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8155.0 - Australian Industry, 2004-05  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 21/12/2006   
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EXPLANATORY NOTES


INTRODUCTION

1 This publication, Australian Industry, 2004-05 (cat. no. 8155.0), presents estimates of the economic and financial performance of Australian industry in 2004-05.


2 The estimates presented have been derived using a combination of directly collected data from the annual Economic Activity Survey (EAS), conducted by the Australian Bureau of Statistics (ABS), and business income tax (BIT) data provided by businesses to the Australian Taxation Office (ATO). To produce estimates at the state and territory level, this combined dataset was then matched to a number of other ABS direct collections to obtain further state/territory dissections. These state and territory estimates, as well as the national ANZSIC class estimates (in Chapter 3), are considered to be experimental, and should be used with care. To assist analysis, please refer to Technical Note 2.


3 Similarly the employment estimates presented are a combination of directly collected data from the EAS, and modelled estimates using wages and salaries information provided as part of the BIT data supplied by businesses to the ATO. These data are also considered to be experimental; please see Appendix 1.


4 From 2006-07 reference year the Economic Activity Survey (EAS) results will be presented using the 2006 edition of ANZSIC, an updated version of the industry classification. At the time of release, data for some previous years will also be made available on a 2006 ANZSIC basis, as an aid to analysis.



STATISTICAL UNITS USED

5 Statistical units are those entities from which statistics are collected, or about which statistics are compiled. In ABS economic statistics, the statistical unit is generally the business. All businesses in the EAS are recorded on the ABS Business Register (ABSBR).


6 The ABS uses an economic statistics units model on the ABSBR to describe the characteristics of businesses, and the structural relationships between related businesses. Within large and diverse business groups, the units model is used also to define reporting units that can provide data to the ABS at suitable levels of detail.


7 This units model allocates businesses to one of two sub-populations:

  • Most businesses and organisations in Australia need to obtain an Australian Business Number (ABN). The vast majority of businesses are simple in structure and are allocated to the population which is maintained by the ATO. These are termed (by the ABS) ABN units.
  • The remaining businesses are in the ABS maintained population, and are termed type of activity units, or TAUs.


8 Together these two sub-populations (of ABN units and TAUs) make up the ABSBR population, from which the EAS samples are taken.


9 For details about the ABSBR and how ABN units and TAUs contribute to the industry statistics in this publication, see Technical Note 1.



SCOPE AND COVERAGE

10 The businesses that contribute to the statistics in this publication are classified:

  • by institutional sector, in accordance with the Standard Institutional Sector Classification of Australia (SISCA), which is detailed in Standard Economic Sector Classifications of Australia (SESCA) (cat. no. 1218.0)
  • by industry, in accordance with the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 edition (cat. no. 1292.0).


11 The scope of the EAS estimates in this publication consists of all business entities in the Australian economy, except for:
  • in most industries, entities classified to SISCA Sector 3 General government. This exclusion particularly affects data presented for Education and Health and community services (ANZSIC Divisions N and O, respectively), in that the estimates relate only to private sector businesses. For the same reason, data for ANZSIC Division M Government administration and defence are also excluded. However, SISCA Sector 3 General government businesses classified to Electricity, gas and water supply (ANZSIC Division D) are included, so that the estimates include data for (for example) relevant local government TAUs;
  • entities classified to ANZSIC Division K Finance and insurance.


12 Note that government-owned or controlled Public Trading Enterprises are included.


13 The ANZSIC-based industry statistics presented in this publication are compiled differently from activity statistics. Each ABN unit or TAU on the ABSBR has been classified (by the ATO and the ABS respectively) to a single industry class irrespective of any diversity of activities undertaken. The industry class allocated is the one which provides the main source of income.


14 Some businesses engage, to a significant extent, in activities which are normally carried out by different industries. For example, a predominantly mining business may also undertake significant amounts of manufacturing. Similarly, a mining business may produce significant volumes of goods which are normally produced in different mining industries. Where a business makes a significant economic contribution to industries classified to different ANZSIC subdivisions, the ABS includes the business in the ABS maintained population, and 'splits' the TAU's reported data between the industries involved. Significance is determined using total income.


15 A TAU's reported data will be split if the inclusion of data relating to the secondary activity in the statistics for the industry of the primary activity distorts (by overstating or understating) either the primary or secondary industry statistics at the ANZSIC subdivision level by:

  • 3% or more, where the industries of the primary and secondary activities are in the same ANZSIC division
  • 2% or more, where the industries of the primary and secondary activities are in different ANZSIC divisions.


