Australian Bureau of Statistics
Celebrating the International Year of Statistics 2013

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Private gross fixed capital formation

Dwellings

15.18 Gross fixed capital formation in dwellings consists of the value of acquisitions of new and existing dwellings less the value of disposals of existing dwellings, the value of dwellings created by the conversion of existing non-dwelling buildings to dwellings, and the value of alterations and additions to existing dwellings. All dwellings, including houseboats, barges, mobile homes and caravans used as the principal residences of households, and any associated structures such as garages, are regarded as fixed assets.

Sources and methods - current price estimates

Annual estimates

15.19 Annual estimates are derived by aggregating the quarterly estimates.

Quarterly estimates

15.20 Estimates are primarily based on the value of work done during the period on new residential buildings and on alterations and additions to residential buildings. Both categories of expenditure are in scope of the quarterly Building Activity Survey. This survey covers both public and private sector activity. Dwellings may be purchased by public housing authorities from private builders after being classified as private sector construction. To avoid incorrect classification of completed dwellings, estimates of gross fixed capital formation in dwellings by the public sector are sourced from the ABS's public finance statistics. Public expenditure (which also allows for net sales of existing dwellings to the private sector) is deducted from total gross fixed capital formation in dwellings to derive the correct value for the private sector. Derivation of public sector estimates is described in paragraphs 15.91 to 15.104.

15.21 Allowances are also added for net expenditure on new dwellings not included in the survey (e.g. dwellings on rural properties not requiring local government permits, existing commercial premises converted to dwelling use and caravans bought for use as dwellings) and architects' and other professional fees (but excluding ownership transfer costs).

15.22 The value of alterations and additions to existing dwellings is estimated using data from regular surveys of building activity, and from the periodic Household Expenditure Survey. The Building Activity Survey provides estimates of the value of work done on alterations and additions with an approval value of $10,000 or more. As a significant part of alterations and additions activity is not covered in the Building Activity Survey, estimates from the survey are used only as an indicator to move forward benchmark estimates of expenditure on alterations and additions obtained from the Household Expenditure Survey.

Sources and methods - volume estimates

Annual estimates

15.23 Annual estimates are derived by aggregating the quarterly estimates.

Quarterly estimates

15.24 Current price estimates of gross fixed capital formation in dwellings are deflated at the State level for each of the three categories: private houses; other dwellings; and alterations and additions, to express them in the prices of the previous year. These estimates are then aggregated to form chain volume estimates for new and used dwellings and alterations and additions for Australia, and total dwellings for Australia and each State.

(a) New and used dwellings

15.25 Current price estimates of gross fixed capital formation in private houses are deflated using composite State-specific price indexes, with each State index derived as a weighted average of a price index for contract-built houses and a price index for other than contract-built houses.

15.26 Contract-built house price indexes are derived as a two quarter ending moving average (i.e. an average of the current quarter and the previous quarter) of the Project Home Price Index from the ABS publication House Price Indexes (Cat. no. 6416.0) for each State and Territory.

15.27 The other than contract-built house price indexes are derived as a four quarter ending moving average (i.e. an average of the current quarter and the three preceding quarters) of the Project Home Price Index from House Price Indexes (Cat. no. 6416.0) for each State and Territory.

15.28 This dichotomy between contract-built and other types of dwelling construction is made to reflect the different lags between when prices are determined and when the work is done.

15.29 Current price estimates of gross fixed capital formation in other dwellings are deflated using State-specific price indexes, with each State index derived as a two quarter ending moving average of other dwelling price indexes for dwellings other than houses compiled by the ABS.

(b) Alterations and additions

15.30 Current price estimates of gross fixed capital formation in alterations and additions are deflated by applying a two quarter ending moving average of the Project Home Price Index from House Price Indexes (Cat. no. 6416.0) to the respective State current price estimates.

Other buildings and structures

15.31 Gross fixed capital formation in other buildings and structures consists of the value of acquisitions of new and existing non-dwelling buildings and structures less the value of disposals of existing non-dwelling buildings and structures, and the value of alterations and additions to existing non-dwelling buildings and structures.

