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9.1. Consumption is defined as the 'using up' of services and non-durable consumer goods that have a single use or an otherwise limited life (i.e. less than one year).
9.6. Consumption is classified according to whether the consumption items are purchased by the household in return for money or whether they have been received by the household as in-kind receipts.
Final consumption expenditure
9.9. Final consumption expenditure is defined as the 'using up' of services and non-durable goods that are acquired in the market place in return for money and have been purchased during the reference period. It includes the value of indirect taxes paid on purchased goods.
9.10. This final consumption expenditure is classified according to the type of goods and services consumed. The classification used in ABS expenditure surveys is that set out in the ABS Household Expenditure Survey Commodity Code List (HESCCL). (Note that the definition here differs, however, from the HESCCL in that it excludes all expenditure on consumer durables that are, in the ICW framework, classified as part of acquisition of non-financial assets.)
9.14. Given the necessity of a common reference period for all household flows, a decision has to be made as to the timing of the consumption. Should the consumption be deemed to have taken place when the items are:
9.15. Taken over the longer period, these occurrences of acquiring, paying for, and consuming the goods will theoretically coincide. For shorter periods, however, these three occurrences may not all occur within the same reference period.
9.16. The first approach of using the time the goods and services are actually consumed causes practical problems. Even non-durable goods are frequently consumed over an extended period e.g. the flour or coffee is not all used up as soon as the packet is opened. Practical problems of collecting data on a consumption basis rule out this approach.
9.17. The second and third approaches of payment and acquisition will coincide for many purchases when cash is paid out for the goods and services. For example, if a newspaper is purchased and paid for over the counter, then the two approaches will give identical results.
9.18. The approaches will not coincide, however, where goods and services are purchased using credit. For example, if a household acquires newspapers daily but only pays the bill every three months, then the two events will not coincide in the short reference periods used in household surveys.
9.19. The ABS recommends the payment approach wherever possible. This approach will better serve the balancing of household accounts in a household income and expenditure survey where clients may wish to derive, say, a residual measure of household saving.
9.20. If, however, this approach is not practical, then the alternative acquisitions approach may be used. The balancing of household accounts will, however, require that some adjustments will need to be made to the household accounts for the above purpose.
Consumption of in-kind receipts from outside the household
9.21. Consumption of in-kind receipts from outside the household is defined as the 'using up' of goods and services that are acquired from outside the household without the intervention of money.
9.24. In-kind consumption is classified in the same manner as was income in-kind, i.e. goods and services acquired via:
9.25. For some analyses, classification according to categories set out for market goods and services in the HESCCL may also be required.
Consumption of goods and services provided from within the household
9.26. Consumption of services provided from within the household are defined as the services provided by household fixed assets and by unpaid household work. Household assets are defined as all durable goods owned or being purchased by the household, including the dwelling.
9.27. Consumption of household services are classified as follows:
Current transfers outlaid (excluding taxes)
9.28. Current transfers outlaid relate to cash and goods disbursed to government, to other households and private institutions or to charitable organisations for consumption by those other entities.
9.31. Current transfers outlaid may be classified according to the nature of the recipient and according to whether the transfers are compulsory or otherwise:
9.32. For some analyses it may be desirable to deduct compulsory private transfers (along with taxes) from the gross income of households to derive a measure of net disposable income after all compulsory transfers have been dispersed. This would also overcome the problem of double counting of these transfers at national aggregate level noted in Other current transfers, paragraph 8.84.