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8155.0 - Australian Industry, 2007-08 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 28/05/2009   
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This document was added 06/12/2009.



EXPLANATORY NOTES


INTRODUCTION

1 This publication, Australian Industry, 2007-08 ( cat. no. 8155.0), presents estimates of the economic and financial performance of Australian industry in 2007-08. The estimates 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 Activity Statement (BAS) data provided by businesses to the Australian Taxation Office (ATO).


STATISTICAL UNITS USED

2 All businesses in the EAS are recorded on the ABS Business Register (ABSBR), 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 to define reporting units that can provide data to the ABS at suitable levels of detail.

3 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.

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

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


SCOPE

6 The businesses that contribute to the statistics in this publication are classified:
7 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 Public administration and safety, Education and training and Health care and social assistance (ANZSIC Divisions O, P and Q, respectively), in that the estimates relate only to private sector businesses. However, SISCA Sector 3 General government businesses classified to Water supply, sewerage and drainage services (ANZSIC Subdivision 28, within Division D) are included, so that the estimates include data for (for example) relevant local government TAUs;
  • entities classified to ANZSIC Division K Financial and insurance services.

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


COVERAGE

9 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 its single predominant industry class irrespective of any diversity of activities undertaken.

10 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.

11 A TAU's reported data will be split, if the inclusion of data relating to the secondary activity, in the statistics of 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.

12 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.

13 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.


IMPROVEMENTS TO COVERAGE

14 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 4% or less for most ANZSIC industry divisions and for most states and territories.


HISTORICAL COMPARISONS

15 To provide comparability with the 2006-07 and 2007-08 estimates, the estimates for 2004-05 and 2005-06 presented in table 1.1 take into account the various changes in collection design, estimation methodology and scope, as well as the introduction of ANZSIC06. This table is the only occasion, in the 2007-08 publication, where a longer time series is presented. For further information on the process of producing these historical estimates please see Technical Note 1 paragraph 20.


SURVEY SAMPLE DESIGN

16 A sample of 15,687 businesses was selected for the directly collected part of the 2007-08 EAS collection. Each business was asked to provide data sourced primarily from financial statements, mainly by mail out questionnaires. Businesses were also asked to supply key details of their operations by state and territory, enabling production of the state/territory estimates contained in table 3.1.

17 Auxiliary information about wages and salaries and turnover for 1,935,786 businesses (including those sampled), sourced from Australian Tax Office (ATO) Business Activity Statement (BAS) data, were used to improve the estimates produced from the survey data. Section 16(4)(ga) of the Income Tax Assessment Act 1936 provides for the ATO to pass information to the Australian Statistician for the purposes of the Census and Statistics Act 1905.


REFERENCE PERIOD

18 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 those 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.

19 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 a result, estimates of wages and salaries per person employed may be affected by any fluctuations in employment during the reference period.

20 Financial data presented incorporate all units in scope of the EAS collections 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

21 In an estimate based on a sample survey there are two types of error possible: sampling error and non-sampling error. More detailed explanations of these terms are available in Technical Note 2.


QUALITY INDICATORS

22 In the 2007-08 survey of Australian industry, there was a 89.7% response rate from all businesses that were surveyed and found to be operating during the reference period. Data were imputed for the remaining 10.3% of operating businesses. This imputation contributed 9.1% to the estimate of sales and service income for Total selected industries.


INDUSTRY PERFORMANCE MEASURES

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

24 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 through the accounting policies and practices 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.

25 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.

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

27 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

28 Industry value added (IVA) is the measure of the contribution by businesses in each industry to gross domestic product. Table 1.3 presents estimates of the components of industry value added for all industries that are within the scope of the collection.

29 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 to achieve a profit. 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 care and social assistance (private) and Other services. See the Glossary definition of IVA for further detail.


INTERNATIONAL FINANCIAL REPORTING STANDARDS

30 The new Australian equivalents to International Financial Reporting Standards (AIFRS) began to be progressively implemented in Australia from 1 January 2005. As a result, a number of items in the financial accounts of Australian businesses have been affected by changed definitions, which have in turn affected both Income Statements and Balance Sheets. A range of ABS economic collections source data from financial accounts of businesses, and use those data to derive economic statistics. There have been no changes in the associated economic definitions.

31 After monitoring data items since March quarter 2005 it has been concluded that most affected published data series are due to data breaks, but that the magnitude of such breaks cannot be determined without imposing disproportionate load upon data providers to ABS surveys and other administratively collected data. ABS will continue to monitor developments and report any significant identified impacts or changes in methodology as a result of AIFRS.


ROUNDING

32 Where figures have been rounded, discrepancies may occur between totals and the sums of the component items.

33 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.


ACKNOWLEDGMENT

34 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

35 A range of publications presenting detailed results of surveys of selected service industries is also produced by the ABS. In general, these publications contain considerable detail about the employing sector of each industry.
Museums, Australia, 2007-08, cat. no. 8560.0, released on 27 March 2009 - Irregular publication
Legal Services, Australia, 2007-08, cat. no. 8667.0, due for release on 24 June 2009 - Irregular publication

36 Current publications and other products released by the ABS are available from the Statistics View on the ABS web 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

37 Further data about Australian industry, derived from the annual Economic Activity Survey, will be available in the spreadsheets released subsequent to this publication release. Financial and quantity data relating to the Energy Supply Survey industry for the 2007-08 reference year are available with the release of this publication. These were collected from all electricity and natural gas producers, transmitters and distributors. The financial data is very similar to that included in the now discontinued publication, Electricity, Gas, Water, and Waste Services, Australia, cat. no. 8226.0 (latest release 2006-07).

USE OF AUSTRALIAN TAX OFFICE (ATO) DATA IN THIS PUBLICATION

38 The results of these studies are based, in part, on tax data supplied by the ATO to the ABS under the Taxation Administration Act 1953, which requires that such data are only used for statistical purposes. No individual information collected under the Census and Statistics Act 1905 is provided back to the ATO for administrative or regulatory purposes. Any discussion of the data limitations or weaknesses is in the context of using the data for statistical purposes, and is not related to the ability of the data to support the Tax Offices's core operational requirements.

Legislative requirements to ensure privacy and secrecy of this data have been followed. Only people authorised under the Australian Bureau of Statistics Act 1975 have been allowed to view data about any particular firm in conducting these analyses. In accordance with the Census and Statistics Act 1905, results have been confidentialised to ensure that they are not likely to enable identification of a particular person or organisation.

ABS DATA AVAILABLE ON REQUEST

39 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.

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