1218.0 - Standard Economic Sector Classifications of Australia (SESCA), 2002  
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Contents >> Chapter 4: Associated classifications >> Public/private classification

Public/private classification

4.4. This classification subdivides the Australian economy between:

  • resident units that are part of the general government sector or are controlled by units of the general government sector (the public sector)
  • all other resident units (the private sector).


4.5. The public sector therefore comprises:

      • all resident units that are classified in the SISCA to the general government sector, including all government units and non-market NPIs that are controlled and mainly financed by government
      • all resident units that are classified to the non-financial corporations sector and are controlled by government units (public non-financial corporations)
      • all units that are classified to the financial corporations sector and are controlled by government units (public financial corporations).

4.6. The second and third categories include quasi-corporations as well as corporations.

4.7. The criteria for recognising units of the general government sector are discussed in Chapter 3. The criterion for recognising government-controlled corporations and quasi-corporations is based on the SNA93 definition of control, which is 'the ability to determine general corporate policy by appointing appropriate directors, if necessary. Owning more than half the shares of a corporation is evidently a sufficient, but not a necessary, condition for control'. (SNA93, paragraph 4.30.) Thus, government controls a corporation when a government unit owns more than 50% of the shares in the corporation. However, in some cases, government control can also exist when a government unit owns 50% or less of the shares of a corporation. For example, government control can exist where special legislation or regulations empower a government to determine corporate policy or to appoint the directors of a corporation. Corporations controlled by other government-controlled corporations are considered to be government controlled.

4.8. For the purposes of the public/private classification, government control of corporations does not include a government's ability to exercise general legislative or regulatory powers over corporations as a group. Government authority to determine the general policy of a corporation usually comes from legislation that is specific to the individual corporation over which control is exercised.

4.9. In some cases, the existence of government control may not be clear. In Australia, such is the case with superannuation funds that governments have established for the benefit of their employees. Legislation places responsibility for the day-to-day operation of the superannuation funds with a board of trustees that is created as a separate legal entity. The establishing governments generally receive no monetary benefits from the funds, which are accordingly treated as NPIs. Because the costs of the funds' operations are recovered from the pool of contributions, the funds are treated as market NPIs and are included in the financial corporations institutional sector. Although the establishing government has the power, under the legislation, to appoint and dismiss some or all of the trustees, the boards of trustees are typically not under the direction of government and are required to act in the beneficiaries' interests, and not those of the government. Accordingly, the funds are not considered to be under government control. Although the circumstances of individual funds may vary, in the interest of uniformity, all superannuation funds with arrangements broadly similar to those described are included in the private sector.

4.10. Statistics for the public sector are usually presented separately for the general government sector component and each of the two corporate components, as follows:
    Diagram: Construction of the public sector
4.11. For some purposes, statistics are compiled for a combination of the general government sector and all public non-financial corporations (i.e. (1) and (2) above), which is described as the non-financial public sector.


4.12. The private sector comprises all resident units other than those classified to the public sector. It therefore includes:

    • all resident households (including unincorporated enterprises that are not treated as quasi-corporations)
    • all resident NPIs other than non-market NPIs controlled and mainly financed by government
    • all resident corporations and quasi-corporations that are not controlled by units of the general government sector.

    4.13. Control of resident private sector corporations can be exercised by households, NPIs (other than those controlled and mainly financed by government) or non-residents.

    4.14. Instances can arise in which the public and private sectors share ownership of a corporation. In such cases, the corporation is allocated to the sector that has effective control over the determination of the activities and policy of the corporation.

    4.15. The public/private classification can be used to subdivide the two corporate sectors in the SISCA, that is, the non-financial corporations sector and the financial corporations sector, between public and private corporations as follows:
    • Non-financial corporations sector
      • Public corporations
      • Private corporations
    • Financial corporations sector
      • Public corporations
      • Private corporations

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