5512.0 - Government Finance Statistics, Australia, 2010-11 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 17/04/2012   
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TECHNICAL NOTE STATEMENT OF STOCKS AND FLOWS 2010–11


2010–11 STATEMENT OF STOCKS AND FLOWS

1 The international Government Finance Statistics (GFS) standard as promulgated by the International Monetary Fund (IMF) recommends that opening and closing 'stock' values be reconciled with all 'flows' occurring throughout the year. The standard is based on an analytical framework in which all changes in the values of stocks from one year to the next can be fully explained by the flows that have occurred during that year.

2 Institutional units hold assets (financial and non–financial) and incur liabilities (which by definition are financial). The level of these assets and liabilities at any point in time is the stock. The difference between assets and liabilities is net worth, which is a measure of the 'wealth' of units or of government. Anything which causes a change in these stocks of assets and liabilities is a flow. Flows are disaggregated into transactions and 'other economic flows'. A transaction is, for the most part, an interaction between two units by mutual agreement, whereas an 'other economic flow' is a change in the volume or value of a stock of a unit not resulting from a transaction.

3 By definition, the value of a stock at the end of a period is the sum of the stock at the beginning of the period and all the flows affecting that stock which took place during the period, i.e. S1 = S0 + F1, where S0 and S1 represent the values of a specific stock at the beginning and end of an accounting period, and F1 represents the net value of all flows during the period relevant to that particular stock.

4 Statistics on transactions giving rise to revenues and expenses are published as part of the GFS operating statement. Revenues are defined as transactions which increase net worth whereas expenses are transactions which decrease net worth. The difference between revenues and expenses, therefore, represents the change in net worth due to transactions. This equates to the GFS net operating balance.

5 Other economic flows can be disaggregated into movements in asset/liability values resulting from price changes ('revaluations') and those resulting from volume changes ('other volume changes').

6 Revaluations result from changes to the value of the assets and liabilities held. Revaluations can accrue to financial assets such as bonds and bills, shares and other forms of equity, as well as non–financial assets such as land and buildings.

7 Other volume changes refer to events that include:

  • the recognition or de–recognition of assets or liabilities on the balance sheet – e.g. when resources become economically exploitable, or when an asset is no longer providing an economic benefit, and so is removed from the balance sheet
  • changes in the quantity or quality of the existing asset – these typically result from catastrophic losses through natural disasters, changes in the volume of natural assets such as fish or forest stocks, creation, discovery, cancellation or seizure of assets, or quality differences arising from events such as a change in the expected life of the asset
  • changes in the classification of assets – these usually arise when the use of an asset changes, e.g. if the use of a parcel of public land changes from recreational use to industrial use.

8 The net effect of all revaluations and other volume changes occurring through the year represents the change in net worth due to other economic flows.

9 Since the values of stocks at the end of a year must be equal to their values at the start of a year, plus all transactions and other economic flows affecting them during the year, it follows that the total change in net worth during a given year is equal to the change in net worth due to transactions, plus the change in net worth arising from other economic flows.

10 When working with reported data, it is often assumed that the difference between opening and closing net worth and the change in net worth due to transactions is attributable to the change in net worth due to other economic flows (i.e. other economic flows is effectively used as a balancing item). However, to ensure data quality it is necessary to independently collect and calculate the change in net worth due to other economic flows. In situations where the reported data do not add through, it is not necessarily the case that the data quality issue is in the other economic flows component of the framework. Where data quality is high throughout the reported data set, the change in net worth as derived via the balance sheet will be consistent with the sum of transaction and other economic flows.


COMMONWEALTH GENERAL GOVERNMENT – STATEMENT OF STOCKS AND FLOWS

11 The Commonwealth Government publishes a statement of other economic flows for the general government sector. This statement outlines all revaluations and other volume changes occurring throughout the year, which allows a full reconciliation of stocks and flows. This information allows the Australian Bureau of Statistics (ABS) to disaggregate other economic flows into price and volume effects. While some states also publish a statement of other economic flows, the majority currently do not. For local government, information on the components of other economic flows are also generally unavailable. Accordingly, the ABS does not have enough information on which to disaggregate other economic flows into its two components across the state and local levels of government.

12 The statement of stocks and flows for the Commonwealth general government sector is presented in Table 1. During 2010–11 the net worth of the Commonwealth general government sector decreased by $53,470m. This was the result of a GFS net operating balance (which reflects the change in net worth due to transactions) of –$45,336m combined with revaluations of –$8,642m. The key contributor to revaluations on the liabilities side was revaluations to unfunded superannuation and other employee entitlements ($5,233m). Revaluations on the assets side of the statement were driven by equity (–$3,325m); investments, loans and placements ($2,959m); and advances paid (–$2,884m).

