5512.0 - Government Finance Statistics, Australia, 2012-13 Quality Declaration 
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 18/06/2014   
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STATEMENT OF STOCKS AND FLOWS, 2012–13


The international Government Finance Statistics (GFS) standard as promulgated by the International Monetary Fund (IMF) recommends that opening and closing 'stock' values be reconciled with all 'flows' occurring throughout the year. The standard is based on an analytical framework in which all changes in the values of stocks from one year to the next can be fully explained by the flows that have occurred during that year.

Institutional units hold assets (financial and non-financial) and incur liabilities (which by definition are financial). The level of these assets and liabilities at any point in time is the stock. The difference between assets and liabilities is net worth, which is a measure of the 'wealth' of units or of government. Anything which causes a change in these stocks of assets and liabilities is a flow. Flows are disaggregated into transactions and 'other economic flows'. A transaction is, for the most part, an interaction between two units by mutual agreement, whereas an 'other economic flow' is a change in the volume or value of a stock of a unit not resulting from a transaction.

By definition, the value of a stock at the end of a period is the sum of the stock at the beginning of the period and all the flows affecting that stock which took place during the period, i.e. S1 = S0 + F1, where S0 and S1 represent the values of a specific stock at the beginning and end of an accounting period, and F1 represents the net value of all flows during the period relevant to that particular stock.

Statistics on transactions giving rise to revenues and expenses are published as part of the GFS operating statement. Revenues are defined as transactions which increase net worth whereas expenses are transactions which decrease net worth. The difference between revenues and expenses, therefore, represents the change in net worth due to transactions. This equates to the GFS net operating balance.

Other economic flows can be disaggregated into movements in asset/liability values resulting from price changes ('revaluations') and those resulting from volume changes ('other volume changes').

Revaluations result from changes to the value of the assets and liabilities held. Revaluations can accrue to financial assets such as bonds and bills, shares and other forms of equity, as well as non-financial assets such as land and buildings.

Other volume changes refer to events that include:

  • the recognition or de-recognition of assets or liabilities on the balance sheet – e.g. when resources become economically exploitable, or when an asset is no longer providing an economic benefit, and so is removed from the balance sheet
  • changes in the quantity or quality of the existing asset – these typically result from catastrophic losses through natural disasters, changes in the volume of natural assets such as fish or forest stocks, creation, discovery, cancellation or seizure of assets, or quality differences arising from events such as a change in the expected life of the asset
  • changes in the classification of assets – these usually arise when the use of an asset changes, e.g. if the use of a parcel of public land changes from recreational use to industrial use.

The net effect of all revaluations and other volume changes occurring through the year represents the change in net worth due to other economic flows.

Since the values of stocks at the end of a year must be equal to their values at the start of a year, plus all transactions and other economic flows affecting them during the year, it follows that the total change in net worth during a given year is equal to the change in net worth due to transactions, plus the change in net worth arising from other economic flows.

When working with reported data, it is often assumed that the difference between opening and closing net worth and the change in net worth due to transactions is attributable to the change in net worth due to other economic flows (i.e. other economic flows is effectively used as a balancing item). However, to ensure data quality it is necessary to independently collect and calculate the change in net worth due to other economic flows. In situations where the reported data do not add through, it is not necessarily the case that the data quality issue is in the other economic flows component of the framework. Where data quality is high throughout the reported data set, the change in net worth as derived via the balance sheet will be consistent with the sum of transaction and other economic flows.


COMMONWEALTH GENERAL GOVERNMENT – STATEMENT OF STOCKS AND FLOWS

The Commonwealth Government publishes a statement of other economic flows for the general government sector. This statement outlines all revaluations and other volume changes occurring throughout the year, which allows a full reconciliation of stocks and flows. This information allows the Australian Bureau of Statistics (ABS) to disaggregate other economic flows into price and volume effects. While some states also publish a statement of other economic flows, the majority currently do not. For local government, information on the components of other economic flows are also generally unavailable. Accordingly, the ABS does not have enough information on which to disaggregate other economic flows into its two components across the state and local levels of government.

The statement of stocks and flows for the Commonwealth general government sector is presented in Table 1. During 2012–13 the net worth of the Commonwealth general government sector increased by $48,832m. This was the result of a GFS net operating balance (which reflects the change in net worth due to transactions) of –$21,131m, offset by revaluations of $69,575m and other volume changes of $388m. The key contributor was revaluations on the liabilities side which was driven by unfunded superannuation and other employee entitlements (–$41,778m), and borrowing (–$5,879m). Revaluations on the assets side of the statement were less significant and driven by other non-equity assets ($6,778m), equity assets ($6,416m), and Investments, loans and placements ($6,409m).

