Challenges Related to the Implementation of 2008 SNA

1. Challenges Related to the Implementation of 2008 SNA May 2014

2. How has the Canadian economy been performing? Statistics Canada • Statistique Canada

3. What is Canada’s investment as a share of Gross Domestic Product? Statistics Canada • Statistique Canada

4. What is Canada’s level of investment in research and development? Statistics Canada • Statistique Canada

5. How open is the Canadian economy? Statistics Canada • Statistique Canada

6. How much did the Canadian federal government borrow during the global financial crisis? Statistics Canada • Statistique Canada

7. How vulnerable is the Canadian household sector? Statistics Canada • Statistique Canada

8. All of these measures fall out of the System of National Accounts The System of National accounts provides the framework under which relevant high quality macroeconomic measures are derived. What do all these things have in common? Statistics Canada • Statistique Canada

9. The need for national accounts! • Timely, relevant and comprehensive national account information is a significant intellectual asset for any country, and serves four important functions. • First, it is a framework to measure the economic performance of a country. • Second, international agencies, organizations and businesses (public and private) increasingly require national account information to inform their opinions regarding a country. • Third, timely national accounts provide fiscal and monetary policy makers with the information they need to establish the most appropriate fiscal and monetary policies required for economic growth and stability. • Fourth, national accounts information is a public good allowing citizens to make informed choices in the context of the national economy Statistics Canada • Statistique Canada

10. The need for national account revisions! • Like any asset the national accounts depreciate with time and new investments need to be made periodically, to ensure that they continue to provide high quality services to their users. Implementing 2008 SNA will improve the relevance of a country’s national accounts information. • This improvement is a challenge for the NSO and does not come without cost. • Government officials, policy makers, academics, businesses and researchers can help NSOs take on this challenge by using their influence and funding mechanisms to secure the resources required to undertake a revision. Statistics Canada • Statistique Canada

11. National Statistical Organizations will face a number of challenges when implementing a new national accounting standard. These include: Determining the scope Compiling the estimates Communicating the changes National account users and government officials can help in addressing each of these challenges. Challenges Statistics Canada • Statistique Canada

12. Understanding economic and social information needs Prior to implementing 2008 SNA the national statistical organization needs to have a good understanding of the basic economic and social information needs within their respective country. National account users, policy makers, researchers and government officials can help by making themselves available to dialogue with national statistical agencies around data needs. Determining the Scope Statistics Canada • Statistique Canada

13. Assessing the availability of data The scope of the revision will in-part depend on the availability of data. The national accounts compiler should also produce an inventory of existing data holdings as well as develop an inventory of the new sources of information required with implementation of SNA2008. This inventory should be aligned with the priorities identified in the user needs consultation process. Determining the Scope Statistics Canada • Statistique Canada

14. Assessing the availability of data When data are required for high priority compliance issues the national statistical organization needs to be creative in how to best secure access to the required information. The tendency to implement a large scale survey should not be the norm. Instead, as much as possible, the national statistical agency should leverage existing information collection systems, including private sector providers of information, to secure the necessary data. National account users and government officials can help by encouraging data providers (or facilitating the transfer of data from within government) to cooperate with the national statistics office in the development of an integrated national statistical programmes. Tools to encourage such cooperation include legislation, memoranda of understanding, and other data sharing agreements. Determining the Scope Statistics Canada • Statistique Canada

15. On-going resources While initial investment funds are often secured for the implementation portion of the project statistical organization are often not allocated on-going funding for the continued production of the estimates. The scope should be determined by the level of on-going resources rather than temporary resources devoted to implementation. NSO need resources for the initial investment as well as on-going resources to carry out the production of the updated and expanded national accounts on an permanent basis. Determining the Scope Statistics Canada • Statistique Canada

16. Human Capital There is a high probability that the team of individuals implementing an SNA revision is most likely the same team that is responsible for the on-going production of the national accounts estimates. If this is the case, the overall project schedule must be integrated with the on-going production schedule of national accounts information. Ensuring this type of expertise is one of the most difficult tasks that need to be addressed by a statistical agency. National account users and government officials can help by ensuring that the NSO has access to both national and international training programs and access to experienced academics and government officials. Compiling the estimates Statistics Canada • Statistique Canada

