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5310.0.55.001 - Information Paper: Introduction of revised international standards in ABS economic statistics in 2009, 2007  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 06/09/2007  First Issue
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Non-compliance with International Standards with Minor Impact

Definition of Basic Prices

SNA93 Rev.1 reaffirms the SNA93 treatment of basic prices. However, users, particularly those of Input-Output tables, have expressed a strong preference for moving back to the SNA68 definition of basic prices. SNA93 altered the definition of basic prices with regard to the treatment of transport. Essentially, under SNA93, transport which is not separately invoiced is to be included within the basic price, while that which is separately invoiced is not to be included in the basic price of the product being transported. This was a change from the SNA68 definition of basic price, which always excluded the transport component whether separately invoiced or not.

The ABS considers that the SNA68 definition provides more useful statistics for detailed analysis of the economy and intends to reapply this definition. This will result only in changes to estimates at the industry level, there will be no impact on GDP.


Repurchase Agreements

A repurchase agreement (repo) involves the sale of securities or other assets with a commitment to repurchase equivalent assets at a specified price. The right to on-selling of these securities has become almost universal. The SNA93 and the BPM5 treat repos similarly to collateralised loans, or as other deposits if repos involve liabilities classified under national measures of broad money. After considering whether the SNA93 treatment should be revised, it was decided that SNA93 Rev.1 would continue the current treatment (collateralised loan) and the issue be placed on the international long-term research agenda.

The collateralised loan treatment is not supported by ABS. The ABS maintains that the best statistical representation of a repo is that of a sale of securities, with the obligation to sell/buy-back similar securities recorded as a forward contract, that is a form of financial derivative. This treatment has the advantage of unduplicated recording of securities assets, whereas the collateralised loan approach requires recording of negative security assets to maintain equality between total securities asset holdings and total securities liabilities on issue. The ABS treatment impacts compositional aspects (e.g. securities vs loans, classification of asset holders) but has no impact on analytical aggregates (net assets, net lending/borrowing).


Recording of Interest on Debt Securities

SNA93 and BPM5 do not deal explicitly with the situation of changing interest rates and the measurement of income flows on tradeable securities. There are two schools of thought. The debtor approach records the interest accruing at the contractual rate agreed at the time of issue of the security. The creditor approach records the interest accruing at the current market interest rate. Proponents of the debtor approach argue that it records the legal liability of the debtor to the creditor. Proponents of the creditor approach argue that it is more consistent with the market valuation principle. SNA 93 Rev.1 and BPM6 recommend the debtor approach be applied for recording interest accruing on debt securities.

The ABS continues to strongly support the creditor approach as a better reflection of the market reality in terms of valuing the underlying instrument and the interest that accrues over the life of the instrument. The ABS intends to maintain consistency throughout the accounts by continuing the creditor approach for debt securities.


Ancillary Units (Holding companies)

Ancillary units are subsidiary units, wholly owned by a parent corporation, created to provide services to the parent corporation, or other corporations in the same group. SNA93 Rev.1 includes a number of changes and clarifications to the treatment of these units. The most significant of these recommends that ancillary units be recognised as separate establishments when they satisfy the conditions of an establishment and should be classified according to their predominant activity.

Holding Companies (a unit which holds the assets of subsidiary corporations but does not undertake any management activities) would receive the proposed sectoral classification of Captive financial institutions and money lenders.

This recommendation would be a departure from the current ABS practice for holding companies where, in Financial Accounts and International Investment, they receive an ancillary treatment and are merged into an existing enterprise. Following the recommendation would result in the creation of additional enterprises in situations where currently there are no financial intermediary enterprises in the group.

The ABS is proposing to maintain its current practice, which is in line with the spirit of the recommendations but deviates in the treatment of holding companies.


Financial Instrument Classification

A new financial instrument classification has been developed which includes more detailed breakdowns in a number of categories, which has significant implications for data collection and respondent burden. Consequently the ABS has adapted the classification with slight changes. The proposed classifications for international investment and national accounts statistics are shown below.

