HOUSE OF REPRESENTATIVES, 30 JULY 2019
A zettabyte is a billion terabytes. A decade ago, global annual data generation was less than one zettabyte. When the coalition came to office in 2013, it was a few zettabytes. Now it is around 25 zettabytes and projected next year to go to 40 zettabytes. We currently produce the same amount of digital data every two days as we did in a year in 2002. The rise of the Internet of Things and wearables technologies and falling storage costs have meant that data is ubiquitous and has the potential to greatly improve the quality of social services and business productivity.
In areas such as health data, energy and social services, it is possible to get significant advantages to the benefit of all Australians, and yet Australia currently lags behind other countries when it comes to access to data. As a report from the Australian Data Archive in 2016 noted:
Australia is well behind the UK, US and most of Europe on open data. This is impacting Australia's ability to be competitive [in research] and its standing [in the Humanities, Arts and Social Sciences] discipline.
A study by the World Wide Web Foundation in 2016 ranked Australia's open data performance overall at 10th. In its impact category, we were a lousy 19th. Open data availability in Australia, according to that report, was particularly low compared to countries with similar governance structures, including not only larger countries, such as the United States and the United Kingdom, but also New Zealand, which has used longitudinal data from anonymised linked administrative datasets to identify young people who are particularly at risk. I gave a speech in Auckland last year about New Zealand's integrated data infrastructure systems and the way in which Australia could learn from that in order to deal with deep deprivation, linking together data that we have from the criminal justice system, education records and child support in order to provide quick, targeted intervention to assist extremely vulnerable populations.
Open data has great potential to improve outcomes in areas such as energy, telecommunications, financial services and insurance. But we need to make sure, as other speakers in this debate have noted, that we get right the issues around privacy. Shoshana Zuboff's book The Age of Surveillance Capitalism talks about the way in which the ubiquity of data collection has expanded in scale—the zettabyte figures I began with. And in scope—we are now collecting data in areas we previously didn't. She gives the example of Gmail's use of targeted advertisements based on words within emails—a form of surveillance which would have been an anathema to many people in the early days of the web but which is now taken for granted by Gmail users. In terms of activities, she gives the example of Pokemon Go, which was monetised through collaborations with private firms that paid to have Pokemon Go users attracted to areas outside their businesses, using big data to change real-world activity.
A report by the Productivity Commission reported that, while seven out of 10 Australians use social media and eight out of 10 participate in customer loyalty schemes, only four in 10 read privacy policies online and many Australians are unaware of the amount of data that is collected about them and how it is collected. But the Productivity Commission also made the point that increasing data use need not increase risk, that the sheer volume of data is not necessarily the driving factor and that we can construct rules that ensure that data is protected. One of the pleasing examples of this is the use of tokenisation in the area of credit cards. The likelihood that your credit card number will be stolen is now markedly lower than it was before the era of tokenisation. Used smartly, tokenising systems can ensure that we get far fewer data breaches than have happened in the past, where we've seen considerable numbers of data breaches take place in government and non-government agencies and that's undermined public confidence in data.
A terrific report done by Danny Gilligan for Reinventure uses the analogy of a brake and an accelerator, making the case that government has two roles when it comes to the data economy. It has a role of encouraging innovation—that's the accelerator role—through bodies such as Data61 and it has a role of ensuring that privacy is protected; you can think of that as the brake role. But he points out that in Australia the brake and the accelerator frequently sit in quite different parts of the government. Data61 sits distinct from bodies such as the Critical Infrastructure Centre, which is responsible for security and privacy. Danny Gilligan distinguishes that from Singapore, which brings together the brake and the accelerator much more effectively, ensuring that the Singapore government is speaking as one voice to potential innovators and ensuring that strategies such as tokenisation are pursued in order to avoid the risk of data breaches.
The productivity potential is significant. In their Commonwealth orange book 2019 the Grattan Institute said:
In banking, government should make it easier for customers to switch banks, and make it easier for new competitors to enter the market. Government could cut switching costs by making it easier for customers to share their data, to transfer their direct debits to a new bank, and to free-up their data from the control of their current bank.
