To See the Future of Digital Government, Look Down Under
We have long admired the Australian Government’s leadership to transform documents into data.
Thanks to a generous invitation from Terrapinn, a global events organizer who arranged Australia’s 12th Annual Technology in Government conference, Data Coalition leadership spent nine days in Sydney and Canberra this month. Executive Director Hudson Hollister and Communications Director Jessica Yabsley met leaders at the vanguard of Australia’s digital transformation, including four agencies: AusIndustry, the Department of Prime Minister and Cabinet, the Australian Taxation Office (ATO), and the Digital Transformation Agency.
We can confirm: in Australia, the future of digital government is already here!
Here are five areas where the Australian Government is demonstrating global leadership in digital transformation — and one area where the U.S. is still in the lead.
In every area, data standardization is key. By adopting common, predictable data fields for all kinds of reports, identification, and information exchange, the Australian Government is creating efficiency for Australian companies, transparency for Australian taxpayers, and fewer headaches for its own decision-makers.
1. Standard Business Reporting Saves Companies $1.4 Billion AUD a Year.
Standard Business Reporting (SBR), the idea that multiple regulatory agencies should adopt the same data format for the information they collect from companies, has been a reality in Australia for the better part of a decade. Led by the ATO, multiple federal and state agencies have all agreed to use a single data taxonomy which specifies the fields and formats of companies’ regulatory reports.
The ATO works directly with vendors that provide financial software to companies, represented by the Australian Business Software Industry Association (ABSIA) trade association, in promulgating the SBR taxonomy.
Thanks to the data standardization, and ATO’s close industry coordination with ABSIA, Australian software vendors like Xero are now positioned to help Australian small businesses and organizations automatically compile and report regulatory information to multiple agencies at once, just as if the agencies were sharing a single portal.
And SBR has led to new innovations — like last month’s launch of Single-Touch Payroll, which allows companies to report payroll taxes automatically, at the time they process payments to employees, rather than having to fill out forms. Single-Touch Payroll was made possible only after SBR established its common taxonomy of data fields which software vendors are able to build products around. You can learn more about SBR’s publicly documented taxonomy architecture here.
The United States regulatory regimes desperately need a standardized taxonomy for regulatory reporting. Unfortunately, for now, each regulatory agency specifies reporting requirements under its own authority and processes. Because our agencies do not have interoperable data fields, companies’ software can only handle one agency’s requirements at a time.
But change is coming. The Data Coalition supports the Financial Transparency Act (FTA) (H.R. 1530), which will require the U.S. government’s financial regulatory agencies to work together to standardize the fields and formats of the information they collect. Over thirty members of the House of Representatives have signed on to cosponsor the Financial Transparency Act.
The Financial Transparency Act would not go as far as Australia’s program as it does not cover tax reporting, business registration, retirement reports, or other kinds of regulatory reporting. But it represents a very real start with the eight financial services and banking regulatory agencies.
Once the Financial Transparency Act is enacted and implemented, we will at least have a taxonomy that covers financial regulatory reporting. That taxonomy could be expanded in the future to include non-financial agencies’ regimes.
2. Ahead: E-Invoicing, and Trillions in Savings.
The benefits of SBR do not end with reduced compliance costs. There are even bigger uses for standardized data fields.
This year, the governments of Australia and New Zealand have begun working together on a common data structure for invoices. This data structure will specify the data fields that are used in both business-to-government and business-to-business invoicing. E-Invoicing is the concept of data fully replacing document-based invoices so that payment systems will be able to digitally communicate directly.
The governments of Australia and New Zealand will start by asking their own suppliers and vendors to use these data fields. Governments are such large market participants that the use of the data fields can spread.
Once it is fully adopted by the private sector for business-to-business transactions, E-Invoicing is predicted to save Australian companies $28 billion AUD per year. None of this would have been possible without the SBR program’s previous groundwork. SBR’s shared data dictionary is being reused, allowing payment systems to communicate with common data fields for companies’ names, addresses, responsible parties, and identification.
