8221.0 - Manufacturing Industry, Australia, 2006-07 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 26/08/2008 Final
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GLOSSARY
If the client is not a manufacturing business, no data are reported by the client as it is excluded from the manufacturing collection. Commission expenses Payments to other businesses and self-employed persons for work done or sales made on a contract or commission basis using materials supplied by the business. Payments to persons paid by commission without a retainer are also included. Excludes commissions paid to persons who receive a retainer, commission paid to the business' own employees, and in-house printing expenses. Cost of sales The sum of purchases, selected expenses and opening inventories less closing inventories. Any capitalised purchases are excluded. Current prices Estimates at current prices are valued at the prices of the period to which the observation relates. For example, estimates for 2006-07 are valued using 2006-07 prices. This contrasts to chain volume measures, where the prices used in valuation refer to the prices of a previous period. Depreciation and amortisation Depreciation/amortisation allowed on tangible and intangible assets. Includes, for lessees only, depreciation/amortisation in respect of finance leases. Disposal of assets Proceeds from the sale of tangible assets (plant, machinery, equipment, land, dwellings, other buildings and structures), and intangible assets (such as patents, licences and goodwill). Earnings before interest, tax, depreciation and amortisation (EBITDA) Profit prior to the deduction of net interest (interest income minus interest expenses), income tax, depreciation and amortisation. Items classifiable to other income are also excluded. Employer contributions into superannuation Includes all employer contributions to superannuation funds (including the employer productivity contribution) and provisions for employer contributions to superannuation funds. Also includes expenses relating to employer funded defined benefit schemes. Employee contributions and salary sacrifice contributions are excluded. Note that salary sacrifice contributions were included in estimates of this item in previous issues of this publication. Employment at end of June Number of persons working for manufacturing businesses during the last pay period ending in June of the given year. Includes working proprietors and partners, employees absent on paid or prepaid leave, employees on workers' compensation who continue to be paid through the payroll, and contract workers paid through the payroll. Excludes persons paid by commission only, non-salaried directors, volunteers and self-employed persons such as consultants and contractors. In order to produce data by state and territory, businesses which received mail out questionnaires were also asked to report employment (as well as wages and salaries, and sales of goods and services) for each state and/or territory in which they operated. For details, see Explanatory Notes paragraph 43. For details of how employment estimates have been derived, see Technical Note 1 paragraph 19. Enterprise An institutional unit comprising:
Enterprise group A unit covering all the operations in Australia of one or more legal entities under common ownership and/or control. It covers all the operations in Australia of legal entities which are related in terms of the current Corporations Law (as amended by the Corporations Legislation Amendment Act 1991), including legal entities such as companies, trusts and partnerships. Majority ownership is not required for control to be exercised. Exports as a proportion of sales of goods produced For an individual business, this represents the percentage of sales of goods produced by the business (or for it on commission) which are exported (or are intended for export) outside Australia by the business or by its agent. (In table 4.1, the proportion is calculated by dividing the value of goods exported by the value of sales of goods produced by all manufacturing businesses, not just the aggregated value for those units which exported.) Because the ATO data do not contain this export information, businesses whose contribution to manufacturing estimates was sourced from BAS data do not contribute to these export data. The effect of the exclusion of these businesses is likely to be minimal, in view of their small contribution to overall estimates. These data also exclude those businesses which operated during the given reference year but were not operating at 30 June of that reference year. Freight and cartage expenses Excludes the cost of delivery by own vehicles and employees, as well as overseas freight and cartage on goods exported, and payments to couriers. Fringe benefits tax Fringe benefits tax is payable by employers when certain benefits in excess of normal wages or salaries (e.g. free or discounted goods or services) are received by their employees (or associates of employees) in connection with their employment. Funding from government for operational costs Funding from federal, state and/or local government for operational costs (e.g. wages and salaries, rent, food). Includes bounties, subsidies, export grants, apprenticeship and traineeship schemes, and amounts reimbursed under the Australian Government's Energy Grants (Fuel Tax Credits) Scheme. Excludes funding from government for specific capital items. Gross fixed capital formation Gross fixed capital formation is measured by the total value of a producer's acquisitions, less disposals, of fixed assets during the reference period, plus certain additions to the value of non-produced assets realised bythe productive activity of institutional units. Fixed assets are tangible or intangible assets produced as outputs from processes of production that are themselves used repeatedly or continuously in other processes of production for more than one year. The derivation of GFCF is as follows: Industry class The structure of ANZSIC