5501.0.55.001 - Government Financial Estimates, Australia, 2014-15 Final Quality Declaration 
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 18/11/2014  Final
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1 The main functions of government are the provision of non–market services, the regulation of economic and social conditions, and the redistribution of income between sections of the community. These activities are primarily financed by taxation and are carried out by entities in the general government sector. In addition to this core activity, governments can also own or control enterprises that sell goods or services to the public and which operate largely on a market basis (public non–financial corporations) or engage in financial intermediation (public financial corporations).

2 The term 'Government Finance Statistics' refers to statistics that measure the financial activities of governments and reflect the impact of those activities on other sectors of the economy. The Australian system of Government Finance Statistics (GFS), which is used to derive the statistics presented here, is designed to provide statistical information on public sector entities in Australia classified in a uniform and systematic way.

3 GFS enables policy makers and users to analyse the financial operations and financial position of the public sector at either the level of a specific government, institutional sector or set of transactions. The system is based on international standards set out in the System of National Accounts, 1993 (1993 SNA) and the International Monetary Fund's Government Finance Statistics Manual, 2001 (GFSM 2001).

4 The System of National Accounts has been updated and the System of National Accounts, 2008 (2008 SNA) was endorsed by the United Nations Statistical Commission in February 2009. 2008 SNA was implemented in Australia's National Accounts from September quarter 2009 and this has resulted in two changes to the Australian Bureau of Statistics' (ABS) compilation of GFS. Defence Weapons Platforms (DWP) have been capitalised to align with the 2008 SNA from September quarter 2009 and time series have been revised. This change affected the Commonwealth General Government Operating Statement, Cash Flow Statement and Balance Sheet. The alignment of Special Drawing Rights (SDR) to the 2008 SNA treatment was introduced in the 2009–10 year. SDRs are international reserve assets created by the IMF and allocated to its members to supplement existing reserve assets. This change means that counterpart liabilities are now recorded to match the value of the SDRs allocated by the IMF to Australia. Previously, SDRs allocated by the IMF were recorded in the Australian GFS as financial assets with no corresponding liabilities and were initially brought onto the balance sheet with matching 'other economic flow' entries. This change has been introduced in the 2009-10 year and the time series have been revised. This has affected the Commonwealth General Government Balance Sheet. The Australian System of Government Finance Statistics: Concepts, Sources and Methods (ABS GFS Manual) (cat. no. 5514.0) has been updated to reflect these changes. The GFSM 2001 will be revised to reflect the 2008 SNA. The IMF review of the GFSM 2001 has commenced and is expected to be completed in 2014. The ABS GFS Manual will also be updated to reflect the new international standards in 2015.

The ABS GFS Manual has been updated to include the treatment of emissions schemes in ABS GFS data. Further information on the treatment of emissions schemes in ABS GFS data can be found in the ABS GFS Manual.

5 Detailed information on the concepts, sources and methods used in compiling GFS can be found in Australian System of Government Finance Statistics: Concepts, Sources and Methods electronic version (cat. no. 5514.0.55.001) or pdf version (cat. no. 5514.0).


6 The term 'government financial estimates' (GFE) refers to statistics that measure the financial activities of governments compiled from initial budget forecasts rather than final audited data.

7 The purpose of the GFE publication is to assist users making an assessment of each jurisdiction's initial budget on a GFS basis, recognising that the budgets of different jurisdictions are brought down at different times.


8 The system of GFS provides details of revenues, expenses, cash flows and assets and liabilities of the Australian public sector and comprises units which are owned and/or controlled by the Commonwealth, state and local governments. These units are grouped as follows:
Total public sector

    1. Non–financial public sector
      1. General government
      2. Public non–financial corporations
    2. Public financial corporations

9 This release contains general government data only. Actual, rather than budgeted, financial year data are available in Government Finance Statistics Australia (cat. no. 5512.0), released in April each year.

General Government

10 The principal function of general government entities is to provide non–market goods and services (e.g. roads, hospitals, libraries) primarily financed by taxes, to regulate and influence economic activity, to maintain law and order, and to redistribute income by means of transfer payments.

11 This institutional sector covers the departments of the Commonwealth Government, state governments and local government municipalities. It also includes agencies and government authorities under departmental administration which are engaged in the provision of public administration, defence, law enforcement, welfare, public education, and health. Also included are non–departmental bodies which independently perform the government functions of regulation (e.g. Nurses Registration Boards and the Maritime Safety Authority), provision of non–market services (e.g. the Australian Broadcasting Corporation), and redistribution of income. Some of these bodies may be called 'corporations', but they are still considered part of the general government sector if they perform general government functions. Public universities are also considered part of the general government sector.

