8155.0 - Australian Industry, 2016-17 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 25/05/2018   
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EXPLANATORY NOTES

INTRODUCTION

1 This publication presents estimates of the economic and financial performance of Australian industry in 2016-17. The estimates are produced annually 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).

Reference period

2 The period covered by the collection was, in general, the 12 months ended 30 June of the relevant year. Where businesses were unable to supply information on this basis, an accounting period for which data can be provided was used for data other than those relating to employment. Such businesses have made a substantial contribution to some of the estimates presented in this publication. As a result, some estimates reflect trading conditions that prevailed in periods outside the twelve months ended June in the relevant year. For more information refer to the Technical Note: Off-June Year Adjusted Estimates in this issue.

3 Although financial estimates related to the full 12 months, employment estimates related to the last pay period ending in June. As a result, estimates of wages and salaries per employee may have been affected by any fluctuations in employment during the reference period.

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


CLASSIFICATIONS

5 The businesses that contributed to the statistics in this publication were classified:


SCOPE

6 The scope of the collection consisted of all business entities operating in the Australian economy during 2016-17, except for:
  • in most industries, entities classified to SISCA Sector 3 General government. This exclusion particularly affected 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 related only to private sector businesses. Note, however, that SISCA Sector 3 General government businesses classified to Water supply, sewerage and drainage services (ANZSIC Subdivision 28, within Division D) were included - that is, data for relevant local government organisations (for example) were included in the estimates.
  • entities classified to ANZSIC Subdivisions 62 Finance and 63 Insurance and superannuation funds. Note that estimates included in this publication for Total selected industries excluded ANZSIC Subdivision 64 Auxiliary finance and insurance services. Experimental estimates for this subdivision are presented in the Appendix of this issue.
  • entities classified to ANZSIC Subdivisions 75 Public administration, 76 Defence and 96 Private households employing staff and undifferentiated goods- and service-producing activities of households for own use.

7 Government owned or controlled Public Non-Financial Corporations were included.


COVERAGE

8 This section discusses frame, statistical units, coverage issues and improvements to coverage.

Frame

9 Businesses contributing to the estimates in this publication were sourced from the ABS Business Register (ABSBR), which has two components as described below.

Statistical units

10 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.

11 In mid 2002, the ABS commenced sourcing its register information from the Australian Business Register (ABR) and at that time changed its business register to a two population model. The two populations comprise what is called the Profiled Population and the Non-Profiled Population. The main distinction between businesses in the two populations relates to the complexity of the business structure and the degree of intervention required to reflect the business structure for statistical purposes.

Non-Profiled Population

12 The majority of businesses included on the ABS Business Register are in the Non-Profiled Population. Most of these businesses are understood to have simple structures. For these businesses, the ABS is able to use the Australian Business Number (ABN) as the basis for a statistical unit. One ABN equates to one statistical unit.

Profiled Population

13 For a small number of businesses, the ABN unit is not suitable for ABS economic statistics purposes and the ABS maintains its own units structure through direct contact with businesses. These businesses constitute the Profiled Population. This population consists typically of large or complex groups of businesses. The statistical units model below caters for such businesses:
  • Enterprise group: This is a unit covering all the operations in Australia of one or more legal entities under common ownership and/or control. It covers all the operations in Australia of legal entities which are related in terms of the current Corporations Law (as amended by the Corporations Legislation Amendment Act 1991), including legal entities such as companies, trusts and partnerships. Majority ownership is not required for control to be exercised.
  • Enterprise: The enterprise is an institutional unit comprising:
    • a single legal entity or business entity, or
    • more than one legal entity or business entity within the same enterprise group and in the same institutional subsector (i.e. they are all classified to a single Standard Institutional Sector Classification of Australia (SISCA) subsector).
  • Type of activity unit (TAU): The TAU is comprised of one or more business entities, sub-entities or branches of a business entity within an enterprise group that can report production and employment data for similar economic activities. When a minimum set of data items is available, a TAU is created which covers all the operations within an industry subdivision (and the TAU is classified to the relevant subdivision of the ANZSIC). Where a business cannot supply adequate data for each industry, a TAU is formed which contains activity in more than one industry subdivision.

Coverage issues

14 The ANZSIC based industry statistics presented in this publication were 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.

15 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 Profiled Population, and 'splits' the TAU's reported data between the industries involved. Significance is determined using total income.

16 A TAU's reported data are 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.

17 The ABS attempts to maintain a current understanding of the structure of the large, complex and diverse business groups that form the Profiled 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.

18 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 such businesses.

Improvements to coverage

19 Data in this publication were adjusted to allow for lags in processing new businesses to the ABSBR, and the omission of some businesses from the register. The majority of businesses affected, and to which the adjustments applied, were small in size. As an example, the effect of these adjustments was generally 4% or less for most ANZSIC industry divisions and for most states and territories.

