats SA, first and foremost, as official in addition to that of other organs of state. This means that the quality of statistics produced by Stats SA undergoes the same rigorous measurement against the South African Statistical Quality Assessment Framework (SASQAF) as expected from other partners.

In terms of co-ordination, major strides have been made with the South African Police Services by establishing a relationship to assist with the improvement of the Crime Statistics strategy. In addition, Stats SA will conduct the second annual Victims of Crime Survey in close collaboration with key role players in the Safety and Security cluster in 2012. Agreement has been reached to improve alignment of the definitions used before producing a joint publication.

Stats SA is continuing to build partnerships with government departments by providing the technical support necessary to conduct self-assessments of the quality of statistics. In this regard, the Department of Science and Technology (DST) was amongst the first institutions to undertake self-assessment on their Research and Development Survey, and has gone further to the second stage of being assessed by a joint team. The Department of Basic Education has applied the South African Statistical Quality Assessment Framework (SASQAF) to develop standards specifically for education and is about to embark on the process of assessing education statistics against these standards

One of the questions that Stats SA is asked on a regular basis when engaging with Parliament is whether they have a sense of the migration patterns internally and across our borders. While a formal response will be provided to the report of the Standing Committee on Finance on this matter, it is important to say something about vital statistics. In addition to releasing the monthly and annual statistical information on vital statistics, Stats SA will be releasing a report on documented immigrants during 2012/13. The report will be published in June 2012 and will provide information on the statistics on permanent and temporary residents in 2010. It will include information on the country of origin, the ages of the applicants and the types of permits. It is envisaged that in future this report will be an annual release, to be published every year in March. We need to understand the importance of the issue not only in terms of being able to use administrative records but also in terms of initiatives undertaken on the continent. The African Ministers for home affairs have formally agreed to improve civil registration and vital statistics as a key priority over the next five years.

Social Statistics

Last year during this debate I spoke about the importance of the Census that was conducted later in the year. I will say more about what the current status of that massive operation is in a few minutes. I want, however, to reiterate the importance of those results for the many other statistical surveys conducted by Stats SA. In all probability sample surveys Stats SA undertakes selecting a percentage from the total, the sample selected would be around 30 000 households out of a total of about 14 million households. At certain times that number is increased to 300 000 households such as was the case with the Community Survey. In other surveys repeat visits are implemented, as is the case in the Income and Expenditure Survey and the Living Conditions Survey.All of these samples are a reflection of the total number which makes it imperative that the census against which they are measured has to be an accurate and reliable reflection.

Through these sample surveys, we can glean a steady supply of information about where South Africans live, work and play. Amongst these is the Quarterly Labour Force Survey (QLFS), mentioned earlier, through which 30 000 households are sampled each quarter and out of this labour market information, including levels and rates of change in employment and unemployment, is obtained. Stats SA will be introducing new modules in the QLFS questionnaire to collect information on migrant work as well as improving the questionnaire to be more gender responsive. A Time-Use Survey was conducted in 2011 and this information will be released in the second quarter of 2012.

The General Household Survey is another annual survey that reaches out to a sample of 30 000 households and asks about living conditions of residents and more importantly focuses on service delivery quality indicators such as availability and adequacy of services including water, healthcare provision, etc.Using the General Household Survey results, Stats SA will release three additional reports that include a report on food security and agriculture by August 2012, a report on the social profile of South Africa by December 2012, and a report on social development indicators by March 2013.

Another ground-breaking survey is the Living Conditions Survey which will be applied in building poverty measures and poverty lines including subjective poverty for South Africa.This arsenal of statistical data and information will continue to be provided as indicated in the Stats SA work programme.

Census 2011

It was during this debate last year that I made the appeal to Members of Parliament to become Census ambassadors and to go into your communities and constituencies and address the fears. It is thanks to the efforts of Members of Parliament among others that I can say that the 2011 Census field operations have been successfully concluded, with more than 14 million dwellings/households visited in 103 000 enumeration areas.Stats SA currently is currently processing the 14 million returns in an operation that continues non-stop 24 hours a day, seven days a week.The purpose of having the 1200 members of staff working shifts to complete this incredible undertaking is to ensure that the data is available for use sooner rather than later. It is obviously important that in completing this task we are assured of the quality of the data collected and collated. In this regard, the Statistics Council who have the legal responsibility to manage the quality of the statistics being produced, have appointed both local and international experts to undertake the evaluation.

The experts, who have already received a five percent sample and have started the evaluation, include Prof. Rob Dorrington, Prof. Tom Moultrie, Dr Kenneth Hill, Prof. Eric Udjo, Prof. Carel van Aardt, Dr Griffith Feeny, Prof. Julian May, Dr Jeremiah Banda, and Prof. Charles Simkins. As part of the quality assurance process, an independent Post-Enumeration Survey (PES) was conducted, where a representative sample of the country was sampled using a shorter questionnaire. The variables of this survey will be compared to the census to assist with the evaluation of any possible under- or over-counting.

Current indications are that the results will be released by the end of September this year. In order to ensure that the data gathered in this massive operation is easily available, information will be released using a wide range of platforms such as hardcopies, electronically, on social networking sites, through the media. I urge Members to examine the census results in detail once it has been released because it should be an invaluable asset to every Member of Parliament. This should be your weapon for holding the Executive to account because you should have the ammunition to back any claims that you make. Using the census data, you should have proof in terms of numbers to be able to demand better services. While we are cognisant of the importance of census result for government and business to plan, it equally is up to you to ensure that the planning is appropriate and that it meets the needs of the communities and constituencies that you convinced to participate in the Census.

I want to take this opportunity to thank the Standing Committee on Finance ably chaired by the Hon. Thaba Mufamadi for consistently providing thoughtful insights and challenges to Stats SA. I want to express our appreciation to the Statistician-General, Mr Pali Lehohla, and his team and to the Stats Council chaired by Mr Howard Gabriels for their advice and hard work.

Ndza khensa.