TABLE 1. COMMONWEALTH, General Government – Statement of Stocks and Flows

Opening Stocks as at 1 July 2010
Transactions
Revaluations
Other Volume Changes(a)
Closing Stocks as at 30 June 2011
$m
$m
$m
$m
$m

Assets
Financial assets
Cash and deposits
1 816
619
2 435
Advances paid
28 163
5 422
–2 884
30 701
Investments, loans and placements
102 910
–7 194
2 959
98 675
Other non–equity assets
53 682
–1 745
51 937
Equity
52 074
1 606
–3 325
50 355
Total
238 645
454
–4 996
234 103
Non–financial assets
Land and fixed assets
85 171
3 170
–1 676
508
87 173
Other non–financial assets
1 448
2 785
–2 474
1 759
Total
86 619
5 954
–4 149
508
88 932
Total
325 264
6 408
–9 145
508
323 035
Liabilities
Deposits held
3 523
95
–4
3 614
Advances received
Borrowing
171 375
44 487
–3 557
212 305
Unfunded superannuation and other employee entitlements
151 416
5 233
156 649
Other provisions
13 255
–815
12 440
Other non–equity liabilities
28 318
7 162
–1 361
34 119
Total
367 887
51 744
–504
419 127
GFS Net worth
42 623
45 336
8 642
508
96 093
Net debt
42 010
. .
. .
. .
84 108
Net financial worth
–129 242
. .
. .
. .
–185 024

. . not applicable
– nil or rounded to zero (including null cells)
(a) Source: Department of Finance and Deregulation, Consolidated Financial Statements for the Year Ended 30 June 2011, December 2011



STATE AND LOCAL GENERAL GOVERNMENT – STATEMENT OF STOCKS AND FLOWS

13 Both the state and local general government Statements of Stocks and Flows (Table 2 and Table 3 respectively) highlight the significance of other economic flows. The net worth of state governments increased by $24,582m during 2010–11, driven by $22,489m from other economic flows. On the asset side the largest contributors were equity ($18,392m) and land and fixed assets ($5,796m). The most significant contributor to liabilities was borrowing ($9,949m).

14 The net worth of local government increased by $1,005m in 2010–11. Other economic flows contributed –$3,175m to this movement.

TABLE 2. STATE, General Government – Statement of Stocks and Flows

Opening Stocks as at 1 July 2010
Transactions
Other Economic Flows
Closing Stocks as at 30 June 2011
$m
$m
$m
$m

Assets
Financial assets
 Cash and deposits
12 531
3 965
1 439
17 935
 Advances paid
5 775
–3 390
3 668
6 053
Investments, loans and placements
48 068
4 672
457
53 197
Other non–equity assets
19 052
192
2 118
21 362
Equity
253 061
–5 318
18 392
266 135
Total
338 488
122
26 072
364 682
Non–financial assets
Land and fixed assets
513 426
16 453
5 796
535 675
Other non–financial assets
2 068
979
–983
2 064
Total
515 494
17 431
4 815
537 740
Total
853 981
17 553
30 888
902 422
Liabilities
Deposits held
3 072
1 126
–293
3 905
Advances received
3 497
–110
1
3 388
Borrowing
60 227
10 570
9 949
80 746
Unfunded superannuation and other employee entitlements
134 276
–123
2 293
136 446
Other provisions
7 830
530
8 360
Other non–equity liabilities
19 656
3 996
–4 082
19 570
Total
228 558
15 459
8 399
252 416
GFS Net worth
625 424
2 094
22 489
650 006
Net debt
422
. .
. .
10 853
Net financial worth
109 930
. .
. .
112 266

. . not applicable
– nil or rounded to zero (including null cells)

TABLE 3. LOCAL, General Government – Statement of Stocks and Flows

Opening Stocks as at 1 July 2010
Transactions
Other Economic Flows
Closing Stocks as at 30 June 2011
$m
$m
$m
$m

Assets
Financial assets
Cash and deposits
7 978
319
–593
7 704
Advances paid
4
–37
39
6
Investments, loans and placements
6 515
324
3 401
10 240
Other non–equity assets
3 172
5 060
–4 741
3 491
Equity
2 477
1
3 414
5 892
Total
20 146
5 667
1 520
27 333
Non–financial assets
Land and fixed assets
306 415
4 474
–11 554
299 335
Other non–financial assets
1 328
75
197
1 600
Total
307 743
4 548
–11 355
300 936
Total
327 889
10 215
–9 836
328 268
Liabilities
Deposits held
392
37
429
Advances received
58
4
–2
60
Borrowing
8 696
888
–1 791
7 793
Unfunded superannuation and other employee entitlements
2 572
134
–46
2 660
Other provisions
119
218
–195
142
Other non–equity liabilities
3 693
4 792
–4 664
3 821
Total
15 530
6 036
–6 661
14 905
GFS Net worth
312 359
4 180
3 175
313 364
Net debt
–5 351
. .
. .
–9 667
Net financial worth
4 616
. .
. .
12 428

. . not applicable
– nil or rounded to zero (including null cells)


15 For more information on the statement of stocks and flows, refer to Table 2.1 in Australian System of Government Finance Statistics: Concepts, Sources and Methods (cat. no. 5514.0.55.001) electronic version or (cat. no. 5514.0) pdf version and Chapter 4 of the International Monetary Fund's Government Finance Statistics Manual 2001.