Sources and methods - current price estimates

Annual estimates

15.32 Annual estimates for the total private sector are obtained by aggregating quarterly estimates. As the sources used to compile the total estimates of level do not contain any information by institutional sector or industry, sectoral dissections and estimates for individual industries are derived mainly using data from the quarterly Survey of Private New Capital Expenditure as an indicator. Because the survey only includes the value of new assets, adjustments are made to reflect net purchases of second-hand assets from the public sector.

Quarterly estimates

15.33 Estimates are based primarily on the value of work done during the period on private non-residential buildings from the Building Activity Survey and the value of work done during the period on private non-building construction activity from the Engineering Construction Survey.

15.34 Adjustments are made to the basic source data to allow for the exclusion from the Building Activity Survey of non-residential building jobs with an approval value of less than $50,000 and architects' and other professional fees. A further adjustment is made to include buildings and structures on farms (which are not covered in these surveys). The estimates are also adjusted to reflect net purchases of second-hand assets from the public sector. Unlike the annual estimates, which are disaggregated by institutional sector and industry, quarterly estimates are compiled in total only.

15.35 Estimates for the most recent quarter are based on preliminary data from the Building Activity Survey and the Engineering Construction Survey.

Sources and methods - volume estimates

Annual estimates

15.36 Annual estimates are derived by aggregating the quarterly estimates.

Quarterly estimates

15.37 Current price estimates of gross fixed capital formation in other buildings and structures are deflated at the State level for each of new non-dwelling building, new engineering construction and net purchases of second-hand assets.

(a) New non-dwelling building

15.38 State-specific price indexes are derived as a three quarter ending moving average of non-dwelling building price indexes compiled by the ABS.

(b) New engineering construction

15.39 Current price estimates of gross fixed capital formation in new engineering construction are deflated using a composite of price indexes for roads, dams, sewerage, electricity infrastructure and telecommunications infrastructure. For all but roads construction, these price indexes are derived for Australia only.

15.40 Road construction price indexes are compiled by the ABS using data from a number of sources, but principally State road authorities.

15.41 The dams and sewerage price index is a composite of relevant wage rates (Wage Cost Index (Cat. no. 6345.0)) and price indexes for equipment (Price Index of Articles Produced by Manufacturing Industry (Cat. no. 6412.0)), materials used in dams and sewerage construction (Price Index of Materials Used in Building Other Than House Building (Cat. no. 6407.0)) and motor vehicle operations (Consumer Price Index (Cat. no. 6401.0)).

15.42 The electrical facility construction price index is a composite of relevant wage rates (Wage Cost Index (Cat. no. 6345.0)) and price indexes for aluminium wires/cables, power transformers (Price Index of Articles Produced by Manufacturing Industry (Cat. no. 6412.0)) and electrical materials (Price Index of Materials Used in Building Other Than House Building (Cat. no. 6407.0)).

15.43 The telecommunications construction price index is a composite of relevant wage rates (Wage Cost Index (Cat. no. 6345.0)) and price indexes for recorded media, electronic equipment manufacturing and some other items of equipment (Price Index of Articles Produced by Manufacturing Industry (Cat. no. 6412.0)).

(c) Net purchases of second-hand assets

15.44 Current price estimates of gross fixed capital formation in net purchases of second-hand assets are deflated for each State using the State specific implicit price deflator of the aggregate of private new non-dwelling building and new engineering construction.

Machinery and equipment

15.45 Gross fixed capital formation in machinery and equipment by producers consists of the value of their acquisitions of new and existing machinery and equipment less the value of their disposals of their existing machinery and equipment. It covers transport equipment and other machinery and equipment, including office equipment, furniture, etc.

