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1370.0 - Measures of Australia's Progress, 2010  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 15/09/2010   
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National income

NATIONAL INCOME GLOSSARY

Chain price indexes

Annually-reweighted chain Laspeyres price indexes referenced to the same year as the chain volume measures. They can be thought of as a series of indexes measuring price change from a base year to quarters in the following year using current price values in the base year as weights, linked together to form a continuous time series. In other words, chain price indexes are constructed in a similar fashion to the chain volume indexes. Quarterly chain price indexes are benchmarked to annual chain price indexes in the same way as their chain volume counterparts. Unlike implicit price deflators, chain price indexes measure only the impact of price change.

Chain volume measures

Annually-reweighted chain Laspeyres volume indexes referenced to the current price values in a chosen reference year (i.e. the year when the quarterly chain volume measures sum to the current price annual values). Chain Laspeyres volume measures are compiled by linking together (compounding) movements in volumes, calculated using the average prices of the previous financial year, and applying the compounded movements to the current price estimates of the reference year. Quarterly chain volume estimates are benchmarked to annual chain volume estimates, so that the quarterly estimates for a financial year sum to the corresponding annual estimate.

Generally, chain volume measures are not additive. In other words, component chain volume measures do not sum to a total in the way original current price components do. In order to minimise the impact of this property, the ABS uses the latest base year as the reference year. By adopting this approach, additivity exists for the quarters following the reference year and non-additivity is relatively small for the quarters in the reference year and the quarters immediately preceding it.

Consumption of fixed capital

Also known as depreciation, it is the reduction in the value of fixed assets used in production during the accounting period resulting from physical deterioration, normal obsolescence or normal accidental damage. Unforeseen obsolescence, major catastrophes and the depletion of natural resources are not taken into account.

Current prices

Estimates are valued at the prices of the period to which the observation relates. For example, estimates for 2007-08 are valued using 2007-08 prices. This contrasts to chain volume measures where the prices used in valuation refer to the prices of a previous period.

Depreciation

The accounting process of systematically allocating the cost less estimated residual value of an asset over its expected useful life. Depreciation as recorded in government financial records may deviate considerably from consumption of fixed capital as depreciation is normally calculated using the original costs of fixed assets. See 'Consumption of fixed capital'.

Exports of goods and services

The value of goods exported and amounts receivable from non-residents for the provision of services by residents.

Employed persons

Employed persons include all persons aged 15 years and over who, during the reference week:

  • worked for one hour or more for pay, profit, commission or payment in kind in a job or business, or on a farm (comprising employees, employers and own account workers); or worked for one hour or more without pay in a family business or on a farm (i.e. contributing family workers); or
  • were employees who had a job but were not at work and were:
    • away from work for less than four weeks up to the end of the reference week; or
    • away from work for more than four weeks up to the end of the reference week and received pay for some or all of the four week period to the end of the reference week; or
    • away from work as a standard work or shift arrangement; or
    • on strike or locked out; or
    • on workers' compensation and expected to return to their job; or
  • were employers or own account workers, who had a job, business or farm, but were not at work.

    Final consumption expenditure

    Net expenditure on goods and services by persons, expenditure of a current nature by private non-profit institutions serving households and net expenditure on goods and services (which does not result in the creation of fixed assets or inventories or in the acquisition of land and existing buildings or second-hand assets) by public authorities other than those classified as public corporations. See 'Final consumption expenditure - general government' and 'Final consumption expenditure - households'.

    Final consumption expenditure - general government

    Net expenditure on goods and services by public authorities, other than those classified as public corporations, which does not result in the creation of fixed assets or inventories or in the acquisition of land and existing buildings or second-hand assets. It comprises expenditure on compensation of employees (other than those charged to capital works, etc.), goods and services (other than fixed assets and inventories) and consumption of fixed capital. Expenditure on repair and maintenance of roads is included. Fees, etc., charged by general government bodies for goods sold and services rendered are offset against purchases. Net expenditure overseas by general government bodies and purchases from public corporations are included. Expenditure on defence assets that are used in a fashion similar to civilian assets is classified as gross fixed capital formation; expenditure on weapons of destruction and weapon delivery systems is classified as final consumption expenditure.

    Final consumption expenditure - households

    Net expenditure on goods and services by persons and expenditure of a current nature by private non-profit institutions serving households. This item excludes expenditures by unincorporated businesses and expenditures on assets by non-profit institutions (included in gross fixed capital formation). Also excluded are maintenance of dwellings (treated as intermediate expenses of private enterprises), but personal expenditure on motor vehicles and other durable goods and the imputed rent of owner-occupied dwellings are included. The value of 'backyard' production (including food produced and consumed on farms) is included in household final consumption expenditure and the payment of wages and salaries in kind (e.g. food and lodging supplied free to employees) is counted in both household income and household final consumption expenditure.