16 The ABS attempts to maintain a current understanding of the structure of the large, complex and diverse business groups that form the ABS maintained population on the ABSBR, through direct contact with those businesses. Resultant changes in their structures on the ABSBR can affect:
  • the availability of such businesses (or units within them) for inclusion in the annual economic collections
  • the delineation of the units, within those groups, for which data are to be reported.


17 The ABS attempts to obtain data for those businesses selected for direct collection and which ceased operation during the year, but it is not possible to obtain data for all of them.



SAMPLING

18 A sample of 21,418 businesses was selected for the directly collected part of the 2004-05 EAS collection. Each business was asked to provide data sourced primarily from financial statements, mainly by mail out questionnaires. The survey population (excluding large or otherwise significant businesses) was then matched to ATO BIT files. Key financial data, from these files, representing approximately 2,622,800 businesses were then used to supplement the ABS's directly collected information. For details, see Technical Note 1.


19 State/territory of operation is not taken into account in selecting the EAS sample. As a result, sampling error may be greater for smaller states/territories. To some extent, any increase in sampling error will have been offset by the use of ATO BIT data, which provides an increase in sample size across each state/territory. The sampling error at the state/territory level may become more significant at the ANZSIC division and subdivision levels, depending on the number of businesses that each business in the sample represents in that particular state/territory. For further details, see Technical Note 2.



REFERENCE PERIOD

20 The period covered by each collection is, in general, the 12 months ended 30 June. Where businesses are unable to supply information on this basis, an accounting period for which data can be provided is used for data other than that relating to employment. Such businesses make a substantial contribution to some of the estimates presented in this publication. As a result, the estimates can reflect trading conditions that prevailed in periods outside the twelve months ended June in the relevant year.


21 It should be noted that, although financial data estimates relate to the full twelve months, employment estimates relate to the last pay period ending in June of the given year. As such, estimates of wages and salaries per person employed can be affected by any fluctuations in employment during the reference period.


22 Financial data presented incorporate all units in scope of the EAS collection that were in operation at any time during the year. They also include any temporarily inactive units, i.e. those units which were in the development stage or which were not in operation, but which still existed and held assets and liabilities and/or incurred some non-operating expenses (e.g. depreciation, administration costs).



RELIABILITY OF ESTIMATES

23 For information about this subject, see Technical Note 2.



INDUSTRY PERFORMANCE MEASURES

24 This publication presents a wide range of data that can be used to analyse business and industry performance.


25 Differences in accounting policy and practices across businesses and industries can lead to some inconsistencies in the data input to the statistics. Although much of the accounting process is subject to standards, there is still a great deal of flexibility left to individual managers and accountants in the accounting policies and practices that they adopt. For example, the way profit is measured is affected by management policy about such issues as depreciation rates, bad debt provisions and write off, and goodwill write off. The varying degree to which businesses consolidate their accounts may also affect any industry performance measures calculated.


26 A range of performance measures, usually referred to as ratios, can be produced from the data available from businesses' financial statements. The performance measures presented in this publication comprise:

  • profitability ratios, which measure rates of profit on sales
  • debt ratios, which indicate the ability of businesses to meet the cost of debt financing
  • investment ratios, which indicate the capacity of business to invest in capital assets
  • labour measures, which relate output, labour costs and employment.


27 A further explanation of each ratio can be found in the Glossary.


28 Those ratios compiled from a combination of flow (whole period) and level (beginning or end of period) items need to be treated with additional caution. Ratios which include both level and flow items in their derivation may be volatile due to the timing differences involved. In particular, this should be taken into account when considering those measures expressed as values per person employed. It may, therefore, be preferable to base any analysis on a range of data presented rather than focusing on one variable.


29 The above limitations are not meant to imply that analysis based on these data should be avoided, only that they should be borne in mind when interpreting the data presented in this publication.



INDUSTRY VALUE ADDED

30 Industry value added is the measure of the contribution by businesses in each industry to gross domestic product. Table 2.3 presents estimates of the components of industry value added for all industries that are within the scope of the collection.


31 The presentation of industry value added in this table is relevant to those businesses that are classified as 'market' producers, that is, businesses which sell their output at economically significant prices. Industry value added is derived in a different way for non-market producers. The industries in which non-market producers make the most significant contribution to industry value added are Health and community services (private) and Personal and other services. See the Glossary item for detailed definitions.