  FINANCIAL INSTRUMENT CLASSIFICATION FOR INTERNATIONAL ACCOUNTS STATISTICS

BPM6 Classification

A. Direct investment
  1.Equity and investment fund shares
       Equity other than reinvestment of earnings
          Direct investor claims on direct investment enterprises
          Direct investment enterprises claims on direct investor
          Direct investment enterprises claims on affiliated enterprises
       Reinvestment of earnings
    of which investment fund shares
    of which money market funds included   in broad money
  2. Debt instruments
        Direct investor claims on direct investment enterprises
        Direct investment enterprises claims on direct investor
        Direct investment enterprises claims on affiliated enterprises
      of which debt securities:
        Direct investor claims on direct investment enterprises
        Direct investment enterprises claims on direct investor
        Direct investment enterprises claims on affiliated enterprises
B. Portfolio investment
  1.Equity and investment fund shares
        Equity other than investment fund shares
             Quoted
             Unquoted
        Investment fund shares
        Money market funds included in broad money
Other investment fund shares
  2.Debt securities
        Short-term
        Long term
C. Financial derivatives and employee stock options
  1.Financial derivatives
            Forwards
            Options
  2.Employee stock options
D. Other investment
  1.Other equity
  2.Currency and deposits
        Short-term
        Long-term
  3.Loans
        Short-term
        Long-term
  4.Insurance, pension and standardized guarantee schemes
  5.Trade credit and advances
        Short-term
        Long-term
  6.Other accounts receivable/payable  
        Short-term
        Long-term
E. Reserve Assets
  1.Monetary gold
        Gold bullion
        Unallocated gold accounts
  2.Special drawing rights
  3.Reserve position in the IMF
  4.Currency and deposits
  5.Securities
         Debt securities
            Short-term
            Long-term
         Equity and investment fund shares
  6.Financial derivatives
  7.Other claims

  FINANCIAL INSTRUMENT CLASSIFICATION FOR INTERNATIONAL ACCOUNTS STATISTICS Continued

Current BPM5 Classification used Proposed Classification to be used

Direct investment A. Direct investment
   Equity capital   1.Equity and investment fund shares
   Reinvested earnings        Equity other than investment funds shares
   Other capital          Equity other than reinvestment of earnings
       Claims on affiliated enterprises             Direct investor claims on direct investment enterprises
       Liabilities to affiliated enterprises             Direct investment enterprises claims on direct investor
            Direct investment enterprises claims on affiliated enterprises
          Reinvestment of earnings on equity other than investment funds shares
            Direct investor claims on direct investment enterprises
            Direct investment enterprises claims on direct investor
            Direct investment enterprises claims on affiliated enterprises
        Investment funds shares
          Equity other than reinvestment of earnings
            Direct investor claims on direct investment enterprises
            Direct investment enterprises claims on direct investor
            Direct investment enterprises claims on affiliated enterprises
          Reinvestment of earnings on investment funds shares
            Direct investor claims on direct investment enterprises
            Direct investment enterprises claims on direct investor
            Direct investment enterprises claims on affiliated enterprises
  2. Debt instruments
          Debt securities
            Direct investor claims on/liabilities to direct investment enterprises
            Direct investment enterprises claims on/liabilities to direct investor
            Direct investment enterprises claims on/liabilities to affiliated enterprises
          Other debt instruments
            Direct investor claims on/liabilities to direct investment enterprises
            Direct investment enterprises claims on/liabilities to direct investor
            Direct investment enterprises claims on/liabilities to affiliated enterprises
Portfolio investment B. Portfolio investment
   Equity securities 1. Equity and investment fund shares
        Equity other than investment fund shares
             Listed
             Unlisted
        Investment fund shares
        of which: money market funds included in broad money
   Debt securities 2. Debt securities
       Bonds and notes         Short-term
          Money market instruments         Long term
Financial derivatives C. Financial derivatives and employee stock options
Other investment D. Other investment
   Trade credit     1.Other equity
      Long-term     2.Currency and deposits
      Short-term           Short-term
   Loans           Long-term
      Long-term        3. Loans
            Drawings (liabilities only)           Short-term
            Repayments (liabilities only)           Long-term
      Short-term    4.Insurance, pension and standardized guarantee schemes
   Currency and deposits    5.Trade credit and advances
   Loans           Short-term
      Long term           Long-term
          Use of IMF credit and IMF       6.Other accounts receivable/payable  
          Short-term
          Other long term           Long-term
             Drawings (liabilities only)
             Repayments (liabilities only)
      Short term
   Other liabilities
        Long-term
        Short-term
Reserve assets E. International reserves
   Monetary gold    1.Monetary gold (assets only)
   Special drawing rights         Gold bullion
      Reserve position in the IMF         Unallocated gold accounts
   Foreign exchange    2.Special drawing rights
            Currency and deposits    3.Reserve position in the IMF (assets only)
         Securities            Use of IMF credit and IMF loans (liabilities only)
            Financial derivatives (net)    4.Currency and deposits
   5.Securities
        Debt securities
            Short-term
            Long-term
        Equity and investment fund shares (assets only))
   6.Financial derivatives
   7.Other assets/liabilities

