Classifying COVID-19 policy interventions in macroeconomic statistics

This article provides a summary of the conceptual classification of key government COVID-19 policies in place during the December quarter 2020.

Released
2/03/2021

Introduction

The impact of the COVID-19 pandemic continues to drive the largest fiscal response to an event in modern Australian history, with the focus of new policy interventions now shifting to support economic recovery. This spotlight provides a summary of the conceptual classification of key COVID-19 policies in place during the December quarter 2020.

The ABS continue to undertake extensive consultation with stakeholders and subject matter experts to determine appropriate classifications for COVID-19 policy interventions. These classifications are based on well-established conceptual frameworks (footnote 1), which ensure consistent recording of these policies across macroeconomic statistics, particularly in relation to Government Finance Statistics (GFS) and the National Accounts (NA).

Classification of COVID-19 policies

The COVID-19 policies are grouped into five broad categories (footnote 2):

  • Increased healthcare and frontline services spending
  • Provision of assistance to households
  • Provision of assistance to corporations, unincorporated enterprises and non-profit institutions
  • Relaxation of tax and non-tax revenue obligations
  • Capital injections, establishment of new, or extended, lending facilities and provision of guarantees

Key COVID-19 policies impacting December quarter

The majority of fiscal support continues to be targeted towards healthcare spending and provision of assistance to households, businesses and non-profit institutions.

Spending on subsidies by the Commonwealth and state governments remained at historically elevated levels but decreased sharply during the December quarter, driven primarily by the tapering of JobKeeper and Boosting Cash Flow for Employers payments. 

Spending on current monetary transfers to eligible households by the Commonwealth government has also decreased this quarter, driven by a reduction in Economic Support Payments and the Coronavirus Supplement rate as well as improving labour market conditions.

Health and aged care spending remained elevated as a result of ongoing COVID-19 health response expenditure on frontline staff, personal protective equipment (PPE) and additional aged care support. The roll out of COVID-19 vaccines will begin affecting government final consumption expenditure from March quarter 2021 onwards.

Table 1 presents a summary of the ABS classification of the key COVID-19 policy interventions in place during December quarter (footnote 3). Key policies that were new this quarter included the JobMaker Hiring Credit, capital transfers to CSL and the Child Care Recovery Payment.

Table 1: Classification of COVID-19 policies across Commonwealth and State and Territory levels of government
Types of COVID-19 policiesExamples of policiesClassification in GFS and NA (footnote 4)
Increased healthcare and frontline services spending
Co-funding arrangements

Commonwealth and state: (footnote 5) Co-funding for the JobTrainer Package

GFS: Current grants

NA: Income accounts - Current transfers
Additional spending on public sector workforceCommonwealth: Deploying staff for COVID-19 response programs

State: Deploying both clinical and non-clinical staff for COVID-19 health response in public hospitals; Deploying police and other staff to manage quarantine, lockdowns and contact tracing; Vocational education expansion to support economic recovery
GFS: Employee expenses

NA: GDP (E) - Government final consumption expenditure, GDP (I) - Compensation of employees
Additional spending on healthcare consumablesCommonwealth: Expenditure on PPE for the National Medical Stockpile; Membership of the international COVAX facility

State: PPE expenditure for state-based medical stockpiles
GFS: Accounts receivable (prepayments), Use of goods & services, Change in inventories

NA: GDP (E) - Government final consumption expenditure, Change in inventories
Additional spending on contractors and communicationCommonwealth and state: Cleaning of publicly owned assets; COVID-19 communication campaigns; COVID-19 hotlinesGFS: Use of goods & services

NA: GDP (E) - Government final consumption expenditure
New and accelerated infrastructure investmentState: Infrastructure investment as economic stimulus (including Commonwealth co-funding)GFS: Acquisition of new non-financial assets

NA: GPD (E) - Public gross fixed capital formation
Provision of assistance to households
Cash payments to householdsCommonwealth: Economic Support Payments; JobSeeker Coronavirus Supplement; Fair Entitlements Guarantee; Reducing deeming rates for retirees

State: Other state-based hardship payments to households
GFS: Current monetary transfers to households

NA: Income accounts - Social assistance benefits
Additional healthcare services to households outside of hospitalsCommonwealth: Expanded digital health and telehealth services for Medicare; Home Medicines Services for PBS; Provision of free COVID-19 pathology testsGFS: Social benefits to households in goods and services

NA: GDP (E) - Government final consumption expenditure
Other rebates and support for householdsCommonwealth: Child Care Subsidy (footnote 6); Additional aged care supplements; Employment support services

State: Rebates to households for electricity bills; Other targeted concessions for households; JobTrainer courses provided through private providers
GFS: Social benefits to households in goods and services

NA: GDP (E) - Government final consumption expenditure
Capital transfers to householdsCommonwealth: HomeBuilder grants for new dwellings and large renovations

State: First Home Owner Grants for new dwellings
GFS: Capital transfer expenses n.e.c.

