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5241.0 - Australian National Accounts: National Balance Sheet, Jun 1996  
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    Net Worth

    Net worth is defined as the difference between total assets and liabilities (including shares). Australia's net worth was estimated at $1,909.5 billion at the end of June 1996, an increase of 2.1% since 30 June 1995, and compares with an average change of 3.1% over the previous six years. Throughout this period the level of net worth (with the exception of the year ended 30 June 1992) grew continuously, and consistently represented at least four times the level of annual GDP. The series exhibited the strongest growth during the years 1992-93 to 1994-95 when annual rates of at least 4% were achieved. With the exception of the recession of 1990-91 growth in nominal GDP exceeded that of net worth for each year in the period 1989-90 to 1995-96.

    Changes in net worth can be explained in the light of changes in the various components of the balance sheet.


    Produced Assets

    Total produced assets were estimated at $1,372.1 billion as at 30 June 1996, an increase of 3.4% from the level at the end of June 1995. The estimated value of produced assets rose at an average annual rate of 4.2% between 30 June 1989 and 30 June 1996 and consistently accounted for about 60% of total assets throughout the period.

    Produced assets have been split into tangible fixed assets and inventories. At 30 June 1996 93% of produced assets were tangible fixed assets: dwellings and non-dwelling construction accounted for 35% and 40% respectively, with machinery and equipment making up most of the rest. At the same time, inventories accounted for 7% of produced assets, mostly in the form of private non-farm stocks. Plantation forests accounted for less than 1% of produced assets.

    The value of livestock is split between fixed assets and inventories but in total was estimated at $18.8 billion at 30 June 1996. This represented 1.4% of total produced assets. The series has registered two turning points since 30 June 1989, with a low of $16.9 billion at 30 June 1992 and a high of $21.2 billion at 30 June 1994. The changes have been in part related to price changes and in part to numbers of animals. In the twelve months to June 1996, an increase in the number of livestock had a positive effect of $0.3 billion, but this increase was more than offset by a fall of $1.9 billion in the price of livestock over the same period.

    Non-Produced Assets1

    The value of non-produced assets was estimated at $822.4 billion by 30 June 1996, a rise of 2.3% over the previous year, largely attributable to an increase in the value of land.

    Overall, the contribution of non-produced assets to net worth has remained at about 40% throughout the period. Non-produced assets comprise mainly land, which represented around 80% of total non-produced assets throughout the period. Sub-soil assets have accounted for nearly all the balance as native forests have only a very small timber value.

    Land
    The value of land in Australia was estimated at $639.1 billion at 30 June 1996 which represents a rise of 2.1% over the level twelve months earlier. The series has grown continuously since 30 June 1992 (albeit at a slower rate each year) after falling by 3.6% from 30 June 1991. However, whereas residential land was at a level one third higher than seven years earlier, commercial land was almost one third below its 1989 value. Rural land has increased slightly over this period, but not monotonically.

    The total area of land is fixed by geographical factors and will not change from year to year; however that measured in practice may change as some categories of land ownership shift within scope of the balance sheet coverage. However these changes, if any, are not separately identified in the available data sources. The change in the estimated value of land is wholly attributable to movements in the price of the asset and has been recorded in the Revaluation account. The entries in this account represent the value of nominal holding gains or losses accruing to the asset holder.

    Sub-soil assets2
    The value of Australia's subsoil assets was estimated at $179.4 billion at 30 June 1996 which represents growth of 3.0% on the estimate for 30 June 1995.

    The time series representing the estimated value of subsoil assets shows the volatility of the series and the influence that the choice of discount rate has on the outcomes obtained by application of the net present value (NPV) approach. The growth rates derived from the producer price index (PPI) derived series have fluctuated from negative 19.8% to positive 25.5% which was mainly due to changes in the level of Economic Demonstrated Resources and changes in the real discount rate applied to the future stream of income.

    Value of selected sub-soil commodities, at 30 June 1996
    $ billion
    percentage of total
    Bauxite
    62.1
    34.6
    Diamonds (a)
    29.4
    16.4
    Petroleum products (b)
    51.8
    28.9
    Sub-total
    143.3
    79.8
    Total Sub-soil assets
    179.4
    -

    (a) The value is the sum of gems and industrial diamonds.
    (b) The value is the sum of crude oil, natural gas, condensate and LPG.