Convert $28 billion AUD to U.S. dollars, then multiply by fifteen to reflect the size of the U.S. economy. That’s what E-Invoicing could save U.S. companies: over $300 billion USD, every year.
For E-Invoicing to work in the United States, there needs to be far greater data standardization.
3. A Single Business Identification Code Brings Together Data For Policy-Making.
In 2001, Australia adopted the Australian Business Number (ABN), a common code to identify companies. Every Australian company, and other types of organizations too, must receive an ABN from the Australian Business Register (ABR). The ABN goes on every government filing — both federal and state. Every agency uses it.
The ABN made it much easier for Australia to start its SBR program than if each agency had been identifying companies differently.
And, more recently, the ABN has become the key to evidence-based policymaking on economics in Australia.
The Australian Government has established the Business Longitudinal Analysis Data Environment (BLADE), a centralized access point for information about companies and their activities drawn from sources all over the Australian government, searchable by every company’s ABN, by geography, by whether a company has received government assistance, and in many other ways. BLADE gives policymakers a front-row seat on economic trends, both macro- and micro-, all the way down to the individual company level. The system also helps policymakers understand whether business-focused policies are succeeding or not, and even allows proposed policies to be modeled and tested.
Access to BLADE is protected to ensure that confidential information is not leaked. Interestingly, BLADE is not used to enforce compliance with regulations but only to inform policymaking.
Unfortunately, the U.S. government has many entity identifiers, whereas the Australian government has only one identification code for companies.
A one-of-a-kind study soon to be published by the Data Foundation and the Global LEI Foundation will explore the company identification codes and data fields in use across the U.S. federal government. The Foundation’s researchers found dozens of them, and they are all incompatible with each other.
Until the U.S. government adopts a single identification code for companies, evidence-based policymakers will have to rely on statistical samples and surveys rather than hard numbers.
Fortunately, U.S. agencies are considering adopting the Legal Entity Identifier (LEI), the only global identification code for business and other entities — sometimes as a replacement for legacy identification codes, and sometimes alongside existing ones.
The universal adoption of the LEI would catch us up with Australia and give our policymakers better data for better decisions.
4. Agencies Adopt Enterprise Data Models to Standardize and Share.
In 2016, AusIndustry — Australia’s commerce department — decided it needed to better organize its data. Just like a U.S. government agency, AusIndustry had many data resources spread across many offices and divisions; nobody within the agency had a view of the whole trove; data sets did not match each other; and there were at least four different, competing plans to bring data together.
A multi-disciplinary team at AusIndustry brought order to chaos by adopting an agency-wide Data Management Strategy. The Strategy defines a future state for AusIndustry’s data set — notably, “[A]ll department data will be shared openly by default within the department, unless data sharing is restricted by legislation.”
Following this master plan, AusIndustry adopted a single Enterprise Data Model, which specifies how AusIndustry’s data sets are supposed to be structured, with standard fields and formats. AusIndustry created a single Data Register, or catalog of its data sets, and keeps it up-to-date so that everyone can understand the agency’s 450 major data-sets, who maintains them, and how to access them.
The catalog tracks each data set’s quality, using a scheme pioneered by the UK’s Open Data Institute. “Bronze” data sets have a clear Steward, or owner; “Silver” data sets have a glossary and clear rules on how their contents can be shared; “Gold” data sets conform to the Enterprise Data Model.
The Enterprise Data Model, by standardizing data, makes it much easier for AusIndustry’s data sets to be shared and fully used — not just within the agency, but outside it too.
No U.S. agency has a single, stable Enterprise Data Model. But the White House has shown a willingness to push U.S. agencies to create them. The President’s Management Agenda includes a push for agencies to organize, standardize, and share their data. Enterprise Data Models are the right way to do that.