15.46 Gross fixed capital formation is not recorded until the ownership of the fixed assets is transferred to the unit that intends to use them in production. Thus, new machinery and equipment that has not yet been sold forms part of additions to inventories of finished goods held by the producers of the assets. Similarly, imported machinery and equipment is not recorded as gross fixed capital formation until it is acquired by the unit that intends to use it. Assets which are purchased under a financial lease arrangement are treated as involving an effective change of ownership, and are therefore recorded as gross fixed capital formation by the lessee, not the lessor.

Sources and methods - current price estimates

Annual estimates

15.47 Prior to 1994-95, estimates are compiled using statistics of depreciable assets available from the Australian Taxation Office. Allowance is made for special taxation provisions applying to the mining, finance and agricultural industries and for those cases where there is a difference between when expenditure on plant can be recorded for tax purposes and when expenditure is actually incurred. A further timing adjustment is made to account for those businesses that operate on a non-June financial year. An estimate is also made for late taxation returns by companies and unincorporated businesses and for organisations (e.g non-profit organisations serving households) which, due to the nature of their operations, are not subject to taxation. From 1994-95, the source of the data is the annual Economic Activity Survey (covering most of the large businesses) combined with data from the Australian Taxation Office (covering small businesses). These estimates are subject to adjustment as part of the data confrontation exercise which leads to balanced supply and use tables.

15.48 Data are compiled separately for companies, individuals (sole traders), and partnerships and trusts, by industry, thereby providing the basis of the institutional sector and industry estimates. As data reported to the Australian Taxation Office are on an industry of ownership basis, adjustments have to be made to accord with Australian Accounting Standard 17 (Accounting for Leases) which requires that assets be recorded on an industry of effective ownership (use) basis. At the total private enterprise level, adjustments are required to take account of the net effect of assets leased to or from the public sector. These adjustments are made using data on net assets acquired under finance lease agreements collected from individual public non-financial corporations and public financial corporations. At the institutional sector by industry level, significant adjustments are required to reallocate gross fixed capital formation from the financial corporations sector to the non-financial corporations sector and the household unincorporated enterprises sector, and from the finance industry to other industries. Indicators for these adjustments include data from the quarterly Survey of Private New Capital Expenditure and from Lending Finance, Australia (Cat. no. 5671.0). Because data on which to base the adjustments are not as detailed as would ideally be required, sector and industry estimates of gross fixed capital formation should be interpreted with caution.

Quarterly estimates

15.49 Quarterly estimates are interpolated between and extrapolated from the annual supply and use table benchmarks using a variety of indicators. The main source is the quarterly Survey of Private New Capital Expenditure. Adjustments are required to take account of industries out of scope of the survey and for net purchases of second-hand assets.

15.50 As agriculture is out of scope of the Survey of Private New Capital Expenditure, alternative sources are used for this industry. Annual estimates based on taxation statistics, and supplemented by Agricultural Finance Survey data, are extrapolated and interpolated using various quarterly indicators. These consist of data on the numbers of tractors and similar self-propelled machinery sold for agricultural purposes from the Tractor Machinery Association, together with Australian Bureau of Agricultural and Resource Economics price indexes for new tractors sold. Estimates for other industries not in scope, such as the community services industry, are obtained by applying the average movements for the industries covered by the survey.

15.51 An estimate of the value of net purchases of second-hand assets from the public sector is derived using data from quarterly surveys of public financial and non-financial corporations and general government units. An estimate of the value of motor vehicle sales from businesses to households is deducted. This estimate is first derived on an annual basis using a perpetual inventory model of the stock of vehicles incorporating data from the Survey of Motor Vehicle Use and motor vehicle sales data available through the VFACTS service. Quarterly estimates are then interpolated and extrapolated according to new motor vehicle sales.