    It can be seen from the table above that bauxite, diamonds and petroleum products together represented 79.8% of the total value of all sub-soil assets in Australia as at 30 June 1996. Deposits of bauxite continue to be the single most valuable commodity, but both petroleum products and diamonds account for a significant proportion of the value of all sub-soil assets.

    Native forests
    Native forests had an estimated value of $3.9 billion at 30 June 1996 compared with $3.5 billion at 30 June 1995. The value of native forests has trended up over the period since 30 June 1992, as a result of increases in stumpage fees and falling real discount rates.

    Of the total value of native forest as at 30 June 1996, State forests accounted for 56.6%, private forests 28.7% and crown forests the remaining 14.7%. These contributions were largely unchanged since the end of June 1989.


    Position with the Rest of the World

    The difference between Australia's assets and liabilities with the rest of the world represents the net international investment position. A negative outcome indicates that the level of foreign liabilities is greater than the level of foreign assets. As at 30 June 1996, Australia had a net liabilities position that amounted to $285.0 billion or 14.9% of net worth. This was up from 13.9% at the end of June 1995 and 9.6% at the end of the 1988-89 financial year. Most of the increase was attributable to the current account deficits recorded during the period.

    The level of financial assets with the rest of the world held by Australian residents stood at $167.5 billion at 30 June 1996, an increase of 5.5% since 30 June 1995. These assets were mainly in the form of shares and other equity or loans which together accounted for 74.4% of the total. Official reserve assets represented 11.4% of these financial assets. For the last four years the estimated level of financial assets with the rest of the world accounted for slightly more than 8% of net worth.

    The level of liabilities to non-residents was $452.5 billion at 30 June 1996, up from $419.4 billion at 30 June 1995 and 78.8% since 30 June 1989. Nearly all of these liabilities were in the form of either shares and other equity ($190.6 billion), securities other than shares ($182.6 billion), or loans ($63.4 billion).


    Sector analysis

    Households and unincorporated enterprises'
    The net worth of this sector was estimated at $1,414.2 billion at 30 June 1996, a rise of $40.7 billion from the estimate twelve months earlier. Household net worth has grown each year since 30 June 1989 and demonstrated a growth of over 35.2% for the period. Total assets of this sector have grown by 41.3% over the same period although this has been offset somewhat by an 81.5% rise in the level of liabilities held.

    Households' share of national net worth amounted to 74.1% of Australia's total at the end of June 1996, a proportion that has generally risen over the seven preceding years. The amount of net worth attributed to households was 66.3% at 30 June 1989 and rose each year except in the year ended 30 June 1995 when the series fell marginally to 73.5%, after registering a peak of 74.8% at 30 June 1994.

    At 30 June 1996, produced assets accounted for 34.4% of household and unincorporated enterprises' total assets. Of this total, fixed assets accounted for over 97.5% of the value, with dwellings representing nearly three-quarters of this total.

    Over the period 30 June 1989 to 30 June 1996, households consistently accounted for the largest proportion of Australia's estimated value of dwellings and livestock. The ABS has assumed that this sector holds almost all available residential and rural land holdings. As a consequence the household and unincorporated enterprise sector is estimated to account for by far the largest proportion of land in Australia. Other than some small ownership of native forest assets all of this sector's non-produced assets are in the form of land.

    Households and unincorporated enterprises held $629.6 billion in financial assets, 44.9% of which was in the form of technical reserves of life insurance companies. Most of the remainder was either held as cash and deposits or shares (including unit trusts). Total liabilities of households and unincorporated enterprises stood at $289.1 billion at 30 June 1996, almost entirely in the form of loans.

    Ratio of household and unincorporated enterprises interest payments to disposable income and the ratio of their debt to net worth, at 30 June (a)

    (a) Household and unincorporates interest payments include household mortgage interest payments and interest paid by unincorporated enterprises. Disposable income includes all income receipts by this sector less income taxes.

