5204.0 - Australian System of National Accounts, 2013-14 Quality Declaration 
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FEATURE ARTICLE 2: DECONSOLIDATED HOUSEHOLD INCOME ACCOUNT


In recent history, the household sector has increasingly saved a larger portion of their disposable income. With a focus on household net saving, the Australian Bureau of Statistics (ABS) investigated the impact of non-profit institutions serving households (NPISH) on the household sector. In the Australian System of National Accounts (ASNA), the household sector includes households, unincorporated enterprises and NPISHs. Experimental estimates have been produced to compile a deconsolidated household income account. Deconsolidation refers to the identification of transactions between units within the same institutional sector. A deconsolidated household income account has been compiled by removing NPISH from published estimates and showing transactions between households and NPISH. The aim was to produce a more pure measure of household income and saving; however, the results show that the impacts of NPISH on the household sector are minimal.

This article presents an overview of the data sources and methodology used to compile this account. Table 1 contains these experimental estimates, which cover a period of eight years, from 2006-07 to 2013-14. The key drivers for compiling a deconsolidated household sector are:

  • to address issues articulated under Recommendation #16 of the G20 Finance Ministers’ Data Gaps Initiative, giving prominence to the publication of disaggregated household data;
  • to improve the set of statistics for the household sector, as per institutional sector definitions in the 2008 System of National Accounts (2008 SNA); and
  • to address requests from a range of users for high quality and timely household saving and saving rate data.


THE HOUSEHOLD SECTOR

The household sector, as currently defined in the ASNA, is a consolidated sector including households, unincorporated enterprises and NPISHs. The 2008 SNA delineates an extra sector for NPISHs, but this has not yet been implemented in the ASNA due to data limitations (footnote 1) . As a result, sectoral accounts for the Australian household sector represent more than just the activity of residential households. By definition, transactions undertaken by NPISHs principally involve households, which receive goods and services from NPISHs as social transfers in kind. NPISHs, in turn, receive a large proportion of their income from households through membership fees and donations. These features partly explain why NPISHs have been consolidated with households in the ASNA.

An NPISH unit is an organisation that provides goods and services to households free or at prices that are not economically significant. As such, these units do not have compensation of employees, gross operating surplus (GOS) - dwellings owned by persons or social assistance benefits. These units are also exempt from the payment of taxes on income. These conceptual differences between an NPISH unit and a household explain why some components of the household income account are not directly impacted by deconsolidation.


DATA SOURCES AND METHODOLOGY

Experimental NPISH estimates are largely derived from two ABS publications, the Australian National Accounts: Non-Profit Institutions Satellite Account (cat. no. 5256.0) and the Australian Industry (cat. no. 8155.0). The Non-profit institutions (NPI) satellite account records the activities of market and non-market NPIs. The scope of experimental estimates for NPISHs is mostly the same as the non-market sector in the NPI Satellite Account. The latest satellite account is based on data from the 2012-13 NPI Survey, and also includes a re-presentation of 2006-07 data from the previous account on an 2008 SNA basis. These two years provide the benchmarks for the NPISH income account.

Australian Industry data are used as indicators to produce time series between the two benchmark years by applying annual percentage movements in indicators to the corresponding benchmark values in the NPISH income account. Secondary indicators are sourced from taxation statistics and the household income account. Latest year estimates have been extrapolated using the published household income account measures.

There were a number of series that were derived using different methodology, including imputed interest, reinvested earnings and non-life insurance claims. The reason for this is that the published income account includes estimates for 2008 SNA concepts that were not measured directly by the NPI satellite account survey. Imputed interest and reinvested earnings were estimated based on proportions of existing estimates within the ASNA.

Final consumption expenditure is also derived differently for NPISH as it consists of their non-market output, which is equal to their operating expenses less any market receipts they may have (footnote 2). Therefore, NPISH final consumption expenditure (NFCE) has been derived by deducting sales of goods and services from the value of non-market output. The reason for deducting sales is to avoid double-counting in the valuation of NFCE, because sales represent transactions between NPISHs and households, and 2008 SNA treats all final consumption expenditure by convention as social transfers in kind to households (footnote 3).