Sources and methods - volume estimates

Annual estimates

15.52 Annual estimates are derived by aggregating the quarterly estimates.

Quarterly estimates

15.53 Current price estimates of gross fixed capital formation in new machinery and equipment and net purchases of second hand machinery and equipment are deflated at the State level using State-specific chain price indexes. These indexes are compiled in a multi-stage process:

• derive quarterly current price and chain volume estimates of the supply of capital goods split into six broad categories;

• derive implicit price deflators (IPDs) for each of the six categories;

• using an annual supply and use model, encompassing both the private and public sectors, impute estimates of gross fixed capital formation for each of the six broad categories for each institutional sector for each industry at the 1 digit level of ANZSIC (broad purpose category for general government);

• for each industry in the private sector, interpolate the annual imputations of gross fixed capital formation in each category by the total estimated quarterly supply of that category, to produce quarterly estimates of gross fixed capital formation for each industry for each of the six machinery and equipment categories; and

• use the IPDs for the six machinery and equipment categories from the second stage to deflate them.

Livestock

15.55 Gross fixed capital formation in livestock that are cultivated for the products they yield year after year (dairy cattle, draught animals, etc.) is measured by the value of acquisitions less disposals. It is therefore equal to the total value of all mature animals and immature animals produced on own account acquired by users of the livestock, less the value of their disposals. Disposals consist of animals sold or otherwise disposed of, including those sold for slaughter, plus those animals slaughtered by their owners. Exceptional losses of animals due to major outbreaks of disease, contamination, drought, famine, or other natural disasters are recorded in the other changes in the volume of assets account and not as disposals. Incidental losses of animals due to occasional deaths from natural causes form part of consumption of fixed capital.

Sources and methods - current price estimates

Annual estimates

15.56 Estimates of the value of sheep and cattle used to produce products such as wool and milk, or for breeding, are included in capital formation. A primary source of data is the annual Agricultural Commodity Survey conducted by the ABS, which provides the number of animals in major livestock categories. Results from the survey are published in Agriculture, Australia (Cat. no. 7113.0). Calculation of sheep and cattle numbers also relies on slaughtering and exports data from Livestock Products, Australia (Cat. no. 7215.0). Data on acquisition and disposal prices of animals are more difficult to obtain and a wide range of sources is used, including industry publications and direct sources. Values for sheep and cattle are estimated by multiplying the number of animals by an average price per head.

Quarterly estimates

15.57 Quarterly estimates are derived by distributing the annual estimates equally across the quarters.

Sources and methods - volume estimates

Annual estimates

15.58 Annual volume estimates of gross fixed capital formation in the prices of the previous year are calculated by subtracting appropriately priced disposals from acquisitions. These estimates are then aggregated to form chain volume estimates of total livestock for each State and Australia.

Quarterly estimates

15.59 Quarterly volume estimates are derived by evenly distributing the annual estimates across the quarters.

Intangible fixed assets

15.60 SNA93 describes the production of books, recordings, films, software, tapes, disks, etc. as a two-stage process of which the first stage is the production of the original and the second stage the production and use of copies of the original. The output of the first stage is the original itself, over which ownership can be established by copyright, patent or secrecy. The value of the original depends on the actual or expected receipts from the sale or use of copies at the second stage.

15.61 The output of the first stage is an intangible fixed asset that belongs to the producer of the original (author, film company, program writer, etc.). It may be produced for sale or for own-account gross fixed capital formation by the original producer. As the asset may be sold to another institutional unit the owner of the asset at any given time need not be the original producer, although they are often one and the same unit. If the original is sold when it has been produced, the value of the output of the original producer is given by the price paid. If it is not sold, its value could be estimated on the basis of its production costs with a mark-up. However, the size of any mark-up must depend on the discounted value of the future receipts expected from using it in production, so that it is effectively this discounted value, however uncertain, that determines its value.

15.62 The owner of the asset may use it directly or to produce copies in subsequent periods. Typically the owner of the asset does one or more of three things in subsequent periods:

• The owner uses the asset directly, e.g. musical performances.

• The owner produces copies of the asset and sells them. If a copy is purchased for use in production for more than one year, then it is reported as gross fixed capital formation of an intangible fixed asset by the purchaser, e.g. most computer software. Otherwise the purchase of a copy is treated as consumption.

