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2 The time series for financial flows, capital accounts and household balance sheet starts from September quarter 1988, the related financial balance sheets for the financial flows start in June quarter 1988. The household analytical measures of income, consumption, saving and wealth start from September quarter 1989. All estimates are in current prices, and the capital accounts are presented in original, seasonally adjusted and trend terms.
CONCEPTS, SOURCES AND METHODS
3 Australia's national accounts statistics are compiled in accordance with international standards contained in the System of National Accounts. The standards governing national accounts are agreed internationally and detailed in the "System of National Accounts 2008" (2008 SNA). 2008 SNA is endorsed by the five major international economic organisations: the United Nations, the International Monetary Fund, the OECD, the World Bank and the European Commission. The current complete version of 2008 SNA is available on-line: http://unstats.un.org/unsd/nationalaccount/sna2008.asp
4 Australia's application of the 2008 SNA standards is described in Australian System of National Accounts: Concepts, Sources and Methods (cat. no. 5216.0). This publication outlines the concepts and definitions, describes sources of data and methods used to derive quarterly estimates published in this publication. The chapters related to the estimates in this publications are as follows:
5 For more detailed information on how the 2008 SNA institutional units and sectors have been adapted to Australian conditions, please see in the Standard Economic Sector Classification of Australia, (SESCA) 2008 (cat. no. 1218.0).
SEASONALLY ADJUSTED AND TREND ESTIMATES
6 Data that are affected by seasonal factors are adjusted to remove the effects of these factors. It is important to note that the methods used in seasonal adjustment do not force the sum of the adjusted current price estimates for each quarter of a year to equal the original annual total.
7 Given the qualifications regarding the accuracy and reliability of the quarterly national accounts, the ABS considers that trend estimates provide the best guide to the underlying movements, and are more suitable than either the seasonally adjusted or original data for most business decisions and policy advice.
8 A trend estimate is obtained by removing the irregular component from the seasonally adjusted series. For estimates in this publication, it is calculated using a centred 7-term Henderson moving average of the seasonally adjusted series. The procedure is designed to minimise distortions in the trend level, turning point shape and timing of turning points. Estimates for the three most recent quarters cannot be calculated using this centred average method; instead an asymmetric average is used. This can lead to revisions in the trend estimates for the last three quarters when data become available for later quarters, even if none of the original data for earlier quarters has changed.
9 The higher the 'irregular' component in a series, then the greater the likelihood that trend estimates for the latest quarters will be revised as more observations become available. However, it is important to note that this does not make the trend series inferior to the seasonally adjusted or original series. In fact, in such cases the effect of the irregular component on overall movements is likely to be even more in the seasonally adjusted and the original estimates than in the trend series.
10 Trend estimates for aggregates such as GDP are derived directly, rather than as the sum of components. As a result, the sum of the trend estimates of individual components of a particular aggregate will not sum to the overall trend estimate of the aggregate for the latest three quarters. This approach provides higher quality trend estimates for key aggregates, particularly GDP.
11 Most figures are subject to revision as more complete and accurate information becomes available.
SPECIFIC INFORMATION RELATED TO FINANCIAL FLOWS AND BALANCE SHEETS
12 Financial accounts of various types - which are also called flow of funds statistics - are published by many Organisation for Economic Cooperation and Development (OECD) countries, including the United States of America (from 1945), the United Kingdom (from 1952) and Canada (from 1962). In Australia, the Reserve Bank produced annual flow of funds accounts for the reference years 1953-54 to 1988-89. The final edition of these was published in the Reserve Bank Bulletin, November 1989. The Australian Bureau of Statistics (ABS) published quarterly estimates commencing with experimental estimates of inter-sectoral financial transactions for the March and June quarters 1989. From the June 1998 reference quarter, the financial accounts dataset was produced according to revised international standards, the System of National Accounts, 1993 (1993 SNA). From the September 2009 quarter, Australian National Accounts: Finance and Wealth (cat. no. 5232.0) has been produced according to the 2008 SNA.