    The above graph indicates that interest payments, as a share of household disposable income, rose somewhat in the year to 30 June 1996, despite a general fall in the interest rate regime, reflecting a 12.2% increase in loans outstanding during the period but an increase of only 7% in household disposable income. Over the seven year period shown here, however, this ratio has tended downwards indicating households' ability to assume more debt has increased. Household debt as a percentage of net worth has been rising monotonically over the period, but at 0.2 (or 20%) at 30 June 1996 it is still low.


    Percentage change in the Consumer Price Index and the value of land owned by households and unincorporated enterprises, at 30 June

    The graph above indicates the percentage annual changes in the CPI and the value of land owned by households and unincorporated enterprises.

    For 1995-96, the rate of increase in the value of land held by households and unincorporated enterprises was less than the increase in the CPI for the first time since 1991-92. The graph also shows three distinct periods of growth in the value of land held by this sector. Between 30 June 1984 and 30 June 1989, which was a period of rapidly rising consumer prices (where the CPI rose by over 40%), the value of land held by this sector rose by 110.0%. From 30 June 1989 to 30 June 1992, the value of land held by this sector rose by just 3.5%. This was a period when the CPI rose at a much slower rate than previously (although four times faster than the land values). From 30 June 1992 to 30 June 1996 however, the value of this sector's land rose by 22.0%, yet consumer prices have been very subdued (rising by only 6.0%).

    General government
    The net worth of this sector was estimated at $376.0 billion at 30 June 1996, virtually unchanged from the 30 June 1995 estimate. The composition of general government's assets saw a rise in non-financial assets (both produced and non-produced) of $10.2 billion, offset by a drop of $19.2 billion in holdings of financial assets (mostly in shares and loans). Liabilities (mainly bonds and short-term paper) fell somewhat.

    At 30 June 1996, the general government sector's produced assets represented 30.8% of this sector's total assets, a proportion which has held constant over the period from 30 June 1989. At 30 June 1995, the value of this sector's non-produced assets reached a level higher than its produced assets for the first time, largely due to the value of sub-soil assets continuing the rise which began in 1991. This remained the case at 30 June 1996, with the gap between the two (produced and non-produced) widening marginally.

    Sub-soil assets are considered to be wholly owned by the general government sector. Accordingly the NPV of their future stream of economic rent has been allocated to this sector. In the year ended 30 June 1996 the estimated value of sub-soil assets stood at $179.4 billion, up some $5.3 billion over the estimate of twelve months earlier, largely as a result of the increased value of gem and cheap gem diamonds outweighing significant falls in the value of black coal and iron ore.

    The net financial position of the general government stood at $13.7 billion at 30 June 1996 about half the $23.6 billion estimated at 30 June 1995. More than half of the financial assets held were in the form of shares and other equity, whilst almost all of the liabilities were in the form of securities other than shares.
    Ratio of general government debt (by level of government) to GDP(I) in current prices, at 30 June


    The graph above illustrates the ratio of total liabilities of general government to nominal GDP (I). In the twelve months to June 1996 general government liabilities as a proportion of GDP fell to 0.43 after reaching a peak of 0.48 at 30 June 1995, and represented the lowest outcome since 30 June 1992. The Commonwealth government's liabilities/GDP(I) ratio stood at 0.23 at the end of June 1996, down marginally from its peak of 0.24 the previous year. State and local government's liabilities/GDP(I) ratio has trended down since 30 June 1993 and was 0.21 at 30 June 1996 (the first time during the period where the State and local government ratio was lower than the Commonwealth government ratio).

    Financial enterprises
    The level of financial assets and liabilities of this sector has grown each year throughout the reference period. Both series stood at a little over $500 billion at 30 June 1989 and both had reached a level of well over $800 billion by 30 June 1996.

    The most significant change in the composition of the liabilities of this sector is the emergence of 'technical reserves of life offices and pension funds' as virtually equal to cash and deposits as the most significant source of funds for this sector. The former demonstrated much faster growth than the latter.

    Financial enterprises holdings of financial assets continue to be mainly loans or securities other than shares although the level of shares and other equity held has demonstrated much faster growth than securities other than shares.

    Non-financial corporations
    Non-financial assets accounted for most of this sector's total assets. These non-financial assets were mainly in the form of produced assets such as non-dwelling construction and machinery and equipment. There is also estimated to be significant holdings of land by this sector, valued at $125.4 billion at 30 June 1996.