20 Adjustments were made to include new businesses in the estimates for the period in which they commenced operation, rather than when they were processed to the ABSBR.

21 For more information on these adjustments, please refer to the ABS publication Information Paper: Improvements to ABS Economic Statistics, 1997 (cat. no. 1357.0).


DEFINITION OF KEY TERMS

22 Selected key terms are described below. Definitions for the data presented can also be found in the Glossary.

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 to output, labour costs and employment.

26 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

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

28 There are two types of businesses: 'market' and 'non-market' producers. Market producers sell their output to achieve a profit, whereas non-market producers sell their output at economically insignificant prices. IVA is derived differently for market and non-market producers. The industries in which non-market producers make the most significant contribution to IVA are Health care and social assistance (private) and Other services. See the Glossary definition of IVA for further detail.


SURVEY DESIGN

29 In order to minimise the load placed on providers, the strategy for this survey was to use, as much as possible, information sourced from the ATO, thus reducing the size of the direct collect sample needed to maintain the range and quality of information available to users of statistical data. The frame (from which the direct collect sample was selected) was stratified using information held on the ABSBR. Businesses eligible for selection in the direct collect sample were then selected from the frame using stratified random sampling techniques.

30 Businesses were only eligible for selection in the survey (the direct collect sample) if their turnover exceeded a threshold level, or the business was identified as being an employing business (based on ATO information), as at the end of the reference period. Turnover thresholds were set for each ANZSIC class so that the contribution of surveyed businesses accounted for approximately 97.5% of total industry class turnover as determined by Business Activity Statement (BAS) data. A sample of 19,571 businesses was selected for the directly collected part of the 2016-17 EAS. Each business was asked to provide data sourced primarily from financial statements. Businesses were also asked to supply key details of their operations by state and territory, enabling production of the state/territory estimates. For the first time in 2012-13, the ABS introduced online questionnaires for business surveys.

31 Businesses which met neither of these criteria are referred to as 'micro non-employing businesses'. These businesses were not eligible for selection in the sample. For these units, BAS data were obtained and annualised, then used to model employment, income and expenses which were added to the directly collected estimates to produce the statistics in this publication. For more information please refer to the Technical Note: Estimation Methodology in this issue.


EFFECTS OF ROUNDING

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


DATA COMPARABILITY

Comparison with other ABS statistics

33 In some cases estimates given in this publication may differ slightly from those from other sources. These differences may be the result of sampling or non-sampling error, or may result from differences in scope, coverage, definitions or methodology.

Revisions

34 Estimates for the 2014-15 and 2015-16 reference years have been revised since the previous issue of this publication. The revisions result from the review of new information received from the businesses in the direct collect sample. The revisions are incorporated in this publication and in associated data cubes available free online. Note that the extent of revisions may differ for individual industries and/or between data items.

35 For more information on improvements of the methodology used for producing the estimates for micro non-employing businesses, please refer to the Technical Note: Estimation Methodology in this issue.

FURTHER INFORMATION

36 A range of further information is available, as described below.

Related publications

37 The following ABS publications present economy-wide and industry specific data:
38 The national accounts estimates in Australian System of National Accounts (cat. no. 5204.0) include businesses classified to industries not in scope of the Economic Activity Survey. This includes current price estimates on Financial and insurance services, as well as Ownership of dwellings and the General government sector. For more information on the scope of the collection for Australian Industry please refer to paragraphs 6-21 above.

Other information available

39 The ABS conducts detailed industry surveys targeting specific industries of interest each year. For the 2016-17 financial year, the ABS undertook surveys into the Administrative and support services (ANZSIC Division N) and the Rental, hiring and real estate services (ANZSIC Division L) industries. Detailed results including a data cube and a feature article for each of these industries are included in this release. Additional data are released each year for the Mining industry including a separate data cube in this release. Up to 2014-15 this additional information was published separately in Mining Operations, Australia (cat. no. 8415.0), which has been discontinued. Previous issues in this publication included detailed articles and data cubes relating to the following industries:
40 The ABS issues a daily Release Advice on its web site which details products to be released in the week ahead.

41 Inquiries about this or other ABS publications should be made to the National Information and Referral Service on 1300 135 070.

Acknowledgement

42 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.

Use of Australian Taxation Office (ATO) data in this publication

43 The results of these statistics are based, in part, on tax data supplied by the ATO to the ABS under the Income Tax Assessment Act 1936 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 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 ATO's core operational requirements.

44 Legislative requirements to ensure privacy and secrecy of these data have been followed. Only people authorised under the Australian Bureau of Statistics Act 1975 have been permitted to view data about any particular business and/or person in conducting these analyses. No information about individual taxpayers (persons) has been released to the ABS. Aggregated personal income tax data are confidentialised by the ATO before release to the ABS. 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.