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8226.0 - Electricity, Gas, Water and Sewerage Operations, Australia, 2003-04  
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NOTES


ABOUT THIS PUBLICATION

This publication presents estimates for the electricity supply, gas supply, and water supply, sewerage and drainage services industries for 2003-04 from the Economic Activity Survey, together with data on a comparable basis for 2001-02 and 2002-03.



CHANGES TO THIS PUBLICATION

This publication includes the first release of employment estimates (and related ratios) using the new statistical infrastructure described in the previous issue of this publication. These were not included in the previous issue, due to methodological problems in deriving employment data from the taxation system data used. (See the Appendix for details.) A time series of employment estimates using the new statistical infrastructure is presented in tables 2.1, 3.1 and 4.1.


Estimates of most assets and liabilities items (and related ratios) are not available from the 2003-04 collection, and hence are not included in this issue.



REVISIONS

Data for 2001-02 and 2002-03 have been revised since the previous issue of this publication. All comparisons with earlier years are based on revised data. Revisions to key data items are presented in tables 2.1, 3.1 and 4.1. Revised data for other items are available on-line in updated versions of the original datasets. Please see below.



INFORMATION AVAILABLE ON-LINE

The text components of this publication are available free on-line. A PDF publication and extended data spreadsheets are also available free on-line. To access this information, go to the ABS website home page <http://abs.gov.au>.



INQUIRIES

For further information about these and related statistics, contact the National Information and Referral Service on 1300 135 070 or John Ridley on Sydney (02) 9268 4541.



CHAPTER 1 CONTRIBUTION TO NATIONAL AND STATE OUTPUT



GROSS VALUE ADDED

Table 1.1 illustrates the growth of Australian industries over time using chain volume measures of their gross value added. Chain volume measures take into account the effects of price changes.


Of the seventeen industries shown in table 1.1,
Electricity, gas and water supply ranked lowest in its average annual growth rate over the past 10 years and equal fourteenth over the past 25 years, with increases of 1.3% and 2.5% respectively. By comparison, the highest growth rates were recorded by Communication services, with annualised rates of 6.1% and 6.7% for the 10 year and 25 year periods.




TOTAL FACTOR INCOME

Table 1.2 shows the contribution of industries to the production (as measured by total factor income) of each state and territory, as well as Australia, in 2003–04. For the purposes of this table, the activity of general government and the ownership of dwellings are each treated as industries.


Of the nineteen industries shown in the table, Electricity, gas and water supply ranked fifteenth (at 2.5%) in its contribution to Australian production for 2003–04. The largest share of production was attributable to Manufacturing, at 11.9%. The contribution of Electricity, gas and water supply was greatest in Tasmania (at 5.8% of total factor income), and smallest in New South Wales and the Northern Territory (2.1% each). In Tasmania, the Electricity, gas and water supply industry was the seventh largest contributor to total production, its highest ranking of any state or territory; the next highest was in South Australia, where it ranked twelfth.



CHAPTER 2 ELECTRICITY SUPPLY INDUSTRY



INTRODUCTION

Statistics in this chapter relate to the electricity supply industry as defined by the Australian and New Zealand Standard Industrial Classification (ANZSIC). These data are presented at the ABN unit / TAU level and, therefore, can contain data about activities normally associated with industries other than electricity supply. (See Explanatory Notes paragraphs 4-19 for further details.) The commentary refers mainly to the tables in this chapter, preceded by some industry background material. The Glossary provides definitions for the more specific terms used.


INDUSTRY CHANGES

Since 1991, governments in Australia have been introducing a competitive market for electricity, referred to as the National Electricity Market (NEM), into the southern and eastern states. In 1994, the introduction of competitive wholesale and retail electricity markets through the NEM resulted in trading across state borders. (Please see <http://www.nemmco.com.au>, the website of the National Electricity Market Management Company, for more details.) Western Australia has also experienced the effects of privatisation but is not part of the NEM, for reasons of geography. Tasmania is scheduled to enter the NEM in July 2006.


Partly as a result, the concept of state bounded entities continues to lose relevance. State data for the electricity supply industry in this publication are allocated on the basis of state of head office (see Explanatory Notes paragraph 32 for more details).


