5204.0.55.008 - Information Paper: The Non-Observed Economy and Australia's GDP, 2012  
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MEASURING HOUSEHOLD PRODUCTION FOR OWN USE


SCOPE AND RATIONALE

6.1 The production boundary of the SNA can be applied to production by households and covers the following activities that are found in the NOE:

  • production of goods or services supplied to units other than their producers;
  • own–account production of all goods retained by their producers for their own final consumption or gross capital formation; and
  • own–account production of housing services by owner–occupied dwellings.

6.2 Own–account production of housing services is the imputed value of the services of owner–occupied dwellings. The imputation of rent to owner occupied dwellings enables the services provided by dwellings to their owner–occupiers to be treated consistently with the marketed services provided by rented dwellings to their tenants. This treatment is considered necessary because, if a large number of rented houses were sold to their occupiers and if estimates of imputed rent were not calculated for owner–occupied dwellings, there would be an apparent decrease in gross domestic product without any decrease in the provision of housing services. In effect, owner–occupiers (like other owners of dwellings) are regarded as operating businesses; they receive rents (from themselves as consumers), pay expenses, and make a net contribution to the value of production which accrues to them as owners. The imputations are necessary to allow international comparisons of GDP between countries with widely varying proportions of owner–occupied and renter–occupied dwellings.

6.3 The production boundary of the SNA excludes all services produced by household members and consumed within the same household, except for services provided by owner–occupied dwellings and services produced by employing paid domestic staff.

6.4 The ABS recognises that, while part of the NOE, the provision of owner–occupied dwelling services by households is a significant component of household final consumption expenditure and these are therefore imputed and included in the ASNA.

6.5 Examples of excluded unpaid services are: the cleaning, decoration and maintenance of the dwelling occupied by the household; the preparation and serving of meals; and the care of sick, infirm or the elderly.

6.6 The 2008 SNA states "…the reluctance of national accountants to impute values for the outputs, incomes and expenditures associated with the production and consumption of services within households is explained by a combination of factors, namely the relative isolation and independence of these activities from markets, the extreme difficulty of making economically meaningful estimates of their values, and the adverse effects it would have on the usefulness of the accounts for policy purposes and the analysis of markets and market disequilibria".

6.7 For example, if the SNA boundary were to be extended to include the production of own account household services, "virtually the whole adult population would be economically active and unemployment eliminated. In practice, it would be necessary to revert to the existing boundary of production in the SNA, if only to obtain meaningful employment statistics" (2008 SNA).

6.8 Although excluded from the ASNA, the production of household services for own consumption is an item of some interest. The ABS has published estimates of unpaid household services in Unpaid Work and the Australian Economy, 1997 (cat. no. 5240.0). While services produced for own consumption within households fall outside the SNA production boundary, the SNA includes the production of goods by households irrespective of whether the goods are intended for own final consumption. Examples are the production of agricultural products and their subsequent storage; the processing of agricultural products; and the supply of water. As stated in para 6.1, the SNA production boundary includes own–account production of all goods retained by their producers for their own final consumption or gross capital formation and therefore these goods also form part of the NOE.

6.9 The ASNA includes estimates of the cultivation of crops and livestock for own final use and the undertaking of own–account construction. While they are of less significance for Australia than they are for many developing countries, the ABS has made adjustments to its national accounts to take account of these activities in accordance with the relevant 2008 SNA guidelines.

6.10 With an increasing awareness of global climate change, a recent trend in the economy is the home production of electricity via solar panels, either for own use and/or for the feeding of surplus–to–home–usage electricity back into the electricity grid. The ABS is investigating these developments and is assessing approaches to compile appropriate estimates. However, the present levels of home production for own use do not appear to be material with respect to the estimation of GDP. Accordingly, there is no current need to adjust GDP estimates for home production for own use of solar power. Home production levels of electricity will be re–assessed periodically to determine when they become material to the estimation of GDP in the ASNA.


CURRENT METHOD FOR MEASURING HOUSEHOLD PRODUCTION FOR OWN USE

6.11 The benchmark estimate on Household production for own final use (HPOFU) in 1991–92 was derived using 'market' prices, applied to volumes collected via the 1992 ABS survey Home Production of Selected Foodstuffs (cat. no. 7110.0). (Given the date of this survey, care should be taken in using this estimate for recent periods.) These 'market' prices were discounted to allow for the associated intermediate use expenses (e.g. seed, fertiliser and gardening tools) that were included in other HFCE items. Consequently, the adjustments to account for backyard production which have been included in HFCE are effectively equal to 'gross' market value less production expenses. Current benchmark estimates have been derived from the 1991–92 estimates. International comparisons of the level of home food and beverage production are difficult as the 1992 survey is output focussed (concentrating on the value of end products) while the international estimates tend to be input focussed (based principally on labour inputs derived from time use surveys). In addition, international estimates tend to include time spent in growing vegetables as a non–disaggregated component of food preparation in a category labelled nutrition.

6.12 The need for more recent benchmark data is recognised, but there is no readily available data source. Further, in an environment of limited resources. the ABS does not plan to conduct a new survey given the cost and the relative statistical priority of such a survey. However, the benchmark estimate for HPOFU will be re–assessed periodically to ensure its applicability to the estimation of GDP.


RESULTS

GDP – P

6.13 A 0.2% adjustment to is applied to GVA for HPOFU representing "backyard" production of vegetables, livestock and similar items.

GDP – E

6.14 A 0.3% adjustment is applied to HFCE for "backyard" production of vegetables, livestock and similar items.

GDP – I

6.15 GDP–I estimates are not independently observed and result from adjustments to the GDP–P and GDP–E estimate compilations. The provision of HPOFU activities is included in the ASNA and a small adjustment of 0.5% is made to GMI for income accrued to owner builders in the course of constructing or improving their own dwelling.