  FINANCIAL ASSET CLASSIFICATION FOR AUSTRALIAN NATIONAL ACCOUNTS (ANA) STATISTICS

  SNA Rev1 Classification

Monetary gold and SDRs
         Monetary gold
         SDRs  
Currency and deposits
          Currency
          Transferable deposits
           Interbank positions
           Other transferable deposits
          Other deposits
Debt securities
          Short-term
          Long-term
Loans
          Short-term
       Long-term  
Equity and investment fund shares  
        Equity  
            Quoted shares
            Unquoted shares  
            Other equity  
        Investment fund shares
            Quoted investment fund shares   
            Unquoted   investment fund shares   
               Money market fund shares/units
               Other investment fund shares/units
Provisions for insurance, pensions  
   and standardised guarantees
        Non-life insurance technical provisions
        Life insurance technical provisions
        Pension entitlements
        Provisions for calls   
           under standardised guarantees
Financial derivatives and employee stock options
        Financial derivatives
              Options  
              Forwards  
           Employee stock options  
Other accounts receivable/payable
         Trade credit and advances
         Other accounts receivable/payable

  FINANCIAL ASSET CLASSIFICATION FOR AUSTRALIAN NATIONAL ACCOUNTS (ANA) STATISTICS Continued

Current SNA93 Classification used in ANA Proposed Classification to be used in ANA

Monetary gold and SDRs
  Monetary gold
  SDRs  
Currency and deposits Currency and deposits
  Currency
  Deposits
  Interbank positions
  Other deposits
Short term debt securities Debt securities
  Bills of exchange   Short term
  One name paper   Bills of exchange
  One name paper issued in Australia   One name paper
  One name paper issued offshore   One name paper issued in Australia
  One name paper issued offshore
  Long term
Bonds   Bonds
  Bonds issued in Australia   Bonds issued in Australia
  Bonds issued offshore   Bonds issued offshore
Loans and placements Loans
  Short-term
  Long-term  
Equities Equity and investment fund shares  
  Listed shares and other listed equity   Equity  
  Unlisted shares and other unlisted equity   Listed shares
  Unlisted shares  
  Other equity  
  Investment fund shares
  Listed investment fund shares   
  Unlisted investment fund shares   
  Money market fund (MMF) shares/units
  Non-MMF investment fund shares/units
Reserves of life offices and pension funds Provisions for insurance, pensions  
Prepayment of premiums and reserves   and standardised guarantees
  Non-life insurance technical provisions
  Life insurance technical provisions
  Pension entitlements
  Provisions for calls   
  under standardised guarantees
Financial derivatives Financial derivatives and employee stock options
Other accounts receivable/payable Other accounts receivable/payable



Reclassifications for Exchanges in International Positions

BPM6 states that domestic transactions resulting in a change in external asset positions should be recorded as a 'reclassification' in the international investment position. Similarly, transactions between two non-residents in a position issued by a resident would also be recorded as a reclassification.

The ABS considers that by issuing a tradeable instrument, the issuer is implicitly a counterpart to any secondary trading in the instrument and that a transaction should be recorded between the vendor and the issuer extinguishing the position, and a second transaction between the purchaser and the issuer creating the position. The ABS will therefore not treat the exchange as a reclassification.

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