5512.0 - Government Finance Statistics, Australia, 2013-14 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 13/05/2015   
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STATEMENT OF STOCKS AND FLOWS


The international Government Finance Statistics (GFS) standard as promulgated by the International Monetary Fund (IMF) recommends that opening and closing 'stock' values be reconciled with all 'flows' occurring throughout the year. The standard is based on an analytical framework in which all changes in the values of stocks from one year to the next can be fully explained by the flows that have occurred during that year.

Institutional units hold assets (financial and non-financial) and incur liabilities (which by definition are financial). The level of these assets and liabilities at any point in time is the stock. The difference between assets and liabilities is net worth, which is a measure of the 'wealth' of units or of government. Anything which causes a change in these stocks of assets and liabilities is a flow. Flows are disaggregated into transactions and 'other economic flows'. A transaction is, for the most part, an interaction between two units by mutual agreement, whereas an 'other economic flow' is a change in the volume or value of a stock of a unit not resulting from a transaction.

By definition, the value of a stock at the end of a period is the sum of the stock at the beginning of the period and all the flows affecting that stock which took place during the period, i.e. S1 = S0 + F1, where S0 and S1 represent the values of a specific stock at the beginning and end of an accounting period, and F1 represents the net value of all flows during the period relevant to that particular stock.

Statistics on transactions giving rise to revenues and expenses are published as part of the GFS operating statement. Revenues are defined as transactions which increase net worth whereas expenses are transactions which decrease net worth. The difference between revenues and expenses, therefore, represents the change in net worth due to transactions. This equates to the GFS net operating balance.

Other economic flows can be disaggregated into movements in asset/liability values resulting from price changes ('revaluations') and those resulting from volume changes ('other volume changes').

Revaluations result from changes to the value of the assets and liabilities held. Revaluations can accrue to financial assets such as bonds and bills, shares and other forms of equity, as well as non-financial assets such as land and buildings.

Other volume changes refer to events that include:

  • the recognition or de-recognition of assets or liabilities on the balance sheet – e.g. when resources become economically exploitable, or when an asset is no longer providing an economic benefit, and so is removed from the balance sheet
  • changes in the quantity or quality of the existing asset – these typically result from catastrophic losses through natural disasters, changes in the volume of natural assets such as fish or forest stocks, creation, discovery, cancellation or seizure of assets, or quality differences arising from events such as a change in the expected life of the asset
  • changes in the classification of assets – these usually arise when the use of an asset changes, e.g. if the use of a parcel of public land changes from recreational use to industrial use.

The net effect of all revaluations and other volume changes occurring through the year represents the change in net worth due to other economic flows.

Since the values of stocks at the end of a year must be equal to their values at the start of a year, plus all transactions and other economic flows affecting them during the year, it follows that the total change in net worth during a given year is equal to the change in net worth due to transactions, plus the change in net worth arising from other economic flows.

When working with reported data, it is often assumed that the difference between opening and closing net worth and the change in net worth due to transactions is attributable to the change in net worth due to other economic flows (i.e. other economic flows is effectively used as a balancing item). However, to ensure data quality it is necessary to independently collect and calculate the change in net worth due to other economic flows. In situations where the reported data do not add through, it is not necessarily the case that the data quality issue is in the other economic flows component of the framework. Where data quality is high throughout the reported data set, the change in net worth as derived via the balance sheet will be consistent with the sum of transaction and other economic flows.


COMMONWEALTH GENERAL GOVERNMENT – STATEMENT OF STOCKS AND FLOWS

The Commonwealth Government publishes a statement of other economic flows for the general government sector. This statement outlines all revaluations and other volume changes occurring throughout the year, which allows a full reconciliation of stocks and flows. This information allows the Australian Bureau of Statistics (ABS) to disaggregate other economic flows into price and volume effects. While some states also publish a statement of other economic flows, the majority currently do not. For local government, information on the components of other economic flows are also generally unavailable. Accordingly, the ABS does not have enough information on which to disaggregate other economic flows into its two components across the state and local levels of government.

The statement of stocks and flows for the Commonwealth general government sector is presented in Table 1. During 2013–14 the net worth of the Commonwealth general government sector decreased by $39,153m. This was the result of a GFS net operating balance (which reflects the change in net worth due to transactions) of –$30,734m, revaluations of –$8,419m and slightly offset by other volume changes of $313m.

