Improved estimates of the annual national accounts: Results of the 2021 historical revisions

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Released
29/10/2021
Source
Australian System of National Accounts, 2020-21 financial year

Introduction

Statistical revisions are carried out regularly in the Australian System of National Accounts to reflect the most current information and estimation methods, however revisions are normally restricted to reflect a three year period. Periodically the ABS will revise a longer annual time series, and this is referred to as a “historical revision". These longer time series revisions focus on improving data quality (e.g. incorporating new data sources or cyclical data collections such as the Census); adopting new classifications; and improving international comparability.

In 2021, the Australian System of National Accounts incorporated five historical revision improvements:

  1. Childcare source and reclassification – data for household and government expenditure on formal childcare is now sourced from the Department of Education, Skills and Employment. In addition, government payments for childcare assistance are now consistently treated as social transfers in kind for all government support programs from 1994 onwards, except for the Childcare Tax Rebate (2004-2007) which remains a non-payable tax offset.
  2. Visa application charges – from 2015-16 onwards, revenue obtained from visa application charges is now treated as tax revenue, rather than the sale of a service. This change brings the treatment of visa application charges in the National Accounts, Balance of Payments, and Trade in Goods and Services statistics into alignment with Government Finance Statistics, as described in the June 2019 Government Finance Statistics publication.
  3. Travel services debits and credits – new data sources for estimating travel service credits and debits are incorporated into the National Accounts, Balance of Payments, and Trade in Goods and Services statistics.
  4. Economic and Financial Statistics collection – new data sourced from APRA for the Financial and Insurance Services industries are introduced into the National Accounts. This change was previously advised in November 2019 as part of the information paper Implementing the new economic and financial statistics collection in ABS economic outputs.
  5. Hours worked – the data source for hours worked has changed from the Labour Force Survey to Labour Accounts from 1994-95 onwards, impacting productivity estimates. Labour Accounts hours worked estimates are consistent in concept, definition and scope with the Australian System of National Accounts.

These historical revisions will also appear in the following upcoming economic releases:

Overview

The 2021 historical revision is constrained to a small number of targeted changes. As such, changes to key economic indicators are significantly smaller than in previous historical revisions. In most respects, the picture of the economy shown in the revised estimates is unchanged from previously published estimates.

The most substantial changes in terms of impact are to the gross value added of the Financial and Insurance Services, Ownership of Dwellings and Health Care and Social Assistance industries and the household saving ratio.

Impact analysis of key economic indicators are outlined below.

Revisions to key national accounts aggregates

Australian gross domestic product (GDP) throughout the time series remains similar to previously published estimates. Figure 1 provides the overall impact of the revisions to annual percentage change in GDP in volume terms. From 1995-96 to 2019-20, the average annual growth rate remains unchanged at 3.0%.

Revisions to expenditure on GDP

The 2021 historical revision results in changes to household final consumption expenditure (HFCE), government final consumption expenditure (GFCE), and international trade.

Household final consumption expenditure (HFCE)

HFCE growth is similar to previously published estimates as shown in Figure 2. The revisions in volume terms range from -0.3 percentage points to 0.3 percentage points, while from 1995-96 to 2019-20, the average annual growth rate remained unchanged at 3.1%.

Figure 3 shows average revisions to selected components of HFCE. The downward revisions in current prices to HFCE between 1994-95 and 2019-20 are predominantly driven by the introduction of the economic and financial statistics collection and the reclassification of childcare schemes. Revised personal services imports drives the remainder of revisions which are spread across 12 COICOPS.

Government final consumption expenditure (GFCE)

The GFCE time series is similar to previously published estimates as shown in Figure 4. Although GFCE was revised through the entire time series, the revisions prior to 2011-12 were minor. The revisions between 2011-12 and 2019-20, in volume terms range from -0.2 percentage points to 0.6 percentage points. These changes are predominantly driven by childcare and visa application charges revisions.

International trade

Like HFCE and GFCE, revised trade estimates remain similar to previously published estimates as shown in Figures 5 and 6. The revised average annual growth rate between 1995-96 and 2019-20, in volume terms remained unchanged for exports at 4.4%. Imports average annual growth rate decreased by 0.1 percentage point to 5.7%.

Revisions to components of gross value added (GVA)

Industries with the most material revisions to GVA are the Financial and Insurance Services, Ownership of Dwellings and Health Care and Social Assistance industries as seen in Figures 7 to 9. 

Revisions to both Financial and Insurance Services and Ownership of Dwellings are driven by updated income, expenditure and balance sheet estimates sourced from the economic and financial statistics collection.  

Revisions to Health Care and Social Assistance, shown in Figure 9, are driven by improved childcare services estimates sourced from Department of Education, Skills and Employment. 

Revisions to income from GDP

The 2021 historical revisions result in minor changes to total compensation to employees (COE) and to gross operating surplus and mixed income estimates (GOSMI) as shown in Figures 10 and 11. 

Compensation of employees (COE)

Total COE growth rates align with previously published estimates. There are minor changes to the Financial and Insurance Services industry resulting from the implementation of the economic and financial statistics collection.

Gross operating surplus and mixed income (GOSMI)

Changes to GOSMI reflected improvements to industry GVA estimates. Larger revisions are seen in the Financial and Insurance Services, Ownership of Dwellings and Health Care and Social Assistance industries. Of these, Financial and Insurance Services revisions were driven by the various improvements resulting from the economic and financial statistics collection. These changes also impact Ownership of Dwellings GOS with significant improvements to FISIM related to dwelling loans, a key component in estimating Ownership of Dwellings GOS. Changes to Health Care and Social Assistance are driven by improved childcare services estimates sourced from Department of Education, Skills and Employment. 

Revisions to household saving ratio

Household net saving is the difference between household net disposable income and household final consumption expenditure. The ratio is revised throughout the entire time series, ranging from -1.5 percentage points to 2.0 percentage points. Revisions are primarily driven by the introduction of the economic and financial statistics collection for measuring HFCE of insurance and other financial services, ownership of dwelling GOS and components of property income. The reclassification of childcare schemes is reflected by decreased income from social assistance benefits. The reclassification of VAC is reflected in changes to other current taxes on income and wealth.