comprises four levels, ranging from industry division (broadest level) to industry class (finest level). Activities are narrowly defined within the industry class level, which is identified by a four-digit code, e.g. Industry Class 1351 Clothing manufacturing. Usually, an activity is primarily defined to one class. However, some activities may be primary to more than one class. Industry division The structure comprises four levels, ranging from industry division (broadest level) to the industry class (finest level). The main purpose of the industry division level is to provide a limited number of categories which give a broad overall picture of the economy. There are 19 divisions within ANZSIC, each identified by an alphabetical letter, that is, 'A' for Agriculture, forestry and fishing, 'B' for Mining, 'C' for Manufacturing, etc. Industry group This is the intermediate level within each industry division of ANZSIC and is identified by a three-digit code, e.g. Industry Group 135 for Clothing and footwear manufacturing. It gives more detail than the industry subdivision, and is created in a way that groups like industry classes together. Industry subdivision This is the broadest level category within each industry division of ANZSIC and is identified by a two-digit code, e.g. Industry Subdivision 13 for Textile, leather, clothing and footwear manufacturing. Industry subdivisions are built up from industry groups which, in turn, are built up from industry classes. The manufacturing industry subdivisions are:
12 Beverage and tobacco product mfg 13 Textile, leather, clothing and footwear mfg 14 Wood product mfg 15 Pulp, pater and converted paper product mfg 16 Printing (including the reproduction of recorded media) 17 Petroleum and coal product mfg 18 Basic chemical and chemical product mfg 19 Polymer product and rubber product mfg 20 Non-metallic mineral product mfg 21 Primary metal and metal product mfg 22 Fabricated metal product mfg 23 Transport equipment mfg 24 Machinery and equipment mfg 25 Furniture and other manufacturing Industry value added (IVA) IVA represents the value added by an industry to the intermediate inputs used by the industry. IVA is the measure of the contribution by manufacturing businesses to gross domestic product. The derivation of IVA is as follows: However, it should be noted that IVA is a measure of economic activity and is not equivalent to operating profit before tax (OPBT). Wage and salary expenses and most other labour costs are not taken into account in its calculation, and nor are most insurance premiums, interest expenses or depreciation and a number of lesser expenses (see the entry for total expenses for further details). On the income side, OPBT includes total income whereas IVA only includes sales and service income. Industry value added is related to, but different from, the national accounting variable gross value added. For national accounts purposes, gross value added is calculated by adjusting industry value added to include General Government units and to also account for some other effects. Industry value added per person employed IVA of manufacturing businesses which operated during the given year ended 30 June divided by the number of persons employed by manufacturing businesses during the last pay period ending in June of that same year. Industry value added to selected labour costs IVA of manufacturing businesses which operated during the year ended 30 June 2007 divided by their selected labour costs, i.e. industry value added / selected labour costs. Insurance premiums Premiums for fire, general, accident, public liability, optional third-party and comprehensive motor vehicle insurance, professional indemnity insurance and common law liability. Excludes workers' compensation insurance premiums/costs (included in selected labour costs) and compulsory third party motor vehicle insurance premiums (included in motor vehicle running expenses). Interest coverage The number of times that businesses can meet their interest expenses from their earnings before net interest, tax, depreciation and amortisation (EBITDA), i.e. earnings before interest, tax, depreciation and amorisation / interest expenses. Interest expenses Includes interest paid on loans from banks, finance companies, partners, and related or unrelated businesses, and in respect of finance leases. Also includes interest equivalents such as hedging costs and expenses associated with discounted bills. Excludes bank charges other than interest and capital repayments. Interest income Includes interest received from deposits in banks and non-bank financial institutions, loans, advances, finance leases and earnings on discounted bills. Excludes capital repayments received. Intermediate input expenses For details, see the entry for total expenses. Intermediate inputs Intermediate inputs consist of materials and certain services which are used up in the production process. The calculation is: Inventories - opening/closing The value of all inventories of finished goods (including inventories for resale), work-in-progress (less progress payments billed), raw materials, fuels, and containers, at the beginning and end of the reporting period respectively. Investment rate (value added) The proportion of industry value added (IVA) used to acquire capital, i.e. (capital expenditure / IVA) x 100. Labour costs For the purposes of table 1.2, comprises wages and salaries, employer contributions into superannuation, workers' compensation premiums/costs, fringe benefits tax and payroll tax. Manufacturing business An ABN unit / TAU predominantly engaged in manufacturing activities. The data collected for such units cover all activities of the business (including non-manufacturing activities). Motor vehicle running expenses Includes expenditure on registration fees, compulsory third-party insurance premiums, fuel, and repair and maintenance expenses. Excludes expenses for off-road motor vehicles (e.g. forklifts, mobile plant) and lease payments, optional third party and comprehensive