NA: Capital account - Capital transfers, GPD (E) - Private gross fixed capital formation (Dwellings)
Current transfers to householdsState: Government vouchers for households to support tourism, hospitality and the arts

GFS: Current transfer expenses nec

NA: Income accounts - Other current transfers
Access to superannuation savingsCommonwealth: Early release of superannuationGFS: No GFS classification is applicable

NA: Financial account and Balance sheet - Net equity in pension funds
Provision of assistance to corporations, unincorporated enterprises and non-profit institutions
Wage subsidiesCommonwealth: JobKeeper; JobKeeper; JobMaker Hiring Credit; Wage subsidies for apprentices; Job creation and support funds; Aged care staff retention bonus; Child Care Recovery Payment (footnote 6)GFS: Other subsidies on production

NA: GDP (I) - Other subsidies on production
Cash support payments to eligible producersCommonwealth: Boosting Cash Flow for Employers

State: Other state-based cash payments to businesses (e.g.; Business Support Fund and Sole Trader Support Fund in Victoria); Travel Agents COVID-19 payment; Electricity rebates for businesses
GFS: Other subsidies on production

NA: GDP (I) - Other subsidies on production
Targeted industry support for market producersCommonwealth: Australian Airline Financial Relief Package; Restart Investment to Sustain and Expand Fund; Temporary Interruption Fund; Zoos and Aquariums Support Package; Australian Screen Production Incentive

State: Support for professional sporting organisations and taxi operators; Regional Tourism Investment Fund in Victoria; Licensed Hospitality Venue Fund and Outdoor Eating & Entertainment Package in Victoria
Classifications vary depending on policy details

GFS: Other subsidies on production, Subsidies on products

NA: GDP (I) - Total subsidies on production, GPD (P) - Subsidies on products
Targeted industry support for non-market producersCommonwealth: Medical Research Future Fund; Funding for charities that provide emergency and food relief; Mental health support services; Funding for aeromedical services

State: Medical research grants; Funding for charities affected by COVID-19 lockdown; Domestic violence, mental health and homelessness support services
GFS: Current transfer expenses n.e.c.

NA: Income accounts - Other current transfers
Capital transfers to businessesCommonwealth: Capital contribution towards CSL facility upgrades in preparation for vaccine manufacture

GFS: Capital transfer expenses n.e.c.

NA: Capital account - Capital transfers, GPD (E) - Private gross fixed capital formation
Relaxation of tax and non-tax revenue obligations
Refunds, waivers and deferrals for various taxes, licenses and feesCommonwealth: Key examples include GST and commercial broadcasting taxes

State: Key examples include payroll, land, liquor, gambling, fishing and stamp duty related policies
GFS: Sales of goods and services, Various taxes classifications

NA: GDP (E) - Government final consumption expenditure, GDP (I) - Total taxes on production, GPD (P) - Taxes on products
Investment incentivesCommonwealth: Increases and expansions to instant asset write-off policies for businessesGFS: Company tax

NA: Income accounts - Current taxes on income, GPD (E) - Private gross fixed capital formation
Capital injections, establishment of new, or extended, lending facilities and provision of guarantees
Loan guaranteesCommonwealth: SME Guarantee Scheme; First Home Loan Deposit Scheme

State: Loan guarantees for public universities
GFS: Contingent liabilities

NA: Not recognised
Equity injectionsState: Government equity injections into public non-financial corporationsGFS: Equity including contributed capital

NA: Financial account and Balance sheet - Shares and other equity
Access to low cost loansCommonwealth: RBA Term Funding Facility for banks

State: Low-interest loans for local government and public universities
GFS: Advances: Concessional or other

NA: Financial account and Balance sheet - Loan and debt security markets (repurchase agreements)

Footnote
1. These frameworks are supported by international standards such as the International Monetary Fund (IMF) Government Finance Statistics Manual 2014 (GFSM 2014) and the System of National Accounts 2008 (2008 SNA).
2. The categories are broadly based on the recommendations in “COVID-19: How to Record Government Policy Interventions in Fiscal Statistics” (IMF, 2020)
3. Table 1 summarises key policies with an impact on the macroeconomic accounts and does not cover every specific COVID-19 government policy in Australia.
4. NA includes the gross domestic product (GDP) accounts, which are measured using the expenditure approach (GDP (E)), the income approach (GDP (I)) or the production approach (GDP (P)). NA also includes income accounts, capital accounts, financial accounts and balance sheets.
5. ‘States’ refers to the state sector in macroeconomic statistics which covers all eight state and territory jurisdictions in Australia.
6. Commonwealth support for the child care industry during the COVID-19 pandemic transitioned between different policies including the existing Child Care Subsidy (prior to 6 April and after 12 July 2020), the Early Childhood Education and Care Relief Package (6 April to 12 July 2020), JobKeeper assistance (30 March to 12 July 2020), the Child Care Transition Payment (13 July to 27 September 2020) and the Child Care Recovery Payment (28 September 2020 to 31 January 2021).

 

 

Reference

IMF (2020), "COVID-19: How to Record Government Policy Interventions in Fiscal Statistics", Special Series on Statistical Issues in Response to COVID-19, IMF publication, viewed at https://www.imf.org/en/Publications/SPROLLs/covid19-special-notes