To guide Government policy and industry action in growing the digital economy in Australia, it is important to have a strong evidence base. Robust performance indicators also provide insight into the present state of the digital economy in Australia and serve as a benchmark against which to measure the success or identify areas for improvement.

The Australian Government recognises that the current evidence base is narrow and additional datasets will need to be developed as the digital economy becomes more pervasive throughout Australian society. Through the consultation phase for the development of this paper, the public submissions that addressed the issue of metrics were almost unanimous in their view that existing datasets are inadequate for the purpose of measuring our future digital economy performance.¹⁸² Common themes emerged from these submissions:

• Broader scope of digital economy performance measures—as internet and broadband connection rates approach 100 per cent, many commentators correctly noted that these initial indicators will become less useful as performance indicators. In addition, the existing indicators are heavily focused on the internet and may not include the expansive nature of the digital economy. For example, existing data is not designed to capture the use of digital devices external to the online environment (such as smart meters or sensors) nor more highly nuanced digital economy activity (such as the level of sophistication of digital services).
• Metrics to highlight nuances in nature of use, drivers for adoption and impact of digital economy engagement—-many submissions noted that existing data did not provide sufficient insight into the diversity of uses to which technology is put, why people are employing them in their business or personal lives nor the impact of this adoption. The ABS Business Characteristics Survey explores some dimensions of changing business practice and the barriers and drivers for those changes (for example, engagement with the digital economy). However, this data may not be sufficiently granular to provide the detailed indicators required to monitor the complexity or dynamism inherent in the digital economy.
• Examples given of additional details that could be collected about digital economy participation included:
  • the direct and indirect economic benefits, including productivity gains
  • the characteristics of businesses and households that adopt broadband technology
  • more details on what businesses and households are using the internet for
  • the impact of broadband access and subsequent internet use on business practice and performance and individual practices and priorities, including in terms of improving international competitiveness of business
  • the impact of high-speed broadband on the environment and energy use.
• Sector and international benchmarking—several submissions noted that digital economy benchmarking should occur at the sector level and be analysed against comparable international sectors. This could help determine which Australian industries are lagging behind their overseas counterparts and whether intervention by government or industry associations could assist.

In addition to the issues raised in the submissions, current data does not show the level of sophistication of digital economy engagement. For example, current metrics may ask a business whether they use the internet to place and receive orders. A business that sends or receives orders by email may answer in the affirmative, just as much as a business that actually has a sophisticated e-commerce and ordering functionality on their website. The ease with which customers can place orders online may have a direct bearing on the growth of e-commerce. Such distinctions considered at the industry sector level could assist in identifying areas of lag and would form part of an 'ideal' set of metrics.

As noted, a range of government and industry bodies are producing reports that play a valuable role in helping to fill data gaps about the digital economy:

• The ACMA report, Australia in the Digital Economy, Report 2: Online Participation¹⁸³ provides more detail about the nature of Australia's online participation.
• The Australian Industry Group's High Speed to Broadband: Measuring industry demand for a world class service¹⁸⁴ surveyed Australian CEO opinions about high-speed broadband and concluded 'broadband is being used as a tool to drive the productive capacity and innovative behaviour of many Australian firms.'
• Industry reports, such as the Sensis e-Business Report¹⁸⁵ and the Digital Services Index,¹⁸⁶ provide useful insights into the nature of online activity. The e-Business Report provides details about technology usage and e-Commerce for SMEs, including by sector level. The Digital Services Index provides data on the level of business and customer expenditure on digital services (including media content and online advertising, marketing and professional services, technology and hosting) as well as the level of customer engagement via digital services.
• Interactive Entertainment Association of Australia's Interactive Australia 2009 report provides sector-specific insight into one digital economy activity—gaming—as well as industry data.¹⁸⁷

Project-specific reports such as Creating new markets: broadband adoption and economic benefits on the Yorke Peninsula ('the Yorke Peninsula Report')¹⁸⁸ also provide invaluable insights into the drivers and impact of broadband adoption on the Yorke Peninsula in South Australia. The report provides examples of the benefits to businesses and households from using broadband applications:

'Of the 37 per cent of premises that have adopted broadband, some 30 per cent use voice-over-the-internet-protocol (VOIP) services[...]This rapid uptake of VOIP, illustrates the enormous flexibility of broadband and shows how it is used differently depending on context-rural users find VOIP attractive because a relatively high proportion of their calls are non-local[...]VOIP is a breakthrough application for these users enabling them to significantly cut their telephone bills and helping reduce the effects of isolation.'¹⁸⁹

In addition, the economic benefit of broadband adoption on the Yorke Peninsula was estimated to be $25.5 million (the five-year present value of all economic benefits) or $11.2 million annually by the year 2010 on a state-wide basis. For the Yorke Peninsula region itself, the equivalent figures are $21.4 million (five-year present value) or $9.4 million annually, with value to business of around $15 million and value to residential households of $6.4 million.¹⁹⁰ The report notes:

'as broadband and internet use becomes more pervasive and sophisticated, it is quite likely that the perceived value will increase. To the extent that this occurs the present value calculations in this study are conservative.'¹⁹¹

Together, the combination of Australian Bureau of Statistics data, ACMA reports and project-specific and industry reports provide a starting point for understanding the current state of the digital economy in Australia and what can be anticipated to be the primary uses, drivers and impacts for digital economy engagement. As Australia's digital economy becomes more successfully diffused throughout the economy, not only will impact and value become more sophisticated, but our benchmarking of this adoption, impact and value will need to become more sophisticated in equal measure.

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[182] See, for example, Australian Bureau of Statistics, Australian Information Industry Association, Multimedia Victoria, Microsoft.

[183] See ACMA's Australia in the Digital Economy paper

[184] AIG-Deloitte National CEO Survey of 22 October 2008, p. 10.

[185] See www.about.sensis.com.au/resources/sebr.php

[186] See http://digitalservicesindex.com.au/

[187] See www.ieaa.com.au/research/IA9 - Interactive Australia 2009 Full Report.pdf

[188] See supra note 5.

[189] Ibid., p. 2.

[190] Ibid., p. 3.

[191] Ibid.

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