motor vehicle insurance premiums, and depreciation. Net capital expenditure The value of total capital expenditure less proceeds received from the disposal of assets. Opening inventories The value of all inventories of finished goods (including inventories for resale), work-in-progress (less progress payments billed), raw materials, fuels, and containers, at the beginning of the reporting period. Operating profit before tax (OPBT) Profit before extraordinary items are brought to account and prior to the deduction of income tax and appropriations to owners (e.g. dividends paid), i.e. total income - total expenses + change in inventories. Other income Includes dividend income and other income such as net profit (or loss) on the sale of fixed tangible assets, net profit (or loss) resulting from variations in foreign exchange rates/transactions, and funding from federal, state and/or local government for specific capital items. It excludes extraordinary profits or losses, i.e. those not associated with the normal operations of the business and of a non-recurring nature. Other intermediate input expenses Comprises intermediate input expenses less current purchases of goods and materials used in production (i.e. excludes any capitalised purchases). Further detail is included in the entry for total expenses. Other selected expenses Includes expenditure on management fees/charges paid to related and unrelated businesses, bank charges other than interest, audit and other accounting expenses, legal fees, advertising expenses, postal and telecommunication expenses, office supplies and printing expenses, travelling, accommodation and entertainment expenses, staff training, payments for royalties from intellectual property (e.g. patents and copyrights), payments to employment agencies for staff, payroll tax, fringe benefits tax, land tax and land rates, and computer software expenses not capitalised. Some of these expense items are treated as intermediate input expenses in the calculation of industry value added. For details, see the entry for total expenses. Payroll tax A tax levied by state and territory governments on the amount of wages and salaries paid by a business. Excludes Pay as You Go withholding tax. Profit margin The percentage of sales and service income available as operating profit before tax (OPBT), i.e. (OPBT / sales and service income) x 100. Purchases and selected expenses Purchases of goods and materials, rent, leasing and hiring expenses, freight and cartage expenses, motor vehicle running expenses, repair and maintenance expenses, contract, subcontract and commission expenses, and other selected expenses. Purchases of goods and materials Purchases of materials, components, containers, packaging materials, fuels, electricity and water, and purchases of finished goods for resale. Also includes capitalised purchases. Excludes purchases of parts and fuels for motor vehicles but includes fuels for off-road vehicles, such as forklifts and mobile plant. Reference period For each collection year, businesses are asked to report data for the financial year ended 30 June. However, if a business has a different financial year, it is asked to report (apart from employment) for the 12 month period which ends between 1 October of the previous year and 30 September of the current year. This period is then used as a substitute for the financial year ended 30 June. For example, for the 2006-07 collection, a business may have reported data for the year ended 31 December 2006. Rent, leasing and hiring expenses Payments for the rent, leasing and hiring of land, dwellings, other buildings and structures, motor vehicles, plant, machinery and other equipment (including telecommunication equipment). Includes operating lease payments; excludes finance lease payments. Rent, leasing and hiring income See the entry for sales and service income. Repair and maintenance expenses Includes repair and maintenance of computer and communications software and hardware, and repair and maintenance of off-road motor vehicles. Excludes wages and salaries of own employees and the repair and maintenance costs of on-road motor vehicles. Sales and service income Includes: Sales of goods
Income from services
Rent, leasing and hiring income
These are valued net of discounts given and exclusive of goods and services tax (GST). Extraordinary items are also excluded. In order to produce data by state and territory, selected businesses which received mail out questionnaires were also asked to report sales of goods and services (as well as employment and wages and salaries) for each state and/or territory in which they operated. For details, see Explanatory Notes paragraph 43. Sales and service income per person employed The value of sales and service income of manufacturing businesses which operated during the given year end 30 June divided by the number of persons employed by manufacturing businesses during the last pay period ending June of that same year. Sales of goods produced Sales of goods produced (manufactured) by the business (including goods produced for the business on a commission basis). Includes export sales, sales or transfers to related businesses or to overseas branches of the business, progress payments relating to long term contracts if they are billed in the period, and delivery charges not separately invoiced to customers. Excludes excise and duties received on behalf of the Government, sales of assets, interest income, and delivery charges separately invoiced to customers. Exports are valued free on board (f.o.b.), i.e. export freight charges are excluded. Selected expenses See the entry for purchases and selected expenses. Selected labour costs See the entry for total expenses. Selected labour costs per person employed The value of selected labour costs paid by manufacturing businesses which operated during the given year ended 30 June divided by the number of persons employed by manufacturing businesses during the last pay period ending in June of that same year. Standard