Another continuing trend has been the diversification of energy businesses with the aim of providing their customers with a wider range of energy services. This has seen electricity businesses enter the gas market and, conversely, gas businesses enter the electricity market as opportunities expand within these markets. Because each business unit reporting in ABS surveys is classified to one industry, based on its predominant activity, such diversification can affect the statistics in this chapter and those in Chapter 3 Gas Supply Industry.


Deregulation has also allowed new entities to come into the market and compete for customers. It has also resulted in a number of long established entities being dismantled or sold off. Disaggregation has tended to involve the creation of new entities specialising in electricity generation, transmission, distribution, wholesaling or retailing, to replace single entities which previously undertook all or most of these functions. The effect on industry structure has been to change single entities wholly classified to the electricity supply industry into a number of smaller entities, most of which are classified to the electricity supply industry, but some of which may be classified to other industries. Those entities classified to other industries do not contribute to the statistics for the electricity supply industry. Examples of activities formerly carried out by businesses classified to the electricity supply industry, but which are now largely carried out by specialist businesses classified to other industries, are network construction, repair and maintenance of electricity transmission towers, and power pole inspection.


Effect on these data

These changes to business structures have a direct impact on the data presented in this publication, but not all impacts are in the same direction. Where several smaller specialist business units wholly classified to the electricity supply industry have been created from one vertically integrated business, transactions between these businesses are recorded in the statistics (such as sales from the generating business to the distributing business). Previously, such transactions were internal to a single business and generally were not recorded in the statistics. This situation tends to increase sales and purchases values for the industry, but should have little direct effect on statistics for industry value added, operating profits or capital expenditure. On the other hand, the estimates of several data items (wages and salaries and capital expenditure in particular) for the electricity supply industry will be reduced if activities such as those mentioned in the previous paragraph are now carried out by businesses classified to other industries.


Generally, private sector businesses which are engaged in the electricity supply industry and conduct their own construction and maintenance operations tend to do so through separate business units (typically classified to ANZSIC Division E, Construction), which employ most of the staff engaged in those activities. Government owned businesses in this industry, by contrast, are more likely to employ these staff in a business unit which is classified to the electricity supply industry.


EMPLOYMENT

At the national level, employment in the electricity supply industry was virtually stable, at 36,504 persons, at the end of June 2004 (192 persons fewer than twelve months earlier). Of the states and territories available for publication, employment increased most strongly in New South Wales (by 603 persons, or 4.8%). The industry in Victoria employed 503 (or 7.9%) fewer persons at the end of June 2004 than at the end of June 2003, and 499 (18.9%) fewer persons in South Australia.


Employment in the electricity supply industry nationally is 2.8% (or 985 persons) higher than at the end of June 2002.


WAGES AND SALARIES

Similarly, wages and salaries paid by the electricity supply industry increased by only 1% ($26m) in 2003-04. This national movement reflects decreases of $41m (23.8%) in South Australia and $26m (5.4%) in Victoria, and increases for the other states and territories overall. Over the period from 2001-02 to 2003-04, the electricity supply industry's wages and salaries expenses have increased in current price terms by 6.2%.


INCOME AND EXPENDITURE

At $32.2b, sales and service income of the electricity supply industry nationally in 2003-04 was unchanged from its value in 2002-03. A decrease of $0.9b (10.4%) for Victoria was offset by movements in the other states and territories overall, including an increase of $0.6b (6.5%) in New South Wales.


Operating Profit Before Tax (OPBT), however, increased nationally by $1.4b (65.8%) to $3.5b in 2003-04, thereby restoring the industry's OPBT to a level similar to that of 2001-02 (when it was $3.7b). The main contributors to this improved result were a $417m (2.7%) decrease in purchases of goods and materials and an increase of $794m (392%) in other income. This increase largely reflects the non-recurrence of one-off factors associated with asset writedowns in 2002-03. Of the states and territories for which data are available for publication, purchases of goods and materials fell by $786m (24.2%) in Victoria and by $128m (11.9%) in South Australia, but increased by $330m (6.0%) in New South Wales. Other income increased by $387m in Victoria and by $225m in Queensland. The national increase in trading profit, which excludes other income, was more modest, at 3.0% ($335m).


