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26.1 A balance sheet is defined in paragraph 13.1 of SNA93 as follows:
26.2 This chapter contains details of the consolidated national and sectoral balance sheets. The balance sheet contains estimates of the value of some of Australia's natural resources as well as data on produced assets, and net financial claims on the rest of the world. The summary aggregate is net worth, which is defined as the difference between total assets and liabilities (including share capital).
Classification of assets in the balance sheet
26.3 Under SNA93 guidelines, for an asset to be included in the national balance sheets it must be an economic asset:
26.4 SNA93 describes three types of asset that should be included in the national balance sheets:
Differences between SNA93 and ASNA in the asset boundary
26.5 The balance sheet estimates are generally consistent with SNA93 recommendations, although there are three main areas where the ABS has not followed the recommendations of SNA93 with regard to the asset boundary.
26.7 The ABS has taken the view that proven resources are too restrictive a concept to guide economic decision making in the Australian context. The volume of subsoil assets available for production is more accurately reflected by the term 'economically demonstrated resources' (EDR), which equate to proven plus probable resources. EDR are those resources that have a very high probability of existence and are economically feasible to extract, given current technology and relative prices. Furthermore, EDR estimates are the only data available in Australia on quantities of exploitable subsoil assets.
26.8 Second, while the flow accounts record new expenditure on mineral exploration (as gross fixed capital formation), the Australian balance sheets do not record a 'stock' value for mineral exploration. To the extent that SNA93 recommends the inclusion of mineral exploration in a nation's balance sheet, the ASNA is currently inconsistent with these recommendations. However, following representations from the ABS and other national statistical agencies, the SNA93 recommendation is being reviewed. The ABS view is that the total value of mineral exploration is already captured in the value of the stock of subsoil assets (in most instances subsoil assets appear as a result of exploration activity).
26.9 A third difference in treatment between the Australian national balance sheets and SNA93 is the treatment of ownership transfer costs. SNA93 suggests that these expenditures are an integral part of the value of the asset, and therefore that they should be included in the value of the asset being acquired. While the ABS recognises new expenditures on ownership transfer costs as gross fixed capital formation, the current treatment is that these expenditures are expensed within the year of acquisition, and so no stock value is recorded in the balance sheets. This decision is currently under review by the ABS.
26.10 Further, while SNA93 recommends that some assets such as valuables, water resources and intangible non-produced assets be included in national balance sheets, they are not recorded in the ASNA. However, in principle the ABS agrees that these assets should be included, though at present there are insufficient data to do so.
General principles of valuation
26.11 Ideally, assets should be valued on the basis of current, observable market prices as this is the basis on which decisions by producers, consumers, investors and other economic agents are made. In the absence of observable market prices, current prices can be approximated for balance sheet purposes in two ways. In some cases, market prices may be approximated by accumulating and revaluing acquisitions less disposals of the asset in question over its lifetime. This method has been used to value estimates of produced fixed assets as well as estimates of the value of consumer durables (the latter appears as a memorandum item in the balance sheet). In other cases, market prices may be approximated by the present, or discounted, value of future economic benefits expected from any given asset; this is the method used for subsoil assets and native forests in the balance sheets.
Non-financial produced and financial assets
26.12 The principles of valuing non-financial produced and financial assets in the ASNA are covered in Chapters 16, 17, and 25 respectively. These are mostly consistent with the approaches recommended in SNA93.
Subsoil assets valuation
26.13 As there are insufficient transactions in subsoil assets in Australia to determine a reasonable price, the ABS has used the net present value (NPV) approach; given the data constraints, this is considered to provide more reliable estimates than alternative approaches.
26.17 As with subsoil assets, market transactions for forests are not common. For Plantations there are readily available proxies for market values, namely insurance values.
26.20 In line with the recommendations of SNA93, the ABS has valued native forests using the NPV method.
26.22 Coniferous forests were valued using an insurance schedule provided by the insurance industry. The schedule shows the value of each hectare from 1 to 30 years of age (35 for South Australia) as determined by the Australian Forest Growers' Association.