ANALYSIS AND RESULTS

Deconsolidation has not had a significant impact on the household sector. The experimental estimates for total income receivable and total income payable show the same rates of growth as published estimates of the household sector. Total gross income grew at a compound annual rate of 5.9% per year between 2006-07 and 2013-14, increasing by 49.2% over the eight years. Total income payable grew at a compound annual rate of 4.5% per year over the same period, increasing 36.1% (and 36.3% for experimental estimates) over the time series. The weaker growth in total income payable means that growth in gross disposable income was strong. Gross disposable income grew at a compound annual rate of 6.3% per year, with experimental gross disposable income being $1044.4 billion in 2013-14, compared to the published household sector estimate of $1057.1 billion for the same year. The drivers of these differences include Gross Mixed Income (GMI), property income receivable, current transfers receivable and payable and final consumption expenditure.


Gross Mixed Income

This series represents the income from production received by unincorporated enterprises and includes GOS and compensation of employees. The experimental estimates of NPISH GOS have been removed from the published series of GMI in the household income account. The rate of growth in GMI has not been affected because of the small values for NPISH GOS. GMI increased by 52.4% (and 52.5% for published estimates) over the period from 2006-07 to 2013-14 over the time series, growing at a compound annual rate of 6.2% per year.


Property Income Receivable

Total property income receivable includes interest and dividend income amongst other items. Property income has not been significantly impacted because of the small values for NPISH. Experimental estimates for property income increased by 49.2% over the period from 2006-07 to 2013-14, growing at a compound annual rate of 5.9% per year. This compares with a growth rate of 48.6% in published estimates for the same period, and a compound annual rate of 5.8% per year.


Current Transfers Receivable

Transfers are a small source of income for the household sector, but have exhibited strong growth in the experimental series. They averaged 2.3% of total experimental household income between 2006-07 and 2013-14. Total transfers increased by 58.5% in the same period, growing at a compound annual rate of 6.8% per year. Deconsolidated households received $31.8 billion worth of income from current transfers in 2013-14, compared to the published estimate of $37.3 billion.

Current transfers to non-profit institutions represents the difference between the published series and the experimental series in the NPISH income account. The published series is sourced from government finance statistics and includes government grants and volume based government funding. The experimental series is sourced from the satellite account and is significantly less as it includes grants only, leaving volume based and other funding as the residual. This series highlights the conceptual issues associated with the treatment of these transactions as transfers or purchases of goods and services by general government. The broader scope of the published estimate explains the reason for the large difference between the two series.


Current Transfers Payable

Current transfers payable grew at a compound annual rate of 5.5% per year, and averaged 6.2% of total experimental household income between 2006-07 and 2013-14. Households paid $21 billion worth of current transfers in 2013-14, compared to the published estimate of $16.2 billion. The difference between both estimates is largely driven by transfers from households to NPISHs. Transfers to NPISHs increased by 7.4% over the period from 2006-07 to 2013-14, reaching $5.9 billion in 2013-14.


Final consumption expenditure

The experimental estimates show the same annual rates of growth as published estimates. Household final consumption expenditure (HFCE) grew at a compound annual rate of 5.2% per year over the period from 2006-07 and 2013-14, at a slower rate than total income received. Deconsolidated households purchased $865.2 billion worth of goods and services in 2013-14, compared to the published estimate of $878.4 billion for the same year.


NET SAVING RATIO

Net saving is a key aggregate in the published household income account and is calculated by deducting HFCE and consumption of fixed capital from household gross disposable income.

Household net saving is not significantly impacted once estimates of NPISH saving have been removed. As the graph below shows, the household saving ratio has changed marginally each year using data from the deconsolidated household income account. It is an expected result, given the relatively small size of the NPISH sector.

HOUSEHOLD SAVING RATIO, Current prices
Graph: HOUSEHOLD SAVING RATIO, Current prices


The experimental household saving ratio was 1.7% in 2006-07 and 10% in 2013-14. The published ratio was 1.8% and 9.7% over the same period.


CONCLUSION

The results indicate that deconsolidation has had minimal impact on the published household income account. The impact on the published estimates changed marginally once an NPISH component has been removed. Deconsolidation does enhance the transparency of the accounts; however, the small size of NPISH transactions means that the experimental estimates presented in this article are not significantly different to published estimates for the household income account.