    Debt to equity ratio for the non-financial corporations sector, at 30 June (a)

    (a) Debt is defined as total liabilities less the value of shares and other equity on issue.

    The graph above shows non-financial corporations' debt to equity ratio where equity is the sum of shares and other equity and net worth. The higher the ratio the greater is the sector's vulnerability to increases in interest rates and may indicate potential cash flow problems.

    In the twelve months to 30 June 1996 the debt to equity ratio remained at a relatively low level. The ratio peaked at 0.86 at 30 June 1991, before falling continuously to a low of 0.62 at the end of June 1995, reflecting, in part, restructuring of corporations' balance sheets on the one hand, and continuing investment in produced assets most notably non-dwelling construction and machinery and equipment.

    Endnotes

    1. The time series for natural resources compiled by the ABS was constructed every year where the data were available. For land, sub-soil assets and livestock the time series extends back to 1984, 1985 and 1988 respectively. In comparison, the complete balance sheet covers from 30 June 1989 to 1995. In order to cater for user requirements, the complete time series have been provided.

    2. The ABS has estimated the value of sub-soil assets using two different deflators (the PPI and CPI approach). Estimates based on the PPI approach have been adopted for inclusion in the national balance sheet. This approach is preferred because the ABS feels that PPI, which reflect price changes to the major inputs of the mining industry (using 1992/93 input-output tables for commodity weights), are a more relevant measure of price change for the mining industry.

Consolidated Balance Sheet Closing balances at 30 June
1989
1990
1991
1992
1993
1994
1995
1996
TOTAL ASSETS
1830.6
1893.2
1942.8
1958.2
2063.9
2164.3
2289.3
2362.0
Non-financial assets
1729.6
1781.1
1829.8
1834.5
1924.7
2015.1
2130.6
2194.5
Produced assets
1062.9
1147.2
1179.3
1201.3
1235.8
1275.7
1326.9
1372.1
Fixed assets
990.9
1067.6
1099.8
1123.2
1155.7
1191.4
1236.6
1280.2
Dwellings
319.8
354.8
370.3
379.5
393.6
414.4
437.2
453.4
Non-dwelling construction
405.5
439.1
454.8
459.7
464.5
471.7
487.1
506.4
Machinery and equipment
206.0
218.5
225.3
234.2
243.7
246.8
251.7
252.7
Livestock - fixed assets
14.8
13.0
11.6
11.7
13.0
15.1
14.6
13.7
Real estate transfer expenses
44.8
42.2
37.8
38.1
40.9
43.3
46.0
54.0
Inventories
71.9
79.6
79.5
78.2
79.9
84.4
90.3
91.9
Private non-farm stocks
56.4
60.8
59.8
58.7
60.9
62.8
68.8
71.2
Farm stocks
1.8
1.5
1.4
1.5
1.3
1.2
1.8
2.2
Public marketing authorities
1.5
3.8
4.3
4.1
4.4
5.0
3.9
3.4
Other public authorities
2.1
2.4
2.3
2.3
2.1
2.1
2.5
2.5
Livestock - inventories
5.4
5.6
5.4
5.2
5.6
6.1
5.8
5.1
Plantation forests
4.9
5.5
6.3
6.5
5.6
7.1
7.5
7.5
Non-produced assets
666.7
633.9
650.5
633.2
689.0
739.4
803.7
822.4
Land
541.7
533.1
544.8
525.3
557.5
597.5
626.1
639.1
Subsoil assets
122.9
98.6
103.2
105.5
128.9
138.7
174.1
179.4
Native forests
2.2
2.2
2.5
2.4
2.6
3.2
3.5
3.9
Financial assets with Rest of the World
101.0
112.1
113.0
123.7
139.2
149.2
158.7
167.5
Official reserves
20.4
21.9
24.0
22.2
20.8
20.7
20.2
19.1
Cash and deposits
2.9
4.4
4.2
2.7
2.6
3.0
3.4
5.1
Securities other than shares
2.4
2.7
4.6
7.9
13.2
9.6
9.2
8.7
Loans
14.1
16.2
15.2
17.8
20.9
22.9
24.3
28.1
Shares and other equity
53.6
58.1
56.3
65.8
73.4
85.1
92.7
96.5
Other claims
7.7
8.9
8.6
7.2
8.3
7.9
8.9
10.0
LIABILITIES to Rest of the World
253.1
282.4
303.7
323.6
355.9
387.6
419.4
452.5
Cash and deposits
4.3
7.1
7.3
7.9
8.4
10.2
10.0
10.7
Securities other than shares
100.7
116.2
127.7
138.3
152.7
148.8
166.9
182.6
Loans
58.3
59.4
61.0
64.0
69.6
67.4
69.5
63.4
Shares and other equity
87.4
97.4
105.2
110.9
122.5
156.1
167.7
190.6
Other claims
2.5
2.3
2.4
2.5
2.8
5.1
5.3
5.3
NET WORTH
1577.5
1610.8
1639.1
1634.6
1708.1
1776.7
1869.9
1909.5
    Consolidated National Balance Sheet and Sectoral Balance Sheets at 30 June 1996
    Consolidated National Balance Sheet
    Households & unincorporated enterprises

