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5216.0 - Australian National Accounts: Concepts, Sources and Methods, 2000  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 15/11/2000   
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Contents >> Chapter 15: Gross capital formation >> Public gross fixed capital formation

Public gross fixed capital formation

Sources and methods - current price estimates

Public corporations

15.91 Public corporations are generally corporations in which Australian governments own a majority of the shares. If Australian governments reduce their shareholding to become minority shareholders then the corporation is regarded as a private corporation from that time on.

Annual estimates

15.92 Estimates for the public non-financial corporations (including public marketing boards) component are compiled from a number of sources. The main ones are financial statements attached to Annual Reports of public non-financial corporations, Auditors'-General Reports, a joint ABS/Commonwealth Grants Commission Collection from each local government authority, and the annual Economic Activity Survey collecting computer software data (see paragraphs 15.63 to 15.70 for more information on this capital formation). The extracted data are coded using a standard classification framework which allows data for individual units to be aggregated to the required levels. Gross fixed capital formation is classified according to type of asset (dwellings, non-dwelling building, engineering construction, machinery and equipment, and computer software), industry and purpose. Because of delays in the receipt of data, estimates for the latest year are based on quarterly sources. Estimates for public financial corporations are derived from an annual collection from each of the corporations.

Quarterly estimates

15.93 Estimates are based on a quarterly collection covering all significant public corporations and a sample survey of local government authorities. There is no quarterly asset dissection.

General government

Annual estimates

15.94 For Commonwealth and State general government, data are extracted from administrative by-product sources such as financial statements prepared by the Minister for Finance, Commonwealth and State Budget Papers and Auditors'-General Reports, Commonwealth Department of Finance and Administration ledgers and supplementary departmental documents, and by direct collection from general government units. The extracted data are coded using a standardised classification framework which allows data for individual units to be aggregated to the required level. Gross fixed capital formation transactions are classified by type of asset and purpose.

15.95 A joint ABS/Commonwealth Grants Commission annual return on capital formation is collected from each local government authority in Australia.

15.96 Estimates of gross fixed capital formation in computer software by general government units are separately derived using Government Use of Information Technology, 1997-98 (Cat. no. 8119.0) as the benchmark and extrapolated using data sourced from the ABS's public finance statistics. Prior to 1997-98, estimates are based on a survey of general government expenditure in respect of 1994-95, after adjusting for non-response and undercoverage, and backcast to 1989-90 using imports of computer software as an indicator. For the period 1978-79 to 1988-89, imports of software are not separately available, so imports of computer equipment (as published in a special article 'Imports of Computer Equipment' in the March quarter 1989 issue of Australian National Accounts: National Income, Expenditure and Product (Cat. no. 5206.0)), are used as an indicator. Prior to 1977-78, it is assumed that general government expenditure grew at an even rate, starting at zero in 1959-60.

Quarterly estimates

15.97 For Commonwealth and State general government, data are extracted from administrative by-product sources such as the Commonwealth Department of Finance and Administration quarterly ledger, and State government monthly and quarterly statements of receipts and expenditure. Data are also obtained from a quarterly sample of general government non-budget units. Data for local government are obtained from a quarterly sample covering about 20 per cent of the authorities. There is no quarterly asset dissection.

Sources and methods - volume estimates

Annual estimates

15.98 Annual current price estimates of gross fixed capital formation in dwellings, non-dwelling construction, computer software, and a six-way dissection of machinery and equipment are separately deflated for each institutional sector by industry (1 digit ANZSIC) for public corporations and by broad purpose category for general government. In addition, for general government, national - other, estimates of gross fixed capital formation in mineral exploration and intangible fixed assets - film and television are deflated using the same price indexes used to deflate private gross fixed capital formation in these items. The single deflator for dwellings is the implicit price deflator for private gross fixed capital formation in dwellings. For non-dwelling construction there is a single deflator for each institutional sector which is derived as an implicit price deflator in the following multi-stage process:

      • annual current price estimates of public gross fixed capital formation in non-dwelling building and engineering construction by institutional sector by State are interpolated using a mathematical procedure to produce quarterly estimates;
      • these quarterly current price estimates are deflated using the same State-specific price indexes for non-dwelling building used to deflate private gross fixed capital formation, but for engineering construction public sector State-specific price indexes are used (they share the same elemental price indexes as used for the private sector but are weighted differently); and
      • aggregate annual chain volume estimates of non-dwelling building and engineering construction combined are derived for each institutional sector and divided into the corresponding current price estimates to produce the implicit price deflators.

The deflators used for computer software and the six broad categories of machinery and equipment are the same as those used for private gross fixed capital formation.

Quarterly estimates

15.99 In general, the elemental price indexes used to deflate public gross fixed capital formation are the same as those used to deflate private gross fixed capital formation. The difference lies in the level of disaggregation at which the deflation is done and some complications with public gross fixed capital formation. In terms of asset dissection, the deflation of public gross fixed capital formation is done at a higher level of aggregation than is the case for private gross fixed capital formation, but public gross fixed capital formation has a sectoral dimension whereas private gross fixed capital formation does not.

15.100 Quarterly current price estimates of public gross fixed capital formation are deflated at the State level according to type of asset (new construction and equipment; net purchases of second hand assets; and computer software) for each of the following institutional sectors:

      • general government, national - other;
      • general government, national - defence;
      • general government, State and local;
      • public corporations, Commonwealth; and
      • public corporations, State and local.

In addition, quarterly estimates of mineral exploration and intangible fixed assets - film and television are deflated at the State level for general government, national - other.

15.101 Current price estimates of net purchases of second hand assets, computer software, mineral exploration and intangible fixed assets - film and television are subtracted from total public gross fixed capital formation for each sector for each State to obtain estimates of total new expenditures on public construction, machinery and equipment. The latter are deflated at the State level using State-specific chain price indexes for the aggregate of new dwellings, new non-dwelling building, new engineering construction and new machinery and equipment. These chain price indexes are derived as follows:
      • for each institutional sector for each State the annual current price estimates of expenditures on new dwellings, new non-dwelling building, new engineering construction and six-way dissection of machinery and equipment are divided by four to obtain quarterly figures, which are extended by three quarters into the latest year. These data are then deflated by the same price indexes used in the deflation of private gross fixed capital formation; and
      • chain volume estimates are formed for each State by sector aggregate and divided into the corresponding current price estimates to form (implicit price deflators) the required chain price indexes.

15.102 Current price estimates of public gross fixed capital formation in computer software, like the estimates for the private sector, are deflated using a price index which declines by 6 per cent a year. Gross fixed capital formation in mineral exploration and intangible fixed assets - film and television are only identified for general government, national - other. The current price estimates are deflated by the same price indexes used in the deflation of private gross fixed capital formation.

15.103 The sale of used assets between the public and private sectors frequently involves very large transactions. In order to ensure that these transactions are exactly offsetting in chain volume terms, the implicit price deflator for total net second hand purchases by the private sector for each State is used to deflate the corresponding current price public sector net second hand sales series for that State.

15.104 Asset sales by the public sector to the private sector are frequently so large that they lead to negative gross fixed capital formation for the quarter in which they occur for the vendor State institutional sector. Alternating positive and negative numbers are inimical to the chaining method used by the ABS, and so the quarterly chain volume estimates of public sector net expenditures on used assets are simply added to the chain volume estimates of purchases of new fixed assets.


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