Earlier this year Treasurer Joe Hockey led the G20 Finance Ministers to pledge lifting GDP by 2 per cent over “business as usual” over the next five years. It’s a big win for the Treasurer, but how can it be delivered? There aren’t many easy options for reform on that scale that don’t create swaths of losers around whom the media swarms, amplifying the inevitable campaigns against change.
But one opportunity is sitting under our noses. In a knowledge economy, data is the new infrastructure. Opening up access to data may not sound like other major economic reforms – like competition policy or cutting tariffs, but open data is an economic opportunity on the same scale. Thus for instance the tax office has data from BAS returns which could help us run the economy. But we don’t access it. We could know far more about what government programs worked, and what didn’t, just by opening up their administrative data (and protecting privacy with anonymisation).
The more open data is, the more it can be reused or repurposed; the more it attracts value adding as business and civil society find clever new ways of making it ever more useful. Most data Google Maps delivers has existed for decades. But government open data policies – and Google – convey open data seamlessly to your mobile as you search out your target.
That’s why Australia’s government implemented the recommendations of the 2009 Government 2.0 Taskforce which I chaired. But here, as elsewhere, high-level commitments have achieved less than they could have if they’d been seamlessly translated down to the delivery coalface as Google has with geospatial data.
Omidyar Network on Thursday releases a Lateral Economics report that estimates a more vigorous open data commitment could grow Australia’s economy by around $16 billion per year. That’s half Joe Hockey’s 2 per cent G20 growth target. Because most of them have travelled less far down the open data road, the rest of the G20 have even more to gain.
To deliver it we must not just break through the red tape and inertia that’s obstructed open data implementation but also embrace a fresh agenda in which governments craft conditions in which private organisations open more of their data to benefit themselves, their business ecosystem, and the wider public. The G20 would also address international dimensions including cross-national standardisation and harmonisation.
Let’s illustrate the promise of this agenda in just one area of the six our report explores – managing the economy.
Currently we steer the economy looking through the rear vision mirror using data that’s months old. Yet Tax administrative data – for instance from Business Activity Statements (BAS) – provides real-time snapshots of our economy. Yet navigating the global financial crisis, it wasn’t normal for that data to be used in macro-economic management. Shockingly, it still isn’t.
Government macro-economic policymakers in Treasury and the Reserve Bank should also release their forecasting models – as both our Treasury and the US Fed have begun doing – open-sourcing critique and improvement as is common in software.
THE WORLD OF BIG DATA
And the world of big data is upon us. Supermarket scanner and bank credit card data can help. But online accounting systems like Xero can take the pulse of the economy in real time with a vastly larger sample of the economy than the ABS could ever hope to command. Partnerships with such providers of software as a service – in accounting, payroll, advertising and other functions could further improve decision making.
We estimate all these improvements might help us reduce economic volatility by one-eighth. But the economic cost of recessions is broadly proportional to the square of their severity. So a one-eighth improvement reduces the costs of recessions – currently running around 1 per cent of GDP – by nearly a quarter or, on our figuring, $3.6 billion each year.
Of course we must protect citizens’ privacy and respect firms’ ownership of their own data. Having done that, open data should be a relatively easy political sell. In contrast to most economic reform, there are minimal losers and widespread winners from open data. It simply makes better use of already existing resources.
With potential gains of this scale to be made through open data, Treasurer Hockey has the opportunity to deliver a significant economic reform at the same time as providing global leadership by seeking a G20 Open Data Charter when G20 Finance Ministers return to Australia later in the year.
Australia was a huge beneficiary of the now fading mining boom, but the whole G20 can join the next mining boom – the data-mining boom.
Nicholas Gruen is managing director of Lateral Economics