12 Unincorporated government enterprises which provide goods and services to their governments and to the public at prices that are not economically significant are also included in this sector. In addition, government quasi–corporations which sell their output exclusively to other government units, while not in open competition with other producers, are also classified as general government units.


13 The public sector comprises all organisations owned or controlled by any of the three levels of government within the Australian political system; national (which includes Commonwealth and multi–jurisdictional), state and local.

Commonwealth Government

14 The Commonwealth Government has exclusive responsibility under the Constitution for the administration of a wide range of functions including defence, foreign affairs and trade, and immigration. A distinctive feature of the Australian federal system is that the Commonwealth Government levies and collects all income tax, from individuals as well as from enterprises. It also collects a significant portion of other taxes, including taxes on the provision of goods and services. The Commonwealth Government distributes part of this revenue to other levels of government, principally the states.

State Governments

15 State and territory governments (referred to as 'state' governments) perform the full range of government functions, other than those the Constitution deems the exclusive domain of the Commonwealth Government. The functions mainly administered by state governments include public order, health, education, administration, transport and maintenance of infrastructure. The revenue base of state governments consists of taxes on property, on employers' payrolls, and on the provision and use of goods and services. This revenue base is supplemented by grants from the Commonwealth Government, which includes an allocation of Goods and Services Tax (GST) revenue.

Local Governments

16 Local government authorities govern areas typically described as cities, towns, shires, boroughs, municipalities and district councils. Although the range of functions undertaken by local governments varies between the different jurisdictions, their powers and responsibilities are generally similar and cover such matters as:
  • the construction and maintenance of roads, streets and bridges;
  • water, sewerage and drainage systems;
  • health and sanitary services;
  • the regulation of building standards; and
  • the administration of regulations relating to items such as slaughtering, weights and measures, and registration of dogs.

17 Local governments also provide transport facilities, recreation grounds, parks, swimming pools, libraries, museums and other business undertakings. Local governments' own–source revenue is derived mainly from property taxes. They also rely on grants from the Commonwealth Government and their parent state governments. The Australian Capital Territory has no separate local government.


18 The multi–jurisdictional sector contains units where jurisdiction is shared between two or more governments, or classification of a unit to a jurisdiction is otherwise unclear. The main type of units currently falling into this category are the public universities.


19 The main GFS classification underlying these forecasts is the Economic Type Framework – this is the main classification of stocks and flows. The Economic Type Framework resembles a set of financial statements, with sections for an operating statement, a cash flow statement and a balance sheet. In addition, there are sections to cater for the reconciliation of accounting net operating result measures with cash flows from operating activities and to capture items like assets acquired under finance leases, intra–unit transfers, and revaluations and other changes in the volume of assets.


20 The GFS conceptual framework is divided into a number of separate statements, each of which is designed to draw out analytical aggregates or balances of particular economic significance and which, taken together, provide for a thorough understanding of the financial positions of jurisdictions individually and collectively. These published statements are the operating statement, the cash flow statement, and the balance sheet. Only the operating statement and the cash flow statement are included as part of this release.

Operating Statement

21 The operating statement presents details of transactions in GFS revenues, GFS expenses and the net acquisition of non–financial assets for an accounting period. GFS revenues are broadly defined as transactions that increase net worth and GFS expenses as transactions that decrease net worth. Net acquisition of non–financial assets equals gross fixed capital formation, less depreciation, plus changes in inventories plus other transactions in non–financial assets. Two key GFS analytical balances in the operating statement are GFS net operating balance (NOB) and GFS net lending(+)/borrowing(–).

22 GFS NOB is the difference between GFS revenues and GFS expenses. It reflects the sustainability of government operations. GFS net lending(+)/borrowing(–) is equal to NOB minus the total net acquisition of non–financial assets. A positive result reflects a net lending position while a negative result reflects a net borrowing position.

Cash Flow Statement

23 The cash flow statement identifies how cash is generated and applied in a single accounting period. 'Cash' means cash on hand (notes and coins held and deposits held at call with a bank or other financial institution) and cash equivalents (highly liquid investments which are readily convertible to cash on hand at the investor's option and overdrafts considered integral to the cash management function).

24 The cash flow statement reflects a cash basis of recording (the other statements are on an accrual accounting basis) where the information has been derived indirectly from underlying accrued transactions and movements in balances. In effect, the transactions are captured when cash is received or when cash payments are made. Cash transactions are specifically identified because they allow the compilation of the cash–based surplus(+)/deficit(–) measure and because the management of cash is often considered an integral function of accrual accounting.