TABLE 1, COMMONWEALTH – General Government – Statement of Stocks and Flows

Opening stocks as
at 1 July 2012
Transactions
Revaluations
Other volume
changes(a)
Closing stocks as
at 30 June 2013
$m
$m
$m
$m
$m

Assets
Financial assets
Cash and deposits
2 523
–429
2 094
Advances paid
33 962
4 802
–1 716
37 048
Investments, loans and placements
98 492
6 197
6 409
111 098
Other non-equity assets
56 475
6 778
63 253
Equity
50 010
2 613
6 416
59 039
Total
241 463
13 182
17 887
272 532
Non-financial assets
Land and fixed assets
94 328
451
1 572
388
96 739
Other non-financial assets
2 216
–1 124
1 095
2 187
Total
96 544
–674
2 668
388
98 926
Total
338 007
12 509
20 554
388
371 458
Liabilities
Deposits held
3 701
95
–10
3 786
Advances received
Borrowing
279 898
26 445
–5 879
300 464
Unfunded superannuation and other employee entitlements
249 889
–41 778
208 111
Other provisions
13 931
449
14 380
Other non-equity liabilities
38 706
7 233
–1 937
44 002
Total
586 125
33 773
–49 154
570 744
GFS Net worth
–248 119
–21 131
69 575
388
–199 287
Net debt
148 621
. .
. .
. .
154 010
Net financial worth
–344 663
. .
. .
. .
–298 212

. . not applicable
– nil or rounded to zero (including null cells)
(a) Source: Department of Finance, Consolidated Financial Statements for the Year Ended 30 June 2013, December 2013.



STATE AND LOCAL GENERAL GOVERNMENT – STATEMENT OF STOCKS AND FLOWS

Both the state and local general government Statements of Stocks and Flows (Table 2 and Table 3 respectively) highlight the significance of other economic flows. During 2012–13 the net worth of the state general government sector increased by $44,478m, driven by $49,636m from other economic flows. The key contributor was other economic flows on the assets side which was driven by equity assets ($18,079m). On the liabilities side, the main contributor to other economic flows was unfunded superannuation and other employee entitlements (–$23,434m).

The net worth of the local general government sector increased by $14,287m in 2012–13. Other economic flows contributed $8,150m to this movement.

TABLE 2, STATE – General Government – Statement of Stocks and Flows

Opening stocks as at 1 July 2012
Transactions
Other Economic Flows
Closing stocks at 30 June 2013
$m
$m
$m
$m

Assets
Financial assets
Cash and deposits
15 749
856
1 081
17 686
Advances paid
7 131
–254
4 156
11 033
Investments, loans and placements
55 660
1 977
1 030
58 667
Other non-equity assets
21 369
237
3 081
24 687
Equity
257 309
–3 000
18 079
272 388
Total
357 218
–185
27 427
384 460
Non-financial assets
Land and fixed assets
559 613
10 613
8 138
578 364
Other non-financial assets
2 064
388
283
2 735
Total
561 677
11 001
8 421
581 099
Total
918 895
10 816
35 848
965 559
Liabilities
  Deposits held
4 425
–135
–178
4 112
  Advances received                                                   
3 394
1
–375
3 020
  Borrowing
97 323
17 594
6 979
121 896
  Unfunded superannuation and other employee entitlements
180 770
–62
–23 434
157 274
  Other provisions
9 033
668
9 701
  Other non-equity liabilities
20 590
–1 424
2 553
21 719
  Total                                                                
315 535
15 974
–13 787
317 722
GFS Net worth
603 360
–5 158
49 636
647 838
Net debt
26 603
. .
. .
41 643
Net financial worth
41 683
. .
. .
66 739

. . not applicable
– nil or rounded to zero (including null cells)

TABLE 3, LOCAL – General Government – Statement of Stocks and Flows

Opening stocks as at 1 July 2012
Transactions
Other Economic Flows
Closing stocks at 30 June 2013
$m
$m
$m
$m

Assets
Financial assets
Cash and deposits
9 342
–330
140
9 152
Advances paid
25
–26
27
26
Investments, loans and placements
11 623
663
–1 893
10 393
Other non-equity assets
3 539
–258
498
3 779
Equity
9 038
–26
–1 870
7 142
Total
33 567
22
–3 097
30 492
Non-financial assets
Land and fixed assets
314 472
5 109
13 495
333 076
Other non-financial assets
1 852
186
–105
1 933
Total
316 324
5 296
13 389
335 009
Total
349 890
5 318
10 293
365 501
Liabilities
Deposits held
431
3
29
463
Advances received                                                   
22
–30
29
21
Borrowing
10 087
971
331
11 389
Unfunded superannuation and other employee entitlements
3 470
–7
–269
3 194
Other provisions
362
144
–54
452
Other non-equity liabilities
4 005
–1 900
2 076
4 181
Total
18 377
–819
2 142
19 700
GFS Net worth
331 514
6 137
8 150
345 801
Net debt
–10 449
. .
. .
–7 698
Net financial worth
15 190
. .
. .
10 792

. . not applicable
– nil or rounded to zero (including null cells)


For more information on the statement of stocks and flows, refer to Table 2.1 in Australian System of Government Finance Statistics: Concepts, Sources and Methods (cat. no. 5514.0.55.001) electronic version or (cat. no. 5514.0) pdf version and Chapter 4 of the International Monetary Fund's Government Finance Statistics Manual 2001.