At present, there is no plan to publish a deconsolidated household income account in the ASNA. The NPISH sector is not of a significant scope or size to justify the resources to produce a time series for implementation into the ASNA. The work undertaken to produce experimental estimates is also contingent on the availability of timely data. The key data source is the NPI Satellite Account; however the ABS has only published three satellite accounts for non-profit institutions, representing points in time rather than time series.

Table 1. Deconsolidated Household Income Account, Current prices

2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2006-07 to
2013-14
$m
$m
$m
$m
$m
$m
$m
$m
%

Income
Primary income receivable
Gross operating surplus - dwellings owned by persons
73 843.2
82 411.1
90 449.0
96 751.7
100 951.3
107 618.3
116 264.1
122 501.0
65.9%
Gross mixed income
85 040.5
98 794.3
102 557.9
107 773.3
115 625.9
119 433.5
127 075.8
129 603.6
52.4%
Compensation of employees
519 884.0
567 031.0
589 137.0
611 986.0
664 250.0
710 894.0
729 722.0
751 306.8
44.5%
Property income receivable
Interest
27 414.8
34 256.9
34 281.8
33 530.3
39 913.9
41 168.1
37 639.8
34 145.5
24.6%
Imputed interest (excluding reinvested earnings)
52 639.5
64 295.6
65 771.4
69 012.0
76 687.7
79 776.3
79 573.4
90 290.9
71.5%
Dividends
25 187.2
26 731.4
26 960.3
25 309.3
27 780.2
28 591.6
29 190.3
31 509.9
25.1%
Reinvested earnings
-276.5
-811.6
-518.1
-1.0
520.8
633.4
681.9
628.1
-327.2%
Rent on natural assets
19.0
19.0
19.0
19.0
19.0
19.0
19.0
19.0
0.0%
Total property income receivable
104 984.0
124 491.3
126 514.3
127 869.7
144 921.6
150 188.4
147 104.4
156 593.4
49.2%
Total primary income receivable
783 751.7
872 727.7
908 658.2
944 380.7
1 025 748.7
1 088 134.3
1 120 166.4
1 160 004.7
48.0%
Secondary income receivable
Social benefits receivable
Workers' compensation
6 234.0
5 940.0
4 985.0
8 382.0
8 789.0
8 715.0
9 631.0
10 256.0
64.5%
Social assistance benefits
82 035.0
87 248.0
112 631.0
99 858.0
106 502.0
116 835.0
122 732.0
126 548.0
54.3%
Non-life insurance claims
20 944.9
22 374.1
26 537.9
29 057.9
30 717.4
34 247.4
32 585.0
33 692.2
60.9%
Current transfers receivable
Current transfers from NPISH to households
697.0
670.2
673.4
691.6
710.3
756.3
722.0
753.7
8.1%
Current transfers to non-profit institutions
15 445.0
16 571.9
19 066.6
23 776.6
22 912.1
25 690.8
25 522.0
26 646.8
72.5%
Other current transfers
3 936.0
4 086.0
4 158.0
4 091.0
4 042.0
4 137.0
4 599.0
4 415.0
12.2%
Total current transfers receivable
20 078.0
21 328.1
23 898.0
28 559.2
27 664.4
30 584.2
30 843.0
31 815.5
58.5%
Total secondary income receivable
129 291.9
136 890.1
168 051.9
165 857.1
173 672.9
190 381.6
195 791.0
202 311.7
56.5%
Total gross income
913 043.6
1 009 617.9
1 076 710.1
1 110 237.8
1 199 421.6
1 278 515.8
1 315 957.4
1 362 316.4
49.2%
Uses of income
Primary income payable
Property income payable
Interest payable
Dwellings
47 685.0
59 930.0
56 995.0
57 913.0
69 326.0
71 768.0
64 325.0
58 527.0
22.7%
Consumer debt
11 146.0
12 824.0