13 The Australian Financial Accounts shown here are not directly comparable with the flow of funds estimates which were previously published by the Reserve Bank of Australia (RBA). Therefore, the ABS series should not be used as an extension of the RBA series. The main differences between the two series are as follows.
14 Deficiencies in the coverage of financial surveys: the ABS does not presently collect balance sheet information from small non-financial corporations, solicitors' and similar trust funds, and financial auxiliaries (such as stock brokers), some of which buy securities on their own account. Although broad information reported by professional fund managers includes funds they invest on behalf of such investors, the fund managers provide asset profiles only for monies they invest on behalf of pension funds. If the coverage deficiency were not corrected it would cause errors in some of the estimates for the household sector. As an interim measure the ABS has made estimates for these unreported assets using the partial information reported by fund managers.
15 The ABS is aware of the following deficiencies in reported data:
16 Problems in estimating financial transactions from balance sheet information: the revaluation data available to the ABS for frequently traded securities are of reasonable quality. These include estimates for listed shares and Commonwealth and State government bonds/bills. The revaluation data available for securities that are less frequently traded, such as unlisted shares, are of only fair quality.
17 Accuracy of the estimates, conclusion: despite the described problems, the ABS considers that these statistics are of an acceptable standard for the purposes they are intended to serve. An indication of the overall quality of the data can be gained by considering the levels information for the household sector, which are judged by the ABS to be the poorest quality data in the publication. All the liabilities data are good quality counterpart data from the asset records of financial institutions. In addition, households' deposit and loan assets are measured directly elsewhere and 'counterpartied' into this sector. Only households' holdings of tradeable securities are derived residually and so reflect errors and omissions in the estimates for the other sectors. Households' holdings of shares are the lowest grade estimate in these statistics. A high proportion of the household data are therefore of high quality despite being considered of poorer quality than the balance of the statistics.
NOTES TO ASSIST INTERPRETATION OF SELECTED TABLES
18 An explanation of how to interpret some statistical tables is given below:
19 Table 1 (credit market outstandings) of the financial accounts shows the key liabilities of each of the domestic non-financial sectors. Included are borrowings, debt securities and equities.
20 All 'off-market' funding arrangements are excluded. For example:
21 Excluded also are non-conventional instruments, including:
22 This table, called demand for credit, is the flow equivalent of table 1 and so has the same exclusions. It shows quarterly net raisings of debt and equity on conventional credit markets worldwide by each of the non-financial domestic sectors. The aggregate at the head of the table is a measure of the primary credit flow in Australia, that is, credit which is to be used primarily to finance non-financial outlays such as investment in plant and equipment.
Tables 3, 5, 7, 11, 13, 26, 28, 30, 32, 36
23 The capital accounts shows the funds accumulated during the period by each of the sectors for the purchase of assets (gross saving and capital transfers) together with estimates of expenditure on capital accumulation and the resulting positive or negative balance (total net capital accumulation and net lending (+)/net borrowing (-)). A surplus in this account is called net lending; by convention a deficit (i.e. net borrowing) is shown as negative net lending.
Tables 4, 6, 8-10, 12, 14-25, 27, 29, 31, 33, 37
24 These tables show the level (stock) and flows of financial assets and liabilities of each domestic subsector of the economy at market prices. Since the aim of these tables is to present an analytically useful financial profile of each of the subsectors, they are consolidated to eliminate holdings of financial instruments by the subsector which issued them. For example, the block bonds etc. in the table for central borrowing authorities (table 23) shows the stock of bonds etc. held as assets by this subsector. A central borrowing authority may be expected to hold long-term debt securities issued by other central borrowing authorities but these holdings are eliminated on consolidation (and the outstanding liability of this subsector for this instrument is reduced accordingly). In contrast, in the table called the bonds market (table 43) a different basis of consolidation is used and these intra-sector holdings are shown (and shown to be substantial).