25 The surplus(+)/deficit(–) is a broad indicator of a sector's cash flow requirements. When it is positive (i.e. in surplus), it reflects the extent to which cash is available to government to either increase its financial assets or decrease its liabilities (assuming that no revaluations and other volume changes occur). When it is negative (i.e. in deficit), it is a measure of the extent to which government requires cash, either by running down its financial assets or by drawing on the cash reserves of the domestic economy, or from overseas.


Data sources

26 For the Commonwealth government and all individual state and territory governments the statistics shown in this release are based on information provided in, or underlying, the published budget projections for the financial year.

27 GFE data for local governments and the multi–jurisdictional sector are not collected and have been estimated by the ABS.


28 To compile statistics about the financial activities of a particular level of government, or any other grouping of public sector units, transactions and debtor/creditor relationships between units within the chosen grouping (sector or subsector) have to be matched and eliminated to avoid double counting. The process of matching and eliminating these items within the chosen group is known as 'consolidation'.

29 Consolidation is particularly important at the state government level where a significant proportion of total expenses/payments are financed by Commonwealth Government grants. Similarly, an appreciable part of the expenditure undertaken by state public non–financial corporations is financed by grants from state governments.


30 The statistics in this publication have been compiled using standard definitions, classifications and treatment of government financial transactions to facilitate comparisons between levels of government and between states within a level of government.

31 However, the statistics also reflect real differences between the administrative and accounting arrangements of the various governments and these differences need to be taken into account when making interstate comparisons. For example, only a state level of government exists in the Australian Capital Territory and a number of functions performed by it are undertaken by local government authorities in other jurisdictions.

32 Interstate comparisons of data may also be significantly affected by differences in the mix of operations undertaken by state governments and local governments. For example:
  • water and sewerage undertakings may be operated by state government, local government or a combination of both
  • government transport undertakings are operated exclusively by state authorities in all states except Queensland where bus transport is operated by the local government sector.


Uniform Presentation Framework

Following the May 1991 Premiers' Conference, the Commonwealth Government and the state governments resolved to implement a uniform presentation framework in their budget documents. The purpose of the uniform presentation framework was to introduce uniformity into the presentation of GFS so that users of the information could make valid comparisons between jurisdictions.

34 Since budget year 1992–93 the Commonwealth and state governments have presented information in their budget documents on the ABS GFS basis. The information presented in the budget documents of each jurisdiction generally conforms with the standards applied by the ABS. Jurisdictions may present the information based on their interpretation of the GFS classifications, but must provide a reconciliation of this information with information reflecting the ABS treatment on these issues. In 1999, the uniform presentation framework was revised from a cash to an accruals basis and the accrual uniform presentation framework was implemented beginning with most jurisdictions' Budgets for 2000–01.

Accounting Standards

35 From 2008–09 onwards, Australian Accounting Standard Board 1049 Whole of Government and General Government Sector Financial Reporting (AASB 1049) replaced Australian Accounting Standard 31 Financial Reporting by Government (AAS 31) as the standard Governments should follow in the preparation of their annual financial statements. Information on AASB 1049 is available from the Australian Accounting Standards Board website <http://www.aasb.gov.au>.

36 A key feature of AASB 1049 is the requirement that where the Australian System of Government Finance Statistics: Concepts, Sources and Methods (cat. no. 5514.0) differs from the accounting standards, a reconciliation to the key GFS aggregates and an explanation must be presented. The key fiscal aggregates are the net operating balance, net borrowing / lending, cash surplus / deficit, and net worth. A functional statement of expenses should also be reported. AASB 1049 covers General Government and Whole of Government, but does not apply to individual government agencies. Whole of Government for each jurisdiction is referred to as Total public sector in GFS.

37 There are a number of known differences between AASB 1049 and Australian System of Government Finance Statistics: Concepts, Sources and Methods (cat. no. 5514.0). These differences include the treatment of provisions for doubtful debts and constructive obligations, treatment of dividends payable by Public Corporations, tax effect accounting, treatment of coins issued by government, measurement of concessional loans, and the treatment of finance leases. Defence Weapons Platforms have been valued using market values rather than the historic cost method used by the Commonwealth Government in its reporting.

38 Data presented in this publication may differ from data published by Treasuries if:
  • Treasuries have not adjusted their data to a GFS basis
  • ABS have a different view on classification treatments applied by jurisdictions
  • ABS employ a different consolidation methodology to those used by jurisdictions
  • ABS apply reconciliation adjustments when it consolidates data for all jurisdictions and compares annual data with quarterly data used in compiling the national accounts
  • ABS include data which were not available when a jurisdiction's GFS presentations were published (e.g. major asset sales).