11 124.0
9 929.0
11 650.0
10 843.0
9 422.0
8 512.0
-23.6%
Unincorporated enterprises
5 908.2
7 574.5
6 566.5
6 309.9
7 734.0
8 277.4
7 306.0
6 612.3
11.9%
Rent on natural assets
458.5
528.3
655.2
616.7
715.2
711.6
756.5
828.5
80.7%
Total property income payable
65 197.7
80 856.8
75 340.7
74 768.7
89 425.2
91 600.0
81 809.5
74 479.8
14.2%
Total primary income payable
65 197.7
80 856.8
75 340.7
74 768.7
89 425.2
91 600.0
81 809.5
74 479.8
14.2%
Secondary income payable
Income tax payable
124 981.3
133 798.0
132 936.8
130 403.3
142 570.0
159 656.5
168 844.8
177 255.3
41.8%
Other current taxes on income, wealth, etc.
3 655.0
3 955.0
4 021.0
4 326.0
3 930.0
4 423.0
4 788.0
4 708.0
28.8%
Social contributions for workers' compensation
5 686.0
5 886.0
6 866.0
7 362.0
8 101.0
9 155.0
9 589.0
10 004.0
75.9%
Net non-life insurance premiums
19 364.9
21 287.5
23 400.7
25 551.5
27 376.7
28 670.6
29 663.6
30 468.5
57.3%
Transfers from households to NPISH
Membership fees
1 732.2
1 868.3
1 962.7
1 940.6
2 100.8
2 158.9
2 199.3
2 035.6
17.5%
Donations, bequests and legacies
3 717.7
4 417.2
3 847.1
3 510.8
3 735.1
3 663.4
3 661.8
3 817.3
2.7%
Total current transfers to NPISH
5 449.9
6 285.5
5 809.8
5 451.4
5 835.9
5 822.3
5 861.2
5 853.0
7.4%
Current transfers to non-residents
Transfers from NPISH to rest of world
16.0
296.9
607.2
1 111.9
1 548.7
2 214.7
2 715.0
2 696.1
16 750.6%
Transfers from households to rest of world
1 671.4
1 370.2
1 364.9
1 277.2
1 356.3
1 430.8
1 478.3
1 537.4
-8.0%
Total current transfers to non-residents
1 687.4
1 667.1
1 972.1
2 389.1
2 905.0
3 645.5
4 193.3
4 233.5
150.9%
Total other current transfers - other sectors
7 270.3
7 045.7
7 960.3
8 270.1
8 850.3
9 925.6
11 536.8
10 917.4
50.2%
Total other current transfers
8 957.7
8 712.8
9 932.4
10 659.2
11 755.3
13 571.1
15 730.1
15 150.8
69.1%
Total current transfers payable
14 407.6
14 998.3
15 742.2
16 110.6
17 591.2
19 393.4
21 591.3
21 003.8
45.8%
Total secondary income payable
168 094.8
179 924.9
182 966.6
183 753.3
199 568.9
221 298.4
234 476.6
243 439.5
44.8%
Total income payable
233 292.5
260 781.6
258 307.3
258 522.0
288 994.2
312 898.5
316 286.1
317 919.3
36.3%
Gross disposable income
679 751.2
748 836.2
818 402.7
851 715.8
910 427.4
965 617.4
999 671.4
1 044 397.1
53.6%
Final consumption expenditure
607 498.1
658 650.7
677 237.3
710 434.5
749 925.0
785 823.2
823 950.7
865 209.5
42.4%
Net saving
10 780.3
23 567.3
73 582.9
69 746.3
84 907.9
103 146.0
96 939.4
95 606.5
786.9%
Consumption of fixed capital
61 472.8
66 618.3
67 582.5
71 535.0
75 594.6
76 648.2
78 781.3
83 581.1
36.0%
Total use of gross income
913 043.6
1 009 617.9
1 076 710.1
1 110 237.8
1 199 421.6
1 278 515.8
1 315 957.4
1 362 316.4
49.2%



1 System of National Accounts, 2008, para. 4.93 <http://unstats.un.org/unsd/default.htm>. <back
2 United Nations, 2003, Handbook on Non-Profit Institutions in the System of National Accounts, para. 4.16 <http://unstats.un.org/unsd/default.htm>. <back
3 System of National Accounts, 2008, para. 9.116 <http://unstats.un.org/unsd/default.htm>. <back