25 In these tables, the primary classification is the financial instrument (e.g. other deposits) and the secondary classification is counterparty sector (e.g. other deposits accepted by: banks).
26 Statistics for the financial assets and liabilities of subsectors of the non-financial public sector are broadly comparable with statistics published in Government Finance Statistics, Australia (cat. no. 5519.0.55.001).
27 The transaction show inter-sectoral transactions in financial assets and liabilities classified by financial instrument. Most instruments are disaggregated to show the subsector of the counterparty. For example, the loans and placements in the table for other depository corporations (table 17) shows the growth (or contraction) in lending by these financial institutions to the other subsectors. In these tables, an entry without an arithmetic sign indicates a net increase in either financial assets or liabilities. An entry with a negative sign indicates a net decrease in financial assets or liabilities.
28 The items (i) net lending (+)/net borrowing (-), (ii) net errors and omissions and (iii) change in financial position provide some analyse of the interrelationships between saving, capital formation and financial transactions in the economy. In concept, a sector's net lending (+)/net borrowing (-) (item from the capital account) should be the same as its net change in financial position (in the financial account). Because this equality is unlikely to be realised in practice (due to the use of different sources of information to derive each aggregate) the item net errors and omissions is included to show the difference between these alternative estimates of the same concept. This difference can be caused by errors and omissions in both the capital account and the financial account.
Table 37: Financial assets and liabilities of the rest of world
29 The items (i) net lending (+)/net borrowing (-), (ii) net errors and omissions and (iii) change in financial position provides an alternative presentation of Australia's quarterly balance of payments statistics, as published in Balance of Payments and International Investment Position, Australia (cat. no. 5302.0). In the financial accounts, these transactions are presented from the point of view of non-residents. Net lending (+)/net borrowing (-) is the balance of payments current account plus capital account (with opposite arithmetic sign), net errors and omissions (with opposite sign) and the net change in financial position is the balance of payments financial account. It may also be found as change in net international investment position reflecting transactions.
30 Australia's net international investment position-level of investment at end of period and transaction during the period as published in Balance of Payments and International Investment Position, Australia (cat. no. 5302.0) can be derived from table 37. It is equal to total financial assets (of non-residents) less total liabilities (of non-residents).
31 When comparing the data in tables 14 and 15 as published in cat. no. 5302.0 and data in table 37 in this publication, it is important to note the following differences.
32 The above points are illustrated in the example below:
33 These tables present - as far as possible - the whole market for each of the financial instruments, that is, the level and transactions of financial assets and liabilities at market prices for each instrument. These tables are less consolidated than sectoral and subsectoral financial flows and balance sheets. Claims between enterprises within the same company group are eliminated; claims between enterprises which are outside the company group but inside the same subsector are not eliminated. For example, claims between a bank and its banking subsidiaries are eliminated on consolidation but not claims between banking groups.
34 These tables shows all transactions and outstanding liabilities of residents of Australia for that financial instrument. Liabilities, for example, bonds, issued in international markets are included with those issued in the domestic market. This total is then dissected into the several sectors which issued this instrument - the primary classification and under each of these lines there is an indented block showing the counterparty sectors which hold these instruments as assets. Tables 42 and 43 relating to the one-name paper and bond markets respectively, also split the total liability between the total issued in Australia and the total issued offshore.
RELATED PRODUCTS AND SERVICES
35 Related ABS publications which may also be of interest include:
36 Current publications and other products released by the ABS are freely available from the ABS website <https://www.abs.gov.au>, the website contains a link to the daily Release Advice which details products to be released in the weeks (months) ahead. A national accounts page is available on the website, select: National Statistics - National Accounts on the left hand side of the home page. This page provides direct links to all national accounts related data and publications, recent national accounts changes and forthcoming events, links to relevant websites and a range of other information about the Australian National Accounts.
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