17. Back-casting the data Users of national accounts data like long consistent time series. There are some very pragmatic reasons for this, including the ease of use in economic modeling. As such, when economic data are subjected to a new set of concepts and methodologies most analysts prefer that these new concepts and methodologies be carried as far backwards as possible. This is a major challenge for a statistical organization, with three things to be considered during the implementation phase. Significance of the break Data availability Level of detail Compiling the estimates Statistics Canada • Statistique Canada

18. Understanding the new national accounts National account users and government officials will need to educate themselves regarding the new national account databases resulting from the 2008 SNA implementation and how these databases relate to data that was previously published. Compiling the estimates Statistics Canada • Statistique Canada

19. The need for flexibility While a great deal of work is necessary to identify which priority issues to implement and identifying available data sources, even more work is required to determine if the implementation plan can be carried out. For example, a country may choose to capitalize research and development, because it has both a user base for the information and available data. However, it is not until they begin to work on the estimates and develop some preliminary series that they will determine the quality of the data and whether or not it can be implemented into the core set of accounts. National account users and government officials can help by ensuring they understand that plans may change during the implementation phase and they need to be willing to accept instances where planned changes need to be moved to a later date. Compiling the estimates Statistics Canada • Statistique Canada

20. Getting the message out The term System of National Accounts is often not well understood! National account users and government officials need to engage themselves and understand the significant of the revision in the context of their work. NSO can help by speaking in their terms, mentioning the outputs of the system rather than the system itself. It will be much easier to garner the attention of a user if you say that you are going to increase the level of a country’s gross domestic product than if you say you are going to expand the asset boundary to include new intangible assets. Communication Statistics Canada • Statistique Canada

21. Identifying your users A challenge a statistical organization faces when communicating its 2008 SNA implementation plans lies in identifying who this information needs to be communicated to. Most statistical organization have vehicles in place to communicate national accounting changes to monetary authorities, various levels of government and large private financial institutions or economic forecasters. However, processes are often lacking and new lines of communication are often needed pertaining to the use and understanding of the information in academia, by journalists, by private enterprises and by the general public. National account users and government officials need to identify themselves and dialogue with the NSO on their use of national account data. Communication Statistics Canada • Statistique Canada

22. Providing lead time Finally, users of national accounts information will need substantial lead time to incorporate the new national accounts information. Economic models are often built from national accounts information. If the presentation, detail or timing of national accounts information changes, users will need to adapt their forecasting and analytical models. Users will need to map the new data into their models as well as devote time to understanding the new data to ensure that they maximize their analytical usefulness. Communication Statistics Canada • Statistique Canada

23. Overcoming the perception of error Another challenge that a statistical agency must overcome when implementing the 2008 SNA is the perception that the revision is intended to correct an error or errors within their national accounts database. While statistical organizations have a large responsibility in developing a comprehensive communication plan surrounding the implementation of 2008 SNA national account users and government officials have a responsibility as well. They will need to engage themselves in understanding what is being communicated and ensure the information is communicated and understood throughout their organization. Communication Statistics Canada • Statistique Canada

24. Appendix Statistics Canada • Statistique Canada

25. What is the level of household income and debt in Canada? Statistics Canada • Statistique Canada

26. What is the level of Canadian government debt? Statistics Canada • Statistique Canada

27. Where is investment taking place in Canada and what is it’s share of GDP? Statistics Canada • Statistique Canada

28. Which province in Canada has grown the fastest throughout the 2000s? Statistics Canada • Statistique Canada

29. Which province in Canada has the highest per capita income? Statistics Canada • Statistique Canada

30. What are Canada’s terms of trade and how does it impact our purchasing power? Statistics Canada • Statistique Canada

31. Who is borrowing and who is lending in the Canadian Economy? Statistics Canada • Statistique Canada

32. How risky is the Canadian household sector portfolio? Statistics Canada • Statistique Canada