20 September 2006

The Web
Business Today

I don’t feel uncomfortable

He may have addressed one of the pre-referendum national mass meetings in favour of EU membership but economist GORDON CORDINA believes that his public activism and role as policy advisor to government in recent years should not be a hindrance to his new role as director general of the National Statistics Office.
Conscious of the frequent controversies that erupt over data published by the NSO, Cordina says that he does not feel “uncomfortable” in his new post.
The economist says that as an academic he always felt the need to step outside the ivory tower and pronounce himself on issues deemed of national importance.
“I have always been impartial because I based my advice or opinion on my academic background. If because of my assessments there were people who agreed or disagreed with me is a secondary issue,” Cordina says.
The NSO is autonomous from government but nonetheless, Cordina insists the office will not be pushing any ideas. “We will be measuring data utilising rigorous methods and in a transparent way to enable others to understand how we derived the results,” he says.
In his new role, Cordina will face the daunting task to convince everyone that statistics gathered by the NSO are not ‘politically’ tainted. However, he takes solace in the fact that it is Eurostat and not government that will be acting as a watchdog on the institution he now presides.

In your first comments to the press after your appointment to the post of director general of NSO, you felt the need to underline the distinction between your previous role as economic advisor to government and your new role as the head of a statistics office that works autonomously from government. Why did you need to stress this distinction?
Until recently I was an academic economist. But it was a natural thing to move into the policy arena since I strongly believe that the academic should not lock himself up in an ivory tower. Alongside the political parties, civil society, the church and other organisations, I believe that academics have a role to play in shaping society.
Prior to my current role I was both an academic at University and also involved in the policy arena by acting as an advisor to the Central Bank, the MCESD and various ministries. I also felt the need to speak out publicly on issues of national importance.
It is an act of courage for an academic to take the plunge into the field of policy making because inevitably you can never please everyone. But I believe that academics need to have the courage to pronounce themselves on national issues with a clean conscious and based on their academic background. They shouldn’t hold back their views out of fear of being attacked or criticised politically. This was my role for the past 10 years.
With my new post that role is changing. I will still be using my academic background but instead of adopting a policy advisory role I will be using my knowledge for statistical measurement.
The NSO is a scientific institution that focuses on research and the collection of socio-economic data.

Do you believe that your background as an economic advisor to government and your foray into the EU membership debate in 2003 can influence the way certain political quarters view you in your new role? What are you going to do to signal the break?
I don’t believe that we should talk of a break since I didn’t do anything partisan in the past. I have always been impartial because I based my advice or opinion on my academic background. If because of my assessments there were people who agreed or disagreed with me is a secondary issue.
I always held back from rebutting my critics even when I was attacked. I just said what I had to say and let others react. Finally it was the people who judged what I was saying.
In my new role I will continue using my academic background, channelled in a different way. I don’t feel uncomfortable at all. It is a different sphere where impartiality is important and where we will not be pushing any ideas. We will be measuring data utilising rigorous methods and in a transparent way to enable others to understand how we derived the results.
Credibility is the biggest asset the NSO needs to have.

Can the fact that the former head of this office moved out and now occupies a central role in government and also given your previous background as a government advisor, lead outsiders to believe that this office is simply an indirect extension of government?
St Augustine said that for the believer ‘no proof is required’ while for the non-believer ‘any proof is never good enough’.
The NSO is funded from the public purse but is autonomous and this is embedded in the law. Alfred Camilleri, before me, did a lot to turn the former government department into an autonomous office.
But our credibility is also derived from the fact that everything we do is being monitored by the European statistical agency, Eurostat. Every statistical office in the EU member states is autonomous and forms part of the European statistical network. Even though we are funded by government, our job is monitored continuously by Eurostat.
This supranational supervision adds to our credibility. Government is not my ‘master’. The client I am servicing with my statistics is Eurostat.

Statistics are often questioned or used by politicians to suit their ends. Are statistics intrinsically ambiguous and open to interpretation or do politicians purposely raise doubts about the reliability of published data?
I cannot answer for Maltese politicians and the way they use statistics. What I can say is that the NSO gathers statistics using internationally approved methodologies and results need to be interpreted according to those methodologies.
For example, the retail price index is an index of prices and should not be utilised to highlight whether the cost of living is going up or down. If government raises taxes, the cost of living for any individual would have gone up because it would be more difficult to continue living as before. But an increase in taxes will not reflect itself in the retail price index since it only measures prices.
If a new product is available on the market and it makes my life easier, thus improving the quality of life, this will not be reflected in the RPI since it does not measure quality issues.
An important issue for us is transparency. It is not enough to publish results but we also show how we arrived at the results. Transparency enables others to interpret statistics in a correct way.