• The owner may also license other producers to make use of the original in production. The latter may produce and sell copies, or use copies in other ways, e.g. for film or music performances. In these cases, the owner is treated as providing services to the licensees that are recorded as part of their intermediate consumption. The payments made by the licensees may be described in various ways, such as fees, commissions or royalties but, irrespective of how they are described, they are treated as payments for services rendered by the owner.

(a) Computer software

15.63 Computer software that an enterprise expects to use in production for more than one year is treated as an intangible fixed asset. Such software may be developed in-house or purchased on the market. Software purchased on the market includes both software products purchased 'off the shelf' and customised software designed by a specialist for a specific customer. Acquisitions of such software are treated as gross fixed capital formation. Software purchased on the market is valued at purchasers' prices, while software developed in-house is valued at its estimated basic price, or at its cost of production if it is not possible to estimate the basic price.

15.64 Gross fixed capital formation in software also includes the purchase or development of large databases that the enterprise expects to use in production over a period of time of more than one year. These databases are valued in the same way as software, described above.

Sources and methods - current price estimates

Annual estimates

15.65 For 1997-98 and subsequent years, data for capital formation in computer software by private and public corporations are available from the annual Economic Activity Survey (EAS). The annual EAS collects data on total computer software expensed and capitalised. Some of the expenditure on software that is reported as being expensed is allocated to capital formation and the remainder is allocated to repair and maintenance (i.e. intermediate input). In addition, some of the reported expenditure on contractors, etc is allocated to capital formation in computer software.

15.66 For earlier periods, estimates of gross fixed capital formation in customised software and computer software developed in-house by private and public corporations are derived using Business Use of Information Technology, 1993-94 (Cat. no. 8129.0) as the benchmark and backcast to 1979-80 using a collection run by Statistics Canada as no Australian data sources are available for this period. The Software Development and Computer Service Industry Survey has been run by Statistics Canada since 1979-80, and provides a history of revenue earned in respect of 'custom software development' and 'contract programming'. Prior to 1978-79, it is assumed that customised software and computer software developed in-house grew at an even rate, starting at zero in 1959-60.

15.67 For periods prior to 1997-98, estimates of gross fixed capital formation in software purchased 'off the shelf' by private and public corporations are derived using data from Information Technology, 1995-96 (Cat. no. 8126.0) as the benchmark and backcast to 1989-90 using imports of computer software as an indicator. Prior to 1989-90 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 for the period 1978-79 to 1988-89. For earlier periods, it is assumed that expenditure on 'off the shelf' software grew at an even rate, starting at zero in 1959-60.

15.68 For 1997-98 and subsequent years, estimates of customised software plus computer software developed in-house on the one hand and estimates of computer software purchased 'off the shelf' on the other are carried forward from the benchmarks described above, but are constrained to sum to the estimates obtained from EAS. The indicators used to move the benchmarks forward are the same indicators used to derive quarterly estimates, described below.

15.69 Gross fixed capital formation in computer software for each industry is estimated using the industry proportions in Business Use of Information Technology, 1993-94 (Cat. no. 8129.0), adjusted to include the agriculture, forestry and fishing industry, as this industry is not covered. It is assumed that software use by farm units is likely to be more consistent with use in those industries that are not intensive users of software.

Quarterly estimates

15.70 Quarterly estimates are derived by interpolating between and extrapolating from the annual estimates as follows:

• computer software developed in-house plus purchases of customised software are derived using linear trend methodology (see Appendix 6); and

• computer software purchased 'off the shelf' are derived using imports of computer software as an indicator.

Sources and methods - volume estimates

Annual estimates

15.71 Annual estimates are derived by aggregating the quarterly estimates.

Quarterly estimates

15.72 Current price estimates of gross fixed capital formation in computer software are deflated using a price index which declines by 6% a year. This rate of decline was determined by Statistics Canada after observing the trend of software prices over time for popular PC software.

(b) Entertainment, literary or artistic originals

15.73 This item covers the production of originals of: films; television programs; music products; and books. Separate estimates are prepared for each of these categories.