Institutional Sector Classification of Australia (SISCA) The SISCA is the central classification among ABS Standard Economic Sector Classifications. It is based on the System of National Accounts 1993 (SNA93) institutional sector classification, and comprises the sectors: non-financial corporations, financial corporations, general government, households, non-profit institutions serving households, and rest of the world (which includes only non-resident units, these being excluded from all other sectors). For more information, users should refer to Standard Economic Sector Classifications of Australia (SESCA) (cat. no. 1218.0). Superannuation See the entry for employer contributions into superannuation. Total acquisitions The total capital expenditure on the acquisition of plant, machinery and equipment, dwellings, other buildings and structures, and of other assets (including land and intangible assets). Also included is capital work done for own use. Total expenses For the purposes of calculating economic and accounting variables, expenses incurred by businesses are divided into several categories. However, some expenses are excluded entirely from all such calculations: excluded are capital repayments, costs associated with the transfer of real estate, dividends, donations, export freight charges, extraordinary losses, foreign exchange losses, goods and services tax (GST), excise and duties payable to governments, income tax and other direct taxes, losses on asset sales, and unrealised gains/losses from revaluations of assets. Those expenses used for calculations are categorised as follows: Intermediate input expenses This category covers the major expenses incurred by businesses in producing and distributing goods and services (except labour costs), and comprises two sub-categories of operating expenses: Purchases of goods, materials and services used in production, which include:
Expenses related to the sale of goods and administrative expenses, which include:
Excluded from intermediate input expenses are selected labour costs and other operating expenses as detailed below. Selected labour costs
Other operating expenses Some expenses are excluded from the calculation of intermediate input expenses and selected labour costs, but are included in the calculation of the accounting variable operating profit before tax (OPBT). These expenses include:
Total income Comprises sales and service income, interest income, funding from government for operational costs, and other income (for details, see the entries for these items). Trading profit A measure of profit directly attributable to trading in goods and services. It is derived by subtracting the cost of sales from the value of sales and service income. It should not be inferred that all of this profit is available as surplus, as other expenses such as selected labour costs, depreciation, insurance premiums, natural resource royalties, bad debts and interest have not been taken into account. Also, other income items such as funding from government and interest income have not been included. Type of activity unit (TAU) The TAU is the statistical unit used by the ABS to represent businesses, and for statistics are reported, in cases where the ABN unit is not suitable for ABS statistical needs. The TAU comprises one or more business entities, sub-entities or branches of a business entity within an enterprise group that can report production and employment data for similar economic activities. When a minimum set of data items are available, a TAU is created which covers all the operations within an industry subdivision (and the TAU is classified to the relevant subdivision of the ANZSIC). Where a business cannot supply adequate data for each industry, a TAU is formed which contains activity in more than one industry subdivision. Wages and salaries The gross wages and salaries (including capitalised wages and salaries) of all employees of the business. The item includes severance, termination and redundancy payments, salaries and fees of directors and executives, retainers and commissions of persons who received a retainer, bonuses, and annual and other types of leave. Provision expenses for employee entitlements (e.g. provisions for annual leave and leave bonus, long service leave, sick leave, and severance, termination and redundancy payments) are also included, as are salary sacrificed earnings and remuneration of employees in the form of share based payments and stock options. (Note that in previous issues of this publication, salary sacrificed earnings and remuneration of employees in the form of share based payments and stock options were reported under related expense items. For example, salary sacrificed for superannuation was included in employer contributions into superannuation). Payments related to salary sacrifice and payments to self-employed persons such as consultants, contractors and persons paid solely by commission without a retainer are excluded. The drawings of working proprietors and partners are also excluded. In order to produce data by state and territory, selected businesses which received mail out questionnaires were also asked to provide wages and salaries (as well as employment and sales of goods and services) for each state and/or territory in which they operated. For details, see Explanatory Notes paragraph 43. Wages and salaries per person employed The value of wages and salaries paid by manufacturing businesses which operated during the given year ended 30 June divided by the number of persons employed by manufacturing businesses during the last pay period ending in June of the same year. Workers' compensation premiums/costs Workers' compensation is a compulsory insurance cover to be taken out by all employers, except for self-insured workers, according to legislative schemes to cover employees suffering injury or disease in the course of or arising out of employment. Document Selection These documents will be presented in a new window.
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