    General government

    Financial enterprises
    Non-finanal corporation
    $b
    $b
    $b
    $b
    $b
    TOTAL ASSETS
    2,362.0
    1,703.3
    585.4
    911.1
    860.1
    Non-financial assets
    2,194.5
    1,073.7
    362.4
    77.3
    681.1
    Produced assets
    1,372.1
    585.1
    180.3
    51.5
    555.2
    Fixed assets
    1,280.2
    570.5
    173.7
    51.5
    484.6
    Dwellings
    453.4
    421.7
    3.2
    0.0
    28.5
    Non-dwelling construction
    506.4
    37.6
    157.4
    39.9
    271.5
    Machinery and equipment
    252.7
    53.1
    12.4
    8.5
    178.6
    Livestock - fixed assets
    13.7
    12.6
    -
    -
    1.1
    Real estate transfer expenses
    54.0
    45.5
    0.6
    3.0
    4.9
    Inventories
    91.9
    14.7
    6.6
    -
    70.6
    Private non-farm stocks
    71.2
    7.1
    -
    64.1
    Farm stocks (excluding livestock)
    2.2
    2.0
    -
    -
    0.2
    Public marketing authorities
    3.4
    -
    -
    -
    3.4
    Other public authorities
    2.5
    -
    1.3
    -
    1.3
    Livestock - inventories
    5.1
    4.3
    -
    -
    0.7
    Plantation forests
    7.5
    1.3
    5.4
    -
    0.8
    Non-produced assets
    822.4
    488.6
    182.1
    25.8
    126.0
    Tangible non-produced assets
    822.4
    488.6
    182.1
    25.8
    126.0
    Land
    639.1
    487.9
    -
    25.8
    125.4
    Subsoil assets
    179.4
    -
    179.4
    -
    -
    Native forests
    3.9
    0.7
    2.7
    -
    0.6
    Financial assets
    167.5
    629.6
    223.0
    833.9
    179.0
    Official reserves (a)
    19.1
    -
    -
    19.1
    -
    Cash and deposits
    5.1
    200.7
    8.1
    4.7
    66.9
    Securities other than shares
    8.7
    22.1
    8.9
    175.3
    9.8
    Loans
    28.1
    6.4
    51.6
    448.7
    11.9
    Shares and other equity
    96.5
    106.2
    150.5
    161.4
    45.7
    Technical reserves of life offices, pension funds
    -
    282.5
    -
    -
    -
    Other claims
    10.0
    11.7
    3.8
    24.6
    44.7
    LIABILITIES (including share capital)
    452.5
    289.1
    209.3
    842.5
    809.6
    Cash and deposits
    10.7
    -
    1.6
    284.4
    -
    Securities other than shares
    182.6
    2.8
    196.1
    107.8
    83.3
    Loans
    63.4
    286.3
    8.7
    45.8
    213.3
    Shares and other equity
    190.6
    -
    -
    89.4
    468.5
    Technical reserves of life offices, pension funds
    -
    -
    -
    282.5
    -
    Other claims
    5.3
    -
    2.9
    32.6
    44.4
    NET WORTH
    1,909.5
    1,414.2
    376.0
    68.7
    50.5


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