DATA COMPARISON AND INTEGRATION
The confrontation of data from different sources and the subsequent reconciliation is a key part of the national accounts process. At its most formal, this process occurs in the annual balancing of the supply and use tables which are used to benchmark the national accounts. It also includes the coherence between the national accounts estimates and the various partial indicators of economic activity that are published by the ABS and outside (where applicable).
Supply and use tables are conventionally presented as two tables, a supply table showing the supply of products from domestic production and imports, and a use table showing the intermediate use of these same products by industry and final use by type of expenditure. A complete use table also includes the primary inputs to production, namely compensation of employees, operating surplus and other taxes less subsidies on production. The balancing of the supply and use tables ensures that final domestic expenditure, intermediate use and exports are consistent with the supply of products from domestic output and imports. It also ensures that the incomes and gross value added of each industry are the same. In turn, this ensures that the three approaches to measuring GDP will produce estimates of equal value as they are drawn from aggregates in the supply and use table.
The tables below illustrate the basic structure of supply and use tables.
The confrontation of data in this framework provides a systematic, if somewhat complex, means of checking the coherence of much of the source data used in the national accounts. In the process the source data are subject to examination and adjustment to achieve coherence in the national accounts statistics. While coherence is achieved, it cannot be claimed that the results are necessarily accurate. Supply and use tables are data intensive and some product information has to be synthesised. Later and more suitable source data may become available that leads the national accounts compiler to take different decisions to balance the supply and use of products. The balancing process itself also has some limitations because it is not possible to thoroughly assess every imbalance. However, it can be expected that any significant inconsistencies in major data items will become apparent in the balancing process. Despite some limitations, the supply and use methodology is recognised internationally as the best means of checking the coherence of data and assuring the accuracy of the national accounts.
The Australian national accounts are balanced to annual supply and use tables from 1994-95 through to the year prior to the latest complete year. Quarterly estimates are not formally compiled in a supply and use framework, and therefore the three approaches to measuring GDP will produce different results on a quarterly basis. A single headline measure of quarterly GDP in Australia is obtained by averaging the three measures.
Although no attempt is made to completely balance quarterly data, considerable attention is given to confronting the consistency of the data used to compile the quarterly accounts. The ABS has developed a quarterly supply and use model to help identify internal inconsistencies and to help focus investigations by the national accounts compilers. However, timing and other inconsistencies in the data still remain after this process, and are reflected in the statistical discrepancies that are shown explicitly in the Australian national accounts. However, as previously mentioned, the statistical discrepancies are only a partial measure of coherence in the data - they represent an aggregation of all the positive and negative discrepancies implicit in the large amount of source data that are used to compile quarterly GDP.
The other aspect of coherence relates to the consistency of the national accounts with other economic data published by the ABS and other organisations. The ABS publishes a large amount of data on various aspects of the economy. To the extent that many of these are also inputs to the national accounts it could be expected that they would be coherent with the national accounts. Processes have been implemented to achieve as much consistency as possible. Representatives of the economic collections and economic accounts areas meet formally and regularly to discuss and come to agreement on the statistical treatment and dimensions of recent economic events such as privatisations, major construction and resource projects, asset purchases and other issues surrounding the reconciliation of economic data more generally.
A formal process has also been established to involve national accounts staff in the clearance of some quarterly economic indicator surveys that are published before the national accounts. This gives the national accountants an opportunity to ask questions and input any additional information gained from the wider perspective of other data available for the wider economy prior to finalisation of the results. As a result of this formal process the national accounts and the partial indicators data for recent quarters should be consistent, although some scope, concepts and other differences may mean that they are not exactly equal. As time goes by, the benchmarking procedures applied to the national accounts may lead to divergence with the sub-annual partial indicator statistics.
There have been a few occasions where officials and economic commentators have questioned the consistency between the national accounts and other economic data. In particular, the relationship between employment growth and output growth as measured by GDP is complex, and the data series can occasionally move in directions that appear counterintuitive. The ABS has undertaken an investigation into the relationship between GDP and employment, see the June 2005 release of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) for more detail. The relationship between GDP growth and growth in tax revenues has also been raised. On this latter point, it should be noted that there are many differences between operating surplus from the national accounts and taxable income. For example, taxable income includes realised capital gains but deducts net interest payments. Operating surplus excludes capital gains and losses and does not deduct net interest payments. The treatment of these elements can result in different year to year movements and also in the longer term growth.