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FEATURE ARTICLE: THE CHANGING STRUCTURE OF THE AUSTRALIAN ECONOMY
Graph 1. CATEGORY SHARES OF GVA, Annual - Current prices
GOODS PRODUCTION CATEGORY
Over the past two decades, the goods producing category grew at a slower rate than total GDP. Across the two periods of 1995-96 to 2005-06 and 2006-07 to 2016-17, the average annual growth rate for industries involved in goods production fell from 2.8% to 2.6%. Over the same two periods, the average annual growth rate in GDP slowed from 3.7% to 2.9%.
In the last decade there has been a clear divergence between the Manufacturing and Mining industries contribution to total GVA. As shown in Graph 2, the Mining industry had an average annual growth rate of 2.9% between 1995-96 and 2005-06. Since September quarter 2007, the value of merchandise exports from Australia to China grew almost fivefold, with a large amount of these exports including mining commodities. This led to the annual average growth rate for the Mining industry to more than double to 6.2% between 2006-07 and 2016-17.
Conversely, the average annual growth rate for the Manufacturing industry was 1.8% between 1995-96 and 2005-06 but had dropped to an average annual growth of -0.7% between 2006-07 and 2016-17. This result reflects the decline of the industry as Australian manufacturers including motor vehicle production competed on a more global scale. The Manufacturing share of GVA fell from 13.9% in 1995-96, to 6.5% in 2015-16.
Graph 2. MANUFACTURING AND MINING INDUSTRY GVA, Annual - Volume measures
SERVICES TO BUSINESS CATEGORY
Annual growth in business services was positive averaging 4.3% between 1995-96 and 2016-17. This was the highest rate of growth of any category, and was well above the average growth in goods production at 2.7%. The growth in business services was supported by trends in other categories of the economy towards increased specialisation and outsourcing of non-core functions, as well as from the rapid technological advances which have occurred since the 1990s.
As illustrated in Graph 3, the rate of growth in businesses services slowed in recent times, recording growth below the long-run average since March quarter 2009. Business service industries produce a range of services that are used as inputs to other firms, highlighting that their growth was largely dependent on strength in the economy. For this reason, growth in business services reflected lower growth in the economy since the Global Financial Crisis. Although there was reduced growth in business services since March quarter 2009, the rate of growth was still higher than growth in total gross value added for a majority of the time, resulting in this category taking up a larger share of the economy overall.
Graph 3. BUSINESS SERVICES GVA, Through the year - Volume measures: Seasonally adjusted
SERVICES TO HOUSEHOLDS CATEGORY
The Services to Households category remained fairly stable in regards to its share of GVA over the past twenty years. The share of GVA was 16.4% in 1995-96 compared to 18.2% in 2015-16. Within this category, the Health Care and Social Assistance industry increased its share of total services to households from 33.7% to 40.4%. As shown in Graph 4, GVA for the Health Care and Social Assistance division grew in size along with the aging Australian population. Data from Australian Demographic Statistics (cat. no. 3101.0) shows that the proportion of the Australian population aged 50 and over, a strong user of Health Care and Social Assistance industry has increased from 26.0% to 33.1%.
Graph 4. HEALTH CARE AND SOCIAL ASSISTANCE GVA and ESTIMATED RESIDENT POPULATION DATA, Annual
In this article the Australian Bureau of Statistics (ABS) has separated the Gross Value Added (GVA) of domestic production of services into three categories for further analysis: Household, Business and Distribution services.
The methodology used to determine these splits is based on unpublished data by product code, which was used to allocate goods and services by Division or Subdivision as specified in Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0) to the Household or Business Category (see Table 1). Industries have been allocated to the Distribution service category on the basis of the margin nature of the service provided.
Table 1. Household and Business Category allocations by ANZSIC Subdivision
Industry household/business allocations were determined using unpublished data from the 2015-16 Supply-Use Tables. Industry allocations were derived by aggregating household final consumption expenditure (HFCE) and business final consumption expenditure for each supply-use product code (SUPC) to benchmark level (usually ANZSIC subdivision level) and assigning the industry using a majority rule. Business final consumption was calculated as the sum of total intermediate use, gross fixed capital formation and change in inventories.
For the majority of industries the assigned household/business allocations were based on a clear majority of at least 65%. However there were some industries where the difference between household and business consumption was marginal. In these cases the classification splits could be considered arbitrary and should be used with caution. These industries include:
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