Sources and methods - current price estimates

Annual estimates

15.74 Annual estimates are derived as follows:

• Film and independent television includes master tapes of feature films and independent television drama and documentaries. Capital formation is calculated as the present value of expected future income flows generated from the originals. These flows are discounted to derive the present value of film and television income in any given year. For years 1988-89 onwards, estimates are derived from data supplied by the Australian Film Finance Corporation. Estimates for earlier years are based on data provided by the Australian Film Commission and the Australian Film Development Corporation. Preliminary estimates for the latest years are based on production and royalty income data from the Australian Film Finance Corporation.

• Television (own-account) includes in-house production of programs classified as artistic originals, i.e. drama, sporting events and documentaries, by public and private television broadcasters. Capital formation is estimated from data on the value of artistic original productions made specifically for television from Film and Video Production and Distribution, Australia (Cat. no. 8679.0), and Australian Broadcasting Authority Broadcasting Financial Results. Estimates for earlier years are based on data supplied by the Australian Film Commission and the Australian Film Finance Corporation.

• Recorded music includes master tapes owned by recording companies as used in the production of vinyl records, CDs and cassettes. Capital formation is estimated using a production cost approach. Budgets allocated to develop originals are indicative of expected future returns from those originals. Data on Australian sales by units for each category were obtained from the Australian Recording Industry Association (ARIA)Yearbook, and ARIA itself. Data on average production costs for each category were obtained from a sample of major record companies. These data were used to estimate current values for each category of originals for the music industry. These data were also used, in conjunction with CPI data and assumptions about economies of scale, to generate historical estimates of values for each category. Preliminary estimates for the latest years are based on production and royalty income data from ARIA.

• Music publishing covers original musical works produced. Capital formation is estimated by using a market transactions approach. The advance a publisher pays a songwriter or composer on signing best describes the expected future return that the publisher hopes to receive from exploitation of the right assigned to them to use the artistic original, plus the publisher's share of the expected royalties. Data on capitalised advances for 1995-96 were obtained from Business of Music, Australia (Cat. no. 4143.0) and used in conjunction with assumptions about the expected royalties to yield the market price of the original musical works.

• Literary works covers original manuscripts of books. Capital formation is estimated by a market transactions approach. The lump-sum payment a publisher pays an author is indicative of future benefits the publisher hopes to receive from publishing the literary work. Data on lump-sum payments to Australian authors for Australian literary works were obtained from Book Publishers, Australia (Cat. no. 1363.0).

15.75 Quarterly estimates for film, television and recorded music are interpolated and extrapolated from the annual estimates using linear trend methodology. Quarterly estimates for recorded music and literary works are based on seasonal sales weights.

Sources and methods - volume estimates

Annual estimates

15.76 Annual estimates are derived by aggregating the quarterly estimates.

Quarterly estimates

15.77 Current price estimates of gross fixed capital formation in entertainment, literacy or artistic originals are deflated as follows:

• Film and television: current price estimates of gross fixed capital formation in film and television originals are deflated using a price index for entertainment services (Consumer Price Index (Cat. no. 6401.0)) as the future revenue/royalty streams are likely to be driven by box office sales.

• Music originals: current price estimates of gross fixed capital formation in music originals are deflated using the price indexes for records and cassettes (Price Index of Articles Produced by Manufacturing Industry (Cat. no. 6412.0)).

• Literary works: current price estimates of gross fixed capital formation in literary originals are deflated using the CPI component index for books, newspapers and magazines (Consumer Price Index (Cat. no. 6401.0)), as the future revenue/royalty streams are likely to be driven by book sales.

(c) Mineral exploration

15.78 Expenditures on mineral exploration are not treated as intermediate consumption. Whether they are successful or not, they are needed to acquire new reserves and are, therefore, all classified as gross fixed capital formation.

15.79 This item covers expenditure on exploration for petroleum (including oil shale), metallic minerals, construction materials, gemstones, and other non-metallic minerals less expenditure on successful bids for offshore petroleum leases (which is regarded as intermediate expenditure, not capital formation). Exploration expenditure covers all exploration activity undertaken on land and in Australia's territorial waters and the continental shelf over which Australia exercises exclusive rights. It includes expenditure on aerial surveys, (including Landsat photographs), general surveys, report writing, map preparation and other activities indirectly attributable to exploration.