STATE AND TERRITORY EXPERIMENTAL ESTIMATES

32 For details of the process used to derive state/territory proportions from EAS data, refer to Technical Note 1 paragraphs 21-27.



NEW BUSINESSES

33 Data in this publication have been adjusted to allow for lags in processing new businesses to the ABSBR. The effect of these adjustments is generally 1% or less for most ANZSIC industry divisions and for most states and territories.



EMPLOYMENT DATA

34 This issue includes the first release of employment estimates for Australian industries. For information about how these have been derived, please see Appendix 1.



COUNTS OF OPERATING BUSINESSES

35 The numbers of operating businesses presented in this publication are intended to represent counts of businesses which are operating at 30 June in the relevant year and which satisfy the scope criteria (as set out above) for inclusion in these statistics.



ACKNOWLEDGMENT

36 ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated: without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.



RELATED PUBLICATIONS

37 Users may also wish to refer to the following publications:

      Australian Bureau of Statistics Register, Counts of Businesses - Summary Tables, June 2004, cat. no. 8161.0.55.001, released on 7 October 2005 - Final issue
      Australian Labour Market Statistics, cat. no. 6105.0 - Quarterly publication
      Australian National Accounts: National Income, Expenditure and Product, cat. no. 5206.0 - Quarterly publication
      Australian National Accounts: State Accounts, 2004-05, cat. no. 5220.0, released on 9 November 2005 - Annual publication
      Business Indicators, Australia, cat. no. 5676.0 - Quarterly publication
      Electricity, Gas, Water and Sewerage Operations, Australia, 2004-05, cat. no. 8226.0, released on 13 October 2006 - Annual publication
      Manufacturing Industry, Australia, 2004-05, cat. no. 8221.0, released on 21 December 2006 - Annual publication
      Mining Operations, Australia, 2004-05, cat. no. 8415.0, released on 27 October 2006 - Annual publication
      Private New Capital Expenditure and Expected Expenditure, Australia, cat. no. 5625.0 - Quarterly publication
      Research and Experimental Development, Businesses, Australia, 2004-05, cat. no. 8104.0, released on 28 August 2006 - Annual publication
      Year Book Australia, 2006, cat. no. 1301.0, released on 20 January 2006 - Annual publication

38 A range of publications presenting detailed results of surveys of selected service industries are also produced by the ABS. In general, these publications contain considerable detail about the employing sector of each industry. Appendix 2 discusses the comparability between data from these surveys and as included in this publication.


39 Current publications and other products released by the ABS are available from the Statistics View that is available from this site. The ABS also issues a daily Release Advice on the web site which details products to be released in the week ahead.



ADDITIONAL DATA

40 Further data about Australian industry, derived from the annual Economic Activity Survey, are available in the spreadsheet released in conjunction with this publication. This spreadsheet now includes data previously released in the following electronic products (which are now discontinued):

  • Australian Industry: States, Territories and Australia, Industry Subdivision - Experimental Estimates, Data Report (cat. no. 8155.0.003) and
  • Australian Industry: Summary of Industry Performance, Australia, Data Report (cat. no. 8155.0.55.002).


41 Although data for Finance and insurance (ANZSIC Division K) have been excluded from published outputs, limited data are available on request for the component ANZSIC industry subdivision Services to finance and insurance (ANZSIC Subdivision 75). Inquiries should be directed to John Ridley on Sydney (02) 9268 4541.



ABS DATA AVAILABLE ON REQUEST

42 As well as the statistics included in this and related publications, the ABS may have other relevant data available on request and for a charge. Inquiries should be made to the National Information and Referral Service on 1300 135 070.


43 Information is also available online via a selection of industry-specific theme pages. To access these theme pages, go to the ABS web site home page <http://abs.gov.au>. Open the Industry link shown under Themes (located in the left-side navigator 'Quick links'), then select one of the links shown under Industry.



ROUNDING

44 Where figures have been rounded, discrepancies may occur between totals and the sums of the component items. Due to data being adjusted for lags in processing new businesses to the ABSBR (see Explanatory Notes paragraph 33), this 'rounding rule' also applies to counts of businesses.


45 Proportions, ratios and other calculated figures shown in this publication have been calculated using unrounded estimates and may be different from, but are more accurate than, calculations based on the rounded estimates.


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