Economic growth is one particular statistic that is often contested by politicians. When faced with contrasting interpretations, that might both have an element of truth in them what role do you envisage for the NSO in trying to clarify matters?
When talking about economic growth data we have to consider two particular issues: timeliness and quality.
The NSO is obliged by Eurostat to publish economic growth data every quarter and we have to deliver the results within 70 days of the end of that particular quarter. It is a very strict and short timetable. But for us to be timely we cannot produce figures that will not be revised some time in the future. If we wanted to publish figures that will definitely not be revised then the country would have to wait two or three years after the end of the particular year, like used to happen in the past.
A quick response rate can never produce a perfect result for various reasons. It can either be that not all questionnaires would have reached the NSO in time, or new information about the economy would have arrived late. The quarterly GDP figures are provisional estimates and we do say so in our news releases.
The NSO tries to produce good quality data as much as possible apart from being timely so that subsequent revisions would be kept to a minimum. And we do so by chasing our respondents, which in turn generates criticism towards us from industry because of the burden our surveys have on them.
But there is another dimension of economic growth that needs to be kept in mind. Let’s assume that Malta exports a lower number of goods but at a higher price. Overall, despite the country exporting less, the value of exports would have gone up. In such a case real GDP would drop because of the lower volume, but the nominal GDP would register growth because of the higher value. Did the economy perform badly because the real GDP dropped? Given that these goods were exported, it is their value that is more important.
But if those goods were sold on the domestic market it would mean there were less goods for the Maltese to enjoy and they paid a higher price for them. In this case we would probably argue that the country would have had a bad performance.
When analysing the GDP one has to take into account the different figures because they tell a different story. And this is why the NSO has to be transparent so that analysts know how we derived the figures.

Businesses in general complain of the burden imposed on them by the NSO to regularly fill in questionnaires. How do you intend addressing this issue?
The response burden is a reality that does not only afflict Malta. This is an issue that is also being raised at a European level. Over the last few years there was a drive by Eurostat so that data is collected as much as possible utilising the survey approach. These surveys automatically create a burden on business. Today, many are questioning whether it is worth it to rely less on surveys and opt for administrative data instead.
Is it viable for the NSO to ask companies that are already giving data to certain ministries, to fill in a questionnaire requesting the same data all over again?
There is also the issue that in a small country the response burden is obviously going to be high. Being small does not mean we can opt for a smaller sample size. The size of the market also means that it is very difficult to find many companies producing the same product or service, which means that every time we would have to go to the same company or companies with our surveys.
To try and mitigate the response burden, the NSO would be striving to cut down on any duplication of effort and being brokers of information we also intend developing a system whereby we would be able to give companies information in return for their efforts.
But the NSO is not the only institution that gathers information. There are constituted bodies that request data. We need to determine whether there needs to be some form of co-ordination and integration between all these efforts.

When will the census be published in its entirety?
I prefer not answering this question since Mr Alfred Camilleri retains his role as census officer. Any questions regarding the census should be addressed to him.

The NSO had been commissioned to carry out the surveys of the Broadcasting Authority but in the latter half of last year it stopped doing these surveys because of the resources required to carry out the census. Does the NSO intend restarting these surveys?
I do not want to speak about one of our clients but on a general level there is an international trend for national statistics institutes to diversify their job by also collecting data that is of importance to certain sectors. While it is logical for government to finance the NSO to produce data that is of national importance, it is also acceptable for the NSO to charge clients that would want sectoral data collection.
Data collection for third parties is an interesting source of income for the NSO and we intend to continue down that route. But the NSO will not be competing unfairly with the private sector for these sectoral surveys. We will not be charging below-market prices.

What will Gordon Cordina bring to the NSO?
I accepted this appointment with immense humility towards the good work done by various people over the last 10 years to build this office from a department that employed 30 people into an institute that now employs around 140 people and is in constant contact with foreign institutes.
I will focus on three levels; output methodology improvement, staff development and external relationships.
Whereas over recent years a great deal of effort was dedicated to extending the coverage of surveys to a wider range of issues, I intend focussing on improving the quality of coverage by adopting new methodologies. The creation of a new household budgetary survey is one such issue; the measurement of producer prices is another.
Secondly, if the NSO wants to keep its staff it needs to invest in them. I want this office to be a learning organisation.
My third objective is to improve external relationships with the media, constituted bodies and other organisations.
A lot has been done but we need to continue building on the capacity of this office because the challenges are bound to increase. In a few months’ time we could expect to be involved in the convergence assessment of the Euro whereby European institutions would be contacting us directly, seeking particular information that we would be supplying directly to them without passing through any other medium.

Gordon Cordina was interviewed by Kurt Sansone

Business Today is published weekly on Wednesdays.
Website is updated weekly on Thursdays
Copyright © MediaToday., Malta
Managing Editor - Saviour Balzan
Editor: Kurt Sansone
Business Today, MediaToday, Vjal ir-Rihan, San Gwann
Tel: (356) 2138 2741 | Fax: (356) 2138 5075 | E-mail