INDUSTRY VALUE ADDED

The electricity supply industry's $12.8b of industry value added in 2003-04 represented an increase of 3.4% (or $422m) over the preceding year. Although sales and service income increased only marginally, the reduction of $417m in purchases of goods and materials and a further fall of $183m (2.7%) in other intermediate input expenses led to this more substantial increase in IVA. IVA of the electricity supply industry in New South Wales increased by $300m (or 8.4%).


CAPITAL EXPENDITURE

Net capital expenditure for the electricity supply industry in 2003-04 decreased by $778m (14.2%) to $4.7b. This amount was similar to the extent of the decrease in Victoria (from $1.8b to $1.1b). Queensland also recorded a substantial fall (from $1.4b to $0.9b). Net capital expenditure showed only small increases in New South Wales and South Australia, implying a net increase of $0.3b in the other states and territories overall.


Victoria's net capital expenditure was substantially affected by a decrease of $0.9b (94.4%) in capital expenditure on other assets. In Queensland, a large increase ($0.4b) in asset disposals had a substantial effect.


Note that these values in this issue include intangible assets for the first time (see paragraph 30 of the Explanatory Notes and the relevant definitions in the Glossary). Estimates of capital expenditure on two types of assets - plant, machinery and equipment, and dwellings, other buildings and structures - are directly comparable between years, as intangible assets are not relevant to these categories. Acquisition of dwellings, other buildings and structures by the electricity supply industry increased by 3.6%, or $66m, between 2002-03 and 2003-04. An increase of 10.9%, or $308m, occurred in outlays on plant, machinery and equipment.


PERFORMANCE RATIOS

Most performance ratios for the electricity supply industry for 2003-04 changed little from their values for 2002-03. A decline from 17.8 to 9.8 in the ratio of acquisitions to disposals of assets reflects reduced outlays on asset purchases and an increase in the value of assets sold.



CHAPTER 3 GAS SUPPLY INDUSTRY



INTRODUCTION

Statistics in this chapter relate to the gas supply industry as defined by the Australian and New Zealand Standard Industrial Classification (ANZSIC). These data are presented at the ABN unit / TAU level and, therefore, can contain data about activities normally associated with industries other than gas supply. (See Explanatory Notes paragraphs 4-19 for further details.) The commentary refers mainly to the tables in this chapter, preceded by some industry background material. The Glossary provides definitions for the more specific terms used.



INDUSTRY CHANGES

The current gas supply industry reflects the results of the restructuring which began in the early 1990s. Most states and territories have committed, under the terms of the 1997 National Gas Pipelines Access Agreement, to work towards implementing full retail contestability (FRC) to give all gas users their choice of supplier. FRC was introduced in NSW and the ACT in January 2002, and in Victoria in October 2002. Western Australia introduced market reforms to the retail gas market in May 2004. These reforms include the introduction of FRC and several new customer protection mechanisms. South Australia commenced in July 2004 and it will be introduced in Queensland from July 2007. Natural gas has recently been introduced into Tasmania by pipeline from Victoria and FRC is operating now for connections to the embryonic distribution network.


As in the electricity supply industry, vertically integrated businesses have formed separate business units to undertake various stages of distribution and other activities. Increasingly, competition has been introduced along the various stages of the distribution chain with the entry of new businesses.


This has resulted in the reporting of transactions between distributors and with other specialist businesses. Such transactions were not recorded separately under the vertically integrated business model. The effect on the statistics in this publication has been to substantially increase the value of ‘gross’ variables such as sales and service income and total expenses (and their component items), but to have a much lesser effect on ‘net’ variables such as industry value added (IVA), earnings before interest and tax (EBIT) and operating profit before tax (OPBT). In general, changes to these net variables reflect improved efficiencies in the industry or changes in sources of funding rather than changed industry structures.


Over time, as the market continues to develop, businesses have gradually rationalised and restructured their operations. This has resulted in several businesses widening their networks through corporate takeovers to include activities not previously undertaken by gas supply businesses. Conversely, some activities previously undertaken by gas supply businesses are now being undertaken by businesses classified to other industries, in particular, electricity supply and pipeline transport.