Even Australia does not have a clear system for data sharing across agencies. A study by the Australian Productivity Commission found 500 different legal restrictions on cross-agency data sharing (see page 33 of the Commission’s report on data availability and use). The Department of Prime Minister and Cabinet is seeking to create a single legal regime to make cross-agency sharing easier.
In the U.S., similar restrictions make data collection and data sharing much more complicated than such activities need to be. Congress should watch how Australia tackles the problem and take note.
5. Consolidated Grant Reporting Saves Agencies and Grantees Time and Treasury.
Just like the U.S. government, the Australian Government awards grants to companies, nonprofits, and social service agencies all over the country. Just like in the U.S., these grants are awarded by dozens of different agencies. Just like in the U.S., each grant carries reporting requirements. The recipients of grants must report back to grantor agencies on their receipt and use of the funds.
Grant reporting creates compliance challenges for grantees, especially those who receive grants from more than one grantor agency. In the U.S., some grantees’ grant officers spend more time complying than they do performing the work that their grants are supposed to fund.
The Australian government tackled the problem of compliance in 2016 when the Department of Finance required every agency to turn its grant management over to one of two government-wide hubs. The Business Grants Hub, managed by AusIndustry, handles grants to companies. The Community Grants Hub, managed by the Department of Social Services, handles social services grants.
Each Grants Hub serves as a single point of contact for grantees. A grantee receiving awards from multiple grantor agencies need not submit reports to all of them, but only to the Hub.
The Grants Hubs make life easier for grantees but also improve management for the grantor agencies. Each Grants Hub helps its grantor agencies to compare grantees’ characteristics and performances across all the programs that it manages.
The U.S. has nearly 2,300 grant programs and zero Grants Hubs. U.S. grantees must report directly to each program — and sometimes to home-grown agency-wide grant management systems like G5 at the Department of Education. One grantee reported to our Data Foundation researchers that her office must maintain roughly 50 different login codes for different federal reporting regimes.
We are a long way from being able to set up Grants Hubs, but data standardization would be a good start.
The proposed Grant Reporting Efficiency and Agreements Transparency (GREAT) Act (H.R. 4887), currently making its way through Congress, and the White House’s Cross-Agency Priority Goal (“CAP Goal”) #8 on “Results Oriented Accountability for Grants” (our summary here) both focus on adopting common data fields for the information that grantees most commonly report to grantor agencies.
Under either the goals of the GREAT Act or the White House’s CAP Goal, grantees’ software could eventually be able to automatically compile and submit information to grantor agencies, even without the further innovation of a Grants Hub.
And if the most common data fields of grant reporting were fully standardized, agencies would be able to bring together data on grantees’ performance to fully track and understand their grants portfolios.
Still in the Lead: U.S. Spending Data.
We were proud to discover that the U.S. government does seem to do a better job than the Australian in one area: spending data.
Our contacts explained that only a portion, not the whole, of Australian government spending is available as open data, and quality is poor.
The U.S. government has something much better: USASpending.gov, which provides a single, unified data set of all of the executive branch’s spending. USASpending.gov was made possible when Congress enacted the DATA Act of 2014, which forced all U.S. federal agencies to start using the same, standardized data structure to report their spending information.
The Australian Government lacks data standards for spending. Data standards make the difference.
What About Blockchain?
In all our meetings with Australian government officials, nobody mentioned blockchain.
That was not because Australia is not a leader in blockchain adoption. The Australian Stock Exchange, for instance, has established a blockchain to manage information about its trades.
Instead, Australian technology leaders seem to understand that blockchain applications only become possible after data is standardized, not before. Blockchain is an interesting and often-transformational way to share information, but only after that information has been moved from document-based to data-centric.
This was a welcome respite from the U.S. government tech scene, where blockchain pilots often seem to be proposed before standardization takes hold.
U.S. policymakers can learn from their Australian colleagues that standardization comes first, sharing second, and using third.
We are grateful for the opportunity to explore the Australian Government’s digital transformation — and we hope to welcome Australian guests at Data Transparency 2018, just two months away.