Sources and methods - current price estimates

Annual estimates

15.80 Data on mineral exploration expenditure from 1965-66 was obtained from Mineral and Petroleum Exploration, Australia (Cat. no. 8412.0.). Data for expenditure on successful bids for offshore petroleum leases were obtained from the Department of Industry, Science and Resources. Data on exploration by commodity (other than for petroleum) for the period 1948-49 to 1964-65 were largely based on data compiled by the Bureau of Resource Sciences.

Quarterly estimates

15.81 Quarterly estimates are based on data from Mineral and Petroleum Exploration, Australia (Cat. no. 8412.0.).

Sources and methods - volume estimates

Annual estimates

15.82 Annual estimates are derived by aggregating the quarterly estimates.

Quarterly estimates

15.83 Current price estimates of gross fixed capital formation in mineral and petroleum exploration are deflated using a composite price index of mining wage rates (Wage Cost Index (Cat. no. 6345.0)) and price indexes for equipment and material categories associated with exploration - steel pipes and tubes, non-ferrous pipe fittings, iron and steel casting and forging, and other industrial machinery (Price Index of Articles Produced by Manufacturing Industry (Cat. no. 6412.0)).

Ownership transfer costs

15.84 Acquisitions of new assets are valued at actual or estimated purchasers' prices plus the associated costs of ownership transfer incurred by units acquiring the assets. Similarly, acquisitions of existing assets are valued at the actual or estimated prices payable to their previous owners plus the associated costs of ownership transfer incurred by the units acquiring the assets. Ownership transfer costs consist of the following components:

• fees paid to lawyers;

• fees and commissions paid to real estate agents and auctioneers;

• stamp duty;

• Title Office charges; and

• local government charges.

Sources and methods - current price estimates

Annual estimates

15.85 Annual estimates for real estate agents' commissions and lawyers' conveyancing fees are based on taxation statistics of total business incomes for these industries and the results from the periodic surveys published in Real Estate Agents Industry, Australia (Cat. no. 8663.0), and Legal and Accounting Services, Australia (Cat. no. 8678.0). The ABS surveys provide an estimate of the proportion of total business income derived from the transfer of real estate, together with an allocation by institutional sector of the value of work done. The resulting ratios are applied to taxation statistics of total business income. The first ABS data were collected in respect of 1982-83. Major ABS surveys in respect of real estate agents and legal services were conducted in 1987-88, 1992-93, 1995-96 and 1998-99. In other years, income from real estate transfers is estimated using a composite indicator which includes movements in the volume of sales, average sale prices and tables of scheduled fees. As taxation statistics are not finalised until about two years after the reference period, estimates for the latest two years are generally based on the quarterly indicators mentioned below.

15.86 Stamp duties estimates are based on data obtained from the various State stamp duty offices. Charges levied by the various Titles Offices for registration of titles are derived mainly from Budget Papers, while local government charges made for various searches are derived using average unit charges multiplied by the number of transfers.

Quarterly estimates

15.87 Quarterly estimates for the real estate agents' commissions and lawyers' fees are derived from movements in a composite indicator based on State data for the number and value of real estate transactions. Periodic changes in scheduled fees are taken into account as well as changes in average charges from the declining rate schedules that generally apply. Data on the number of transactions and average sale prices are obtained from State Titles Offices and Valuers'-General Departments.

15.88 Stamp duties estimates are based on quarterly data from each State government. Titles Office and local government charges are estimated from the number of transactions occurring in each quarter.

Sources and methods - volume estimates

Annual estimates

15.89 Annual estimates are derived by aggregating the quarterly estimates.

Quarterly estimates

15.90 Volume estimates of ownership transfer costs are derived by quantity revaluation at the State level, by multiplying the number of transactions by the average price in the previous year.

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