26.23 These were also valued using insurance schedules showing the insured value of each hectare of forest according to tree age (up to 20 years). These schedules are determined by the Australian Forest Growers' Association.
Out of scope timber values
26.24 Standing timber other than that recommended for inclusion in national balance sheets in SNA93 may also have an economic value. For instance, conservation forests with timber values include national parks, wilderness areas, water catchment areas and those inscribed on the World Heritage List, such as the Lord Howe Island Group.
Produced assets other than livestock and plantations
26.27 Estimates of produced fixed assets shown in the balance sheet, other than livestock, are essentially derived using the perpetual inventory method. For a description of this method see Chapter 16.
Financial assets and liabilities
26.29 Data for financial assets are obtained from Australian National Accounts: Financial Accounts (Cat. no. 5232.0) and unpublished estimates. Chapter 25 provides information on the sources and methods used to compile these estimates. Estimates of financial assets and liabilities for 30 June 1995 and later dates are not fully consistent with the estimates shown for earlier dates. The break in series is due to major changes to the data from 30 June 1995 associated with the implementation of SNA93. As a result of this break in the series, net worth and total assets and liabilities are also not consistent across these two periods.
26.30 All livestock under the economic management of institutional units within Australia are in scope of the balance sheet estimates.
26.34 Land is defined in the SNA93 as
Excluded are any buildings or other produced structures situated on it (cultivated crops, trees and livestock); subsoil assets; non-cultivated biological resources and water resources.
26.35 Estimates for the value of land in the balance sheets include freehold and leasehold land in private hands, plus land owned by Commonwealth government business enterprises, but exclude land held by the Commonwealth Government and State and local governments and their business enterprises.
26.36 From 30 June 1992 to 30 June 1999, estimates of land values were supplied to the ABS from each of the State and Territory Valuers-General. The estimates are on a consistent basis with those supplied to the Commonwealth Grants Commission, i.e. they represent the site value of land and are classified according to land purpose.
26.37 Subsoil assets are defined in SNA93 to consist of
Subsoil assets consist of known deposits of coal, oil and natural gas, metallic minerals and non-metallic minerals.
26.38 Estimates of mineral resources in Australia are published annually by the Australian Geological Survey Organisation in Australia's Identified Mineral Resources. Production costs are provided by a private consulting firm and are derived using a number of models and regression techniques incorporating both known and estimated variables.
26.39 Standing timber assets cover both plantation and native forests. SNA93 does not specifically identify the types of standing timber to be included in national balance sheets other than that the forests must be owned by an institutional unit and must bring economic benefits to their owners. All publicly owned forests outside conservation reserves and all private forests in Australia are potentially available for timber production, either now or at some time in the future, although a number of constraints reduce the area of forest available for production.
26.41 Discoveries and depletion of subsoil assets are recorded in the other changes in volume of assets account, while any holding gains and losses are included in the revaluation account. Further, growth and harvesting of native timber are recorded in the other changes in volume of assets account, while any holding gains are included in the revaluation account.
26.42 A sectoral breakdown of the national balance sheet is also provided. The Australian national accounts identify four domestic institutional sectors within the economy (the household sector (which includes unincorporated enterprises and NIPSHs), general government, financial corporations and non-financial corporations). Transactor units are assigned to a sector according to their functional role in the economy.
26.44 In order to derive estimates of net worth, natural resources have been valued in monetary terms to provide a common basis for aggregation of all assets. However, the valuation of natural resources is still very much in its infancy, and the values should be interpreted with caution and used in conjunction with the physical stocks of the resources.
26.49 The monetary estimates of natural resources contained in the balance sheet are underpinned by a data set of physical estimates detailing levels of particular natural resources. Due to the experimental nature of the monetary estimates, it is considered that monetary estimates of natural resources should be considered in conjunction with the physical estimates, especially for subsoil assets.