TABLE 1, COMMONWEALTH – General Government Sector – Statement of Stocks and Flows

Opening stocks as
at 1 July 2013
Transactions
Revaluations
Other volume
changes(a)
Closing stocks as
at 30 June 2014
$m
$m
$m
$m
$m

Assets
Financial assets
Cash and deposits
2 094
1 769
–19
3 844
Advances paid
37 048
3 138
2 770
42 956
Investments, loans and placement's
111 098
7 718
–1 309
117 507
Other non-equity assets
63 167
4 238
67 405
Equity
59 039
12 033
13 311
84 383
Total financial assets
272 446
24 658
18 992
316 096
Non-financial assets
Land and fixed assets
97 870
1 774
3 445
313
103 089
Other non-financial assets
2 187
1 926
–1 561
2 552
Total non-financial assets
100 056
3 700
1 885
313
105 641
Total assets
372 502
28 358
20 877
313
421 737
less
Liabilities
Deposits held
3 786
103
67
3 956
Advances received
Borrowing
300 464
63 146
–415
363 195
Unfunded superannuation and other employee entitlements
208 111
29 566
237 677
Other provisions
14 380
–143
14 237
Other non-equity liabilities
44 010
–4 046
110
40 074
Total liabilities
570 753
59 204
29 183
659 140
equals
GFS Net worth
–198 250
–30 734
8 419
313
–237 403
Net debt
154 010
. .
. .
. .
202 843
Net financial worth
–298 307
. .
. .
. .
–343 044

. . not applicable
– nil or rounded to zero (including null cells)
(a) Source: Department of Finance, Consolidated Financial Statements for the Year Ended 30 June 2014, November 2014.



STATE AND LOCAL GENERAL GOVERNMENT – STATEMENT OF STOCKS AND FLOWS

During 2013–14 the net worth of the state general government sector increased by $3,378m, driven by $3,873m from transactions.

The net worth of the local general government sector increased by $18,834m in 2013–14. Other economic flows contributed $12,967m to this movement.

TABLE 2, STATE – General Government Sector – Statement of Stocks and Flows

Opening stocks as at 1 July 2013
Transactions
Other Economic Flows
Closing stocks at 30 June 2014
$m
$m
$m
$m

Assets
Financial assets
Cash and deposits
17 686
18
1 840
19 544
Advances paid
11 033
307
–283
11 057
Investments, loans and placement's
58 667
5 110
–478
63 299
Other non-equity assets
24 641
218
–371
24 488
Equity
281 449
–783
11 880
292 546
Total financial assets
393 476
4 870
12 588
410 934
Non-financial assets
Land and fixed assets
578 364
9 326
–2 065
585 625
Other non-financial assets
2 735
939
–934
2 740
Total non-financial assets
581 099
10 265
–2 999
588 365
Total assets
974 575
15 136
9 588
999 299
less
Liabilities
  Deposits held
4 112
–798
177
3 491
  Advances received                                                   
3 020
91
–8
3 103
  Borrowing
121 896
9 437
475
131 808
  Unfunded superannuation and other employee entitlements
157 274
–75
10 880
168 079
  Other provisions
9 701
1 070
10 771
  Other non-equity liabilities
21 732
2 608
–2 512
21 828
  Total liabilities  
317 734
11 262
10 085
339 081
equals
GFS Net worth
656 840
3 873
495
660 218
Net debt
41 643
. .
. .
44 503
Net financial worth
75 741
. .
. .
71 854

. . not applicable
– nil or rounded to zero (including null cells)

TABLE 3, LOCAL – General Government Sector– Statement of Stocks and Flows

Opening stocks as at 1 July 2013
Transactions
Other Economic Flows
Closing stocks at 30 June 2014
$m
$m
$m
$m

Assets
Financial assets
Cash and deposits
9 095
–366
–5
8 724
Advances paid
26
4
–2
28
Investments, loans and placement's
10 511
879
122
11 512
Other non-equity assets
3 776
–271
255
3 760
Equity
7 176
21
13
7 210
Total financial assets
30 583
267
384
31 234
Non-financial assets
Land and fixed assets
333 188
5 498
13 884
352 570
Other non-financial assets
1 926
246
–200
1 972
Total non-financial assets
335 114
5 744
13 683
354 541
Total assets
365 698
6 011
14 066
385 775
less
Liabilities
Deposits held
460
12
–17
455
Advances received                                                   
21
–2
19
Borrowing
11 393
909
186
12 488
Unfunded superannuation and other employee entitlements
3 195
98
–110
3 183
Other provisions
111
59
–27
143
Other non-equity liabilities
4 023
–936
1 071
4 158
Total liabilities
19 203
144
1 100
20 447
equals
GFS Net worth
346 495
5 867
12 967
365 329
Net debt
–7 757
. .
. .
–7 302
Net financial worth
11 380
. .
. .
10 787

. . not applicable
– nil or rounded to zero (including null cells)


For more information on the statement of stocks and flows, refer to Table 2.1 in Australian System of Government Finance Statistics: Concepts, Sources and Methods (cat. no. 5514.0.55.001) electronic version or (cat. no. 5514.0) pdf version and Chapter 3 of the International Monetary Fund's (IMF) Government Finance Statistics Manual 2014 (GFSM 2014).