16.1 The ABS has made comprehensive changes to its capital stock estimates in recent years. Major changes include the full integration of capital stock and multifactor productivity (MFP) measures, more detailed asset lives for machinery and equipment, implementation of chain volume measures, and the inclusion of certain fixed intangible and cultivated assets.
16.2 Estimates of the capital stock of the Australian economy, together with the value of capital assets used up in the productive process (called depreciation or consumption of fixed capital) and the flow of capital services to the productive process, are produced using an application of the perpetual inventory method (PIM). Estimates of capital stock and capital consumption are calculated for all fixed assets, tangible and intangible, that are owned by producers. These measures are expressed in current prices and also as chain volume measures.
16.3 Capital stock measures are discussed in detail in the ABS Occasional Paper: Estimates of Depreciation and Capital Stock, Australia by R. Walters and R. Dippelsman (1985/3). Despite the major changes that have been introduced since this paper was written, it is still a valuable source of information, e.g. the estimation of detailed estimates of gross fixed capital formation prior to 1948-49 and the derivation of asset lives. The upgraded capital stock estimates are also discussed in a feature article 'Upgrade of Capital Stock and Multifactor Productivity Estimates' in the 1997-98 issue of Australian System of National Accounts (Cat. no. 5204.0).