The Australian Competition and Consumer Commission has taken a similar approach, pointing out that the Australian banking sector has various characteristics which suggest that it is not, as the ACCC delicately puts it, 'vigorously competitive'. It refers to the concentrated market structure; high overall profit margins by international standards; the relatively quick pass-through of mortgage rate increases but slower pass-through of rate reductions, suggesting an asymmetry; and the low levels of customer switching.
The ACCC points out that the Australian banking sector has various characteristics of the famous competitive forces strategy equilibrium model set out by Harvard Business School's Michael Porter, where he says firms can attain success by erecting high entry barriers, keeping suppliers weak and dispersed, curbing buyer power with high loyalty and reducing the likelihood of substitutes, and points out that those characteristics of firms making themselves productive show up in the Australian banking sector. The ACCC drew an analogy to telephone number portability, which was resisted in the telecommunications market by Telstra 15 to 20 years ago but which has proved to be a significant spur to competitive pressures. Making it easier for customers to switch banks and for customers to share their data to find out the best deal for them is a useful pro-competitive measure.
We're seeing this in the United Kingdom at the moment where the rise of neobanks has been quite significant. Atom bank emerged in 2016; Starling has captured significant revenue growth, opening 520,000 personal accounts since 2016; Monzo has opened 1.6 million new accounts in Britain, opening 30,000 more each week according to The Economist magazine; Revolut has a banking licence in Lithuania and is expanding across the eurozone; and N26 has launched in Austria and Germany and is now in 24 European countries. You might be interested to know, Mr Deputy Speaker McVeigh, that N26 is named for the number of cubes that make up a Rubik's cube. Neobanks are currently capturing around a third of new account growth in the United Kingdom. The promise of open banking is clearly there and it is important that these facilities are available to those who don't want to spend a great deal of time shopping around.
Like my colleagues, I'm very concerned about the impact that open banking could have on vulnerable Australians. We need to make sure that, in any shift towards a cashless economy, vulnerable Australians are not left behind. Yes, there is disproportionate use of high-level currency denominations by organised crime, and one of the ways of addressing organised crime could potentially come through that shift to a cashless economy. But those who are unbanked are, disproportionately, vulnerable Australians, and we need to make sure they are at the forefront of the minds of parliamentarians and public servants as we shape the new open banking environment.
It's important, too, that we think about the role of defaults. We know that there is a history, not just in banking but in other sectors, of customers getting a good deal in their first year and then being defaulted into poorer-performing products. Open banking will work best if there are products or third parties that ensure that customers are reminded if their current bank is not offering them the best deal, if the legacy customers aren't being treated as well as the new customers. Behavioural economics has taught us that defaults matter and there is a stickiness to these things, so improving portability and the ability of customers to shop around is absolutely vital.
I do take seriously the concerns of consumer groups around these issues—the importance of ensuring that we have a system that is not only rigorous and protected against data breaches but also perceived to be so by Australians. The risk to Australians of having a system in place where they don't feel that they can opt out is very real. This needs to be a system which has the consumer at its heart, where consumers are able to opt out and where the shift to open banking and, ultimately, the extension of a consumer data right to other sectors of the economy is very real.
My friend and co-author Joshua Gans has done a great deal of work on the potential of data to spur economic growth. Providing confidentialised government datasets can potentially improve the productivity of firms in the economy. The data.gov.au website is useful, and not only the Commonwealth but state and territory governments have provided data to allow third-party services to emerge. These might be anything from a service that allows people to find the nearest public toilet, or find out when their bus is likely to arrive or to work out the local bin collections, to one that allows them to create useful mapping software.
My brother, Tim Leigh, who works in GIS mapping, has been engaged in the question of how non-profit organisations can assist government, using those GIS data for the public good. There is huge potential for the zettabytes of data that are coming down the pipeline, if the government is smart about this, but it is absolutely vital that the systems are structured in such a way that we avoid data breaches, that privacy is protected and that the spectre of surveillance capitalism is not something which puts people off the significant pro-competitive benefits that can come from smart engagement with the data economy.
Authorised by Noah Carroll ALP Canberra.