5512.0 - Government Finance Statistics, Australia, 2012-13
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 18/06/2014
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STATEMENT OF STOCKS AND FLOWS, 2012–13

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 2012–13 the net worth of the Commonwealth general government sector increased by \$48,832m. This was the result of a GFS net operating balance (which reflects the change in net worth due to transactions) of –\$21,131m, offset by revaluations of \$69,575m and other volume changes of \$388m. The key contributor was revaluations on the liabilities side which was driven by unfunded superannuation and other employee entitlements (–\$41,778m), and borrowing (–\$5,879m). Revaluations on the assets side of the statement were less significant and driven by other non-equity assets (\$6,778m), equity assets (\$6,416m), and Investments, loans and placements (\$6,409m).

 TABLE 1, COMMONWEALTH – General Government – Statement of Stocks and Flows Opening stocks as at 1 July 2012 Transactions Revaluations Other volume changes(a) Closing stocks as at 30 June 2013 \$m \$m \$m \$m \$m Assets Financial assets Cash and deposits 2 523 –429 – – 2 094 Advances paid 33 962 4 802 –1 716 – 37 048 Investments, loans and placements 98 492 6 197 6 409 – 111 098 Other non-equity assets 56 475 – 6 778 – 63 253 Equity 50 010 2 613 6 416 – 59 039 Total 241 463 13 182 17 887 – 272 532 Non-financial assets Land and fixed assets 94 328 451 1 572 388 96 739 Other non-financial assets 2 216 –1 124 1 095 – 2 187 Total 96 544 –674 2 668 388 98 926 Total 338 007 12 509 20 554 388 371 458 Liabilities Deposits held 3 701 95 –10 – 3 786 Advances received – – – – – Borrowing 279 898 26 445 –5 879 – 300 464 Unfunded superannuation and other employee entitlements 249 889 – –41 778 – 208 111 Other provisions 13 931 – 449 – 14 380 Other non-equity liabilities 38 706 7 233 –1 937 – 44 002 Total 586 125 33 773 –49 154 – 570 744 GFS Net worth –248 119 –21 131 69 575 388 –199 287 Net debt 148 621 . . . . . . 154 010 Net financial worth –344 663 . . . . . . –298 212 . . not applicable – nil or rounded to zero (including null cells) (a) Source: Department of Finance, Consolidated Financial Statements for the Year Ended 30 June 2013, December 2013.

STATE AND LOCAL GENERAL GOVERNMENT – STATEMENT OF STOCKS AND FLOWS

Both the state and local general government Statements of Stocks and Flows (Table 2 and Table 3 respectively) highlight the significance of other economic flows. During 2012–13 the net worth of the state general government sector increased by \$44,478m, driven by \$49,636m from other economic flows. The key contributor was other economic flows on the assets side which was driven by equity assets (\$18,079m). On the liabilities side, the main contributor to other economic flows was unfunded superannuation and other employee entitlements (–\$23,434m).

The net worth of the local general government sector increased by \$14,287m in 2012–13. Other economic flows contributed \$8,150m to this movement.

 TABLE 2, STATE – General Government – Statement of Stocks and Flows Opening stocks as at 1 July 2012 Transactions Other Economic Flows Closing stocks at 30 June 2013 \$m \$m \$m \$m Assets Financial assets Cash and deposits 15 749 856 1 081 17 686 Advances paid 7 131 –254 4 156 11 033 Investments, loans and placements 55 660 1 977 1 030 58 667 Other non-equity assets 21 369 237 3 081 24 687 Equity 257 309 –3 000 18 079 272 388 Total 357 218 –185 27 427 384 460 Non-financial assets Land and fixed assets 559 613 10 613 8 138 578 364 Other non-financial assets 2 064 388 283 2 735 Total 561 677 11 001 8 421 581 099 Total 918 895 10 816 35 848 965 559 Liabilities Deposits held 4 425 –135 –178 4 112 Advances received 3 394 1 –375 3 020 Borrowing 97 323 17 594 6 979 121 896 Unfunded superannuation and other employee entitlements 180 770 –62 –23 434 157 274 Other provisions 9 033 – 668 9 701 Other non-equity liabilities 20 590 –1 424 2 553 21 719 Total 315 535 15 974 –13 787 317 722 GFS Net worth 603 360 –5 158 49 636 647 838 Net debt 26 603 . . . . 41 643 Net financial worth 41 683 . . . . 66 739 . . not applicable – nil or rounded to zero (including null cells)

 TABLE 3, LOCAL – General Government – Statement of Stocks and Flows Opening stocks as at 1 July 2012 Transactions Other Economic Flows Closing stocks at 30 June 2013 \$m \$m \$m \$m Assets Financial assets Cash and deposits 9 342 –330 140 9 152 Advances paid 25 –26 27 26 Investments, loans and placements 11 623 663 –1 893 10 393 Other non-equity assets 3 539 –258 498 3 779 Equity 9 038 –26 –1 870 7 142 Total 33 567 22 –3 097 30 492 Non-financial assets Land and fixed assets 314 472 5 109 13 495 333 076 Other non-financial assets 1 852 186 –105 1 933 Total 316 324 5 296 13 389 335 009 Total 349 890 5 318 10 293 365 501 Liabilities Deposits held 431 3 29 463 Advances received 22 –30 29 21 Borrowing 10 087 971 331 11 389 Unfunded superannuation and other employee entitlements 3 470 –7 –269 3 194 Other provisions 362 144 –54 452 Other non-equity liabilities 4 005 –1 900 2 076 4 181 Total 18 377 –819 2 142 19 700 GFS Net worth 331 514 6 137 8 150 345 801 Net debt –10 449 . . . . –7 698 Net financial worth 15 190 . . . . 10 792 . . 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 4 of the International Monetary Fund's Government Finance Statistics Manual 2001.