EMPLOYMENT

The gas supply industry employed 2,166 persons at the end of June 2004, 110 persons (or 5.4%) more than twelve months earlier. Employment in the industry was 8.5% (or 202 persons) lower than at the end of June 2002.



WAGES AND SALARIES

Wages and salaries paid by the gas supply industry decreased slightly, by 2.7% ($2.6m) to $92m, in 2003–04. Over the period from 2001-02 to 2003-04, the gas supply industry's wages and salaries expenses have fallen in current price terms by 18.2%.



INCOME AND EXPENDITURE

Sales and service income of the gas supply industry in 2003-04 was $5.7b, 7.0% (or $369m) higher than in 2002-03. A larger increase, of $520m (or 18.3%), in purchases of goods and materials was the main contributor to a decline of 8.8% (or $101m) in trading profit.


Operating Profit Before Tax (OPBT) increased by $15m (3.1%) to $500m in 2003-04. Major contributors to this movement were increases in interest income (from $13m to $80m) and other income (from $41m to $90m), which compensated for the decline in trading profit (as above).



INDUSTRY VALUE ADDED

At $1.1b, gas supply industry value added in 2003-04 was 8.7% (or $102m) lower than the preceding year. As well as the relative increases already mentioned in sales and service income and purchases of goods and materials, other intermediate input expenses declined (by 4.2%, or $55m).



CAPITAL EXPENDITURE

Net capital expenditure for the gas supply industry in 2003-04 increased by $39m (13.8%) to $323m. Note that this value in this issue includes intangible assets for the first time (see paragraph 30 of the Explanatory Notes and the relevant definitions in the Glossary).

Acquisition of plant, machinery and equipment by the gas supply industry increased by 59.0%, or $51m, between 2002-03 and 2003-04. An increase of 38.8%, or $41m, occurred in outlays on dwellings, other buildings and structures. However, the acquisition of other assets (including land and intangible assets) fell by 52.5%, or $50m.



PERFORMANCE RATIOS

A decline in the gas supply industry's trading profit ratio (from 21.7% to 18.5%) reflects reduced trading profit and the increase in sales and service income, both mentioned above.



CHAPTER 4 WATER SUPPLY, SEWERAGE AND DRAINAGE SERVICES INDUSTRY



INTRODUCTION

This chapter presents statistics about the water supply, sewerage and drainage services industry as defined by the Australian and New Zealand Standard Industrial Classification (ANZSIC). Both private and government units are included in the scope of the survey. In a manner similar to the electricity and gas supply industries, the water supply, sewerage and drainage services industry is also undergoing a process of reform. At the same time, changes in the structure of public sector units recorded on the ABS's Business Register can affect the statistics, by reclassifying business units engaged in these activities between this industry and ANZSIC Division M, Government Administration and Defence.



EMPLOYMENT

The water supply, sewerage and drainage services industry employed 21,346 persons at the end of June 2004, 1,018 persons (or 4.6%) fewer than twelve months earlier. Employment in the industry was 2.1% (or 468 persons) lower than at the end of June 2002.



INDUSTRY PERFORMANCE

Wages and salaries paid by the water supply, sewerage and drainage services industry increased by 6.6% ($79m), to $1.3b, in 2003-04. Over the period from 2001-02 to 2003-04, the industry's wages and salaries expenses have increased in current price terms by 18.4%.


For the water supply, sewerage and drainage services industry, all of the financial performance indicators fell in 2003-04.


The industry earned $7.6b in sales and service income in 2003-04, 4.1% (or $322m) less than in 2002-03. Trading profit declined by 5.8%, earnings before interest and tax declined by 13.2% and operating profit before tax declined by 14.2%.


At $5.0b, industry value added of the water supply, sewerage and drainage services industry in 2003-04 was 5.0% (or $264m) lower than in the preceding year.



CAPITAL EXPENDITURE

Net capital expenditure for the water supply, sewerage and drainage services industry in 2003-04 increased by $143m (7.4%) to $2.1b. Note that this value in this issue includes intangible assets for the first time (see paragraph 30 of the Explanatory Notes and the relevant definitions in the Glossary).


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