    Final consumption expenditure per capita

    The ratio of final consumption expenditure to an estimate of the resident Australian population. Population estimates use data published in the quarterly publication ABS Australian Demographic Statistics (cat. no. 3101.0).

    Fixed assets

    Produced assets that are used repeatedly, or continuously, in processes of production for more than one year. Fixed assets not only include structures, machinery and equipment and intellectual property products but also cultivated assets such as trees and animals that are used repeatedly or continuously to produce other products such as fruit and dairy products.

    General government sector

    General government consists of all government units and non-market NPIs that are controlled and mainly financed by government. It mainly comprises Commonwealth, State and local government departments, offices and other bodies that are primarily engaged in production of goods and services outside the normal market mechanism. Statistics for this broad sector are broken down into two levels of government (LOG): National government; and State and local government.

    All units that have a national role or function are classified to the National government sector. The fact that a unit is controlled by the Commonwealth Government is prima facie (but not necessarily conclusive) evidence that the unit has a national role or function. The only multi-jurisdictional units currently classified to the National LOG are the public universities which are mainly financed and partly controlled by the Commonwealth Government but are subject to a degree of control by the establishing State or Territory Government. All units that have a State or Territory, or a local, role or function are classified to the State and local government sector.

    Gross domestic product (GDP)

    The total market value of goods and services produced in Australia within a given period after deducting the cost of goods and services used up in the process of production but before deducting allowances for the consumption of fixed capital. Thus gross domestic product, as here defined, is 'at market prices'. It is equivalent to gross national expenditure plus exports of goods and services less imports of goods and services.

    GDP per capita

    The ratio of the chain volume estimate of GDP to the estimated resident population (ERP) of Australia. Population estimates use data published in the quarterly publication ABS Australian Demographic Statistics (cat. no. 3101.0) and ABS projections.

    Gross national expenditure (GNE)

    The total expenditure within a given period by Australian residents on final goods and services (i.e. excluding goods and services used up during the period in the process of production). It is equivalent to gross domestic product plus imports of goods and services less exports of goods and services.

    See 'Real gross domestic income' and 'Gross domestic product (GDP)'.

    Gross national income (GNI)

    This measures the total domestic and foreign value added claimed by residents. GNI comprises Gross Domestic Product (GDP) plus net receipts of primary income from non-resident sources. It is the aggregate value of gross primary incomes for all institutional sectors, including net primary income receivable from non-residents. Gross National Income was formerly called gross national product (GNP).

    Gross national income (GNI) per capita

    The ratio of gross national income (GNI) to the estimated resident population (ERP) of Australia. Population estimates use data published in the quarterly publication Australian Demographic Statistics (cat. no. 3101.0).

    Gross value added (GVA)

    The value of output at basic prices minus the value of intermediate consumption at purchasers' prices. The term is used to describe gross product by industry and by sector. Basic prices valuation of output removes the distortion caused by variations in the incidence of commodity taxes and subsidies across the output of individual industries.

    See 'Industry gross value added (IGVA)'.

    Household sector (National Accounts basis)

    Includes all non-financial unincorporated enterprises that are owned and controlled by households and are not included in the private non-financial corporations sector. Most business partnerships and sole proprietorships are included because their owners combine their business and personal affairs and do not keep separate accounts for their business operations and therefore do not qualify as quasi-corporations. Although private non-market non-profit institution serving households, such as clubs and charities, are included in a separate sector in the Standard Economic Sector Classification of Australia (SESCA) (ABS cat. no. 1218.0), in this publication such non-profit institutions are included with the households sector because separate information about their financial operations is not available.

    A household is a small group of persons who share the same living accommodation, who pool some, or all, of their income and wealth and who consume certain types of goods and services collectively, mainly housing and food. Households include group households of unrelated persons, same-sex couple households, single-parent households as well as one-person households. A household usually resides in a private dwelling (including caravans etc. in caravan parks). Persons usually resident in non-private dwellings, such as hotels, motels, boarding houses, jails and hospitals, are not included in household estimates. This definition of a household is consistent with the definition used in the Census. The number of households can be either based on count or estimated resident population.

    Industry gross value added (IGVA)

    The total value of goods and services produced by an industry, after deducting the cost of goods and services used up in the process of production. The sum of IGVA across industries differs from GDP to the extent of taxes less subsidies on products.

    See 'Gross value added (GVA)' and 'Gross domestic product (GDP)'.

    Imports of goods and services

    The value of goods imported and amounts payable to non-residents for the provision of services to residents.

    Intermediate consumption

    Consists of the value of the goods and services used as inputs by a process of production, excluding compensation of employees and the consumption of fixed capital.

    National net saving

    Calculated as the sum of the net saving of each of the resident sectors – households and unincorporated enterprises, non-financial corporations, financial corporations and general government. Also referred to as net saving.

    Net saving

    See 'National net saving'.

    Net saving - corporations

    This is equal to the gross income receivable by corporations less income payable and consumption of fixed capital. Income receivable by corporations includes gross operating surplus, property income and current transfers receivable. Income payable includes property income and current transfers (including income taxes) payable.

    Net saving - general government

    The surplus of general government gross income over current use of income. Current use of income includes final consumption expenditure and current transfers (interest and other property income payable, social assistance benefits payments to residents, transfers to non-profit institutions, subsidies, etc.).

    Net saving - households

    Is equal to gross household disposable income less household final consumption expenditure and consumption of fixed capital. Household saving is estimated as the balancing item in the households income account. It includes saving through life insurance and superannuation funds (including net earnings on these funds), increased equity in unfunded superannuation schemes and the increase in farm assets with marketing boards.

    OECD

    Organisation for Economic Co-operation and Development.

    Population in work

    The ratio of the number of employed persons to an estimate of the resident Australian population. Population estimates use data published in the quarterly publication ABS Australian Demographic Statistics (cat. no. 3101.0).

    Purchasing power parity (PPP)

    For international comparison purposes, income and GDP estimates are adjusted for purchasing power parity i.e. the time it takes a person on an average wage to purchase an average basket of goods and services. For example, incomes might be higher in a given country, but prices might also be higher.

    Real

    It is possible to deflate measures of income and wealth by a price index in order to measure purchasing power. By comparing the deflated value of the income with the actual value of the income, it is possible to determine by how much the real purchasing power of the income or wealth has increased or decreased. Aggregates deflated in this way is generally described as "real". Real income or wealth is measured with reference to the price level in some selected reference year. Thus real values cannot exist in isolation, rather they vary depending upon the choice of reference year.

    Real gross domestic income

    Calculated by:
  • taking the volume measure of gross national expenditure (GNE)
  • adding exports of goods and services at current prices deflated by the implicit price deflator for imports of goods and services
  • deducting the volume measure of imports of goods and services
  • adding the current price statistical discrepancy for GDP(E) deflated by the implicit price deflator for GDP.

    In the derivation of the aggregate all of the adjustments are made using the chain volume aggregation method used to derive all of the ABS chain volume estimates.

    See 'Gross national expenditure (GNE)', 'Real net national disposable income (RNNDI)' and 'Real gross state income (RGSI)'.

    Real gross national income

    Calculated by adjusting real gross domestic income for the real impact of primary income flows (property income and labour income) to and from overseas.

    Real gross state income (RGSI)

    This is the total value of goods and services produced in a state or territory, after deducting the cost of goods and services used up in the process of production and taking into account changes in state terms of trade. The comparable Australian estimate is real gross domestic income.

    See 'Real gross domestic income'.

    Real gross state income (RGSI) per capita

    The ratio of RGSI to an estimate of the resident Australian population. Population estimates use data published in the quarterly publication ABS Australian Demographic Statistics (cat. no. 3101.0).

    Real net national disposable income (RNNDI)

    Calculated by:
  • taking real gross domestic income
  • deducting real incomes payable to the rest of the world
  • adding real incomes receivable from the rest of the world
  • deducting the volume measure of consumption of fixed capital.

    Real incomes payable and receivable are calculated by dividing the nominal income flows by the implicit price deflator for gross national expenditure. In the derivation of the aggregate, all of the adjustments are made using the chain volume aggregation method used to derive all of the ABS chain volume estimates.

    See 'Real gross domestic income'.

    Real net national disposable income (RNNDI) per capita

    The ratio of RNNDI to the estimated resident population (ERP) of Australia. Population estimates use data published in the quarterly publication ABS Australian Demographic Statistics (cat. no. 3101.0). See 'Real net national disposable income (RNNDI)'.

    Terms of trade

    Calculated by dividing the export implicit price deflator by the import implicit price deflator and multiplying by 100.
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