5216.0 - Australian National Accounts: Concepts, Sources and Methods, 2000  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 15/11/2000   
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Contents >> Appendix 2 - Differences between ASNA and SNA93


A2.1 As mentioned previously, the ABS endorses the revised SNA and has implemented its recommendations to the fullest extent practicable, especially in relation to those changes which affect GDP. However, there are a number of SNA93 recommendations relating to concepts and the production boundary that the ABS does not plan to implement or is not currently in a position to implement because of inadequate data. These are described below.

Superannuation contributions and receipts in the household income account

A2.2 At present in the ASNA, employers’ contributions to superannuation funds (a component of compensation of employees), and interest received on householders’ equity in life insurance and superannuation funds, are recorded as household income and contribute to disposable income and saving. Contributions to and drawdowns from superannuation reserves are treated as financial transactions by households and do not impact on income or saving. In addition, contributions placed with financial institutions managing superannuation funds are not treated as income of the financial institutions, neither are payments of benefits from the funds regarded as disbursements of income from the financial institutions. Rather, the contributions made to the schemes and the benefits paid by them represent changes in the equity of households in the schemes, and are reflected instead in the financial accounts and balance sheets.

A2.3 SNA93 continues this conceptual treatment in so far as it affects household saving. However, in contrast to ASNA practice, SNA93 recommends that some additional transactions on account of superannuation should be included in households’ secondary income receivable and payable, in order to make explicit the underlying economic processes taking place. Actual receipts of benefits would be shown as receipts of secondary income by households. Similarly, contributions by households to superannuation schemes (both the employers’ and employees’ components, including property income attributable to householders’ equity) would be shown as secondary income payable. The SNA93 treatment therefore alters the measure of household disposable income. However, in order to maintain the conceptual integrity of the system, the additional transactions need to be reversed, by including a new item ‘Adjustment for change in net equity of households on life insurance and pension funds’ so as to leave household saving unaffected. The ABS will not be implementing this SNA93 recommendation in the ASNA, because it is considered to be too confusing for users of the accounts.

Speculative construction - timing of recording in gross fixed capital formation

A2.4 SNA93 recommends that speculative construction be shown as part of inventories until the ownership has been transferred to the eventual user of the asset. Hence work done on speculative construction would not be treated as gross fixed capital formation until that time. The value of output would remain as part of the work-in-progress of the institutional unit producing the asset until sold. However, construction for own use or work completed under contract of sale should be included as gross fixed capital formation as the work is put in place. The ASNA currently adopts the latter treatment for all building and construction activity, including speculative construction.

A2.5 The ABS has decided to retain the existing approach in the ASNA for operational reasons and because the ASNA treatment is not regarded as a significant departure from the intentions of SNA93. It would be difficult to collect the data needed to implement the SNA93 treatment in the ABS Building Activity Survey, the major source of data on the value of new buildings for the national accounts. In particular, the nature of the survey would have to change from a ‘work done’ basis to an ‘inventories’ basis, for speculative building projects. Information about individual speculative building projects would need to be collected until the building was sold. It is considered that the gains in adopting the SNA93 treatment of speculative construction are minimal and not worth the extra burden on respondents, especially as there would be no impact on the measurement of GDP. Moreover, speculative activity is only important at certain times in the building cycle and, as dwellings are generally completed over one or two quarters, any timing adjustment to investment and capital stock would be relatively insignificant. There were also objections to this SNA93 recommendation during the user consultations which were conducted prior to the implementation of SNA93 in the ASNA.

Crops - time of recording in output and GDP

A2.6 SNA93 recommends that cultivated natural growth be included in output as work-in-progress or gross fixed capital formation over the entire period of the growth process. This recommendation covers growth of agricultural crops, livestock, cultivated fish and crustacea, vineyards, orchards and timber tracts. In SNA68, only growth in livestock and fishstock were treated in this way, although the recommended treatment was not adopted in the ASNA. The existing ASNA treatment is to include crops and forest products in output when harvested, but to follow SNA93 recommendations for major categories of livestock (i.e. beef and dairy cattle and sheep).

A2.7 The recommendations for crops and plantation growth will not be implemented for data availability and operational reasons. Implementation of the SNA93 treatment for crops would require crop output to be forecast at the beginning of the crop year and then distributed to quarters as production occurs. Because the crop year generally spans more than one financial year in Australia, it would also require a redistribution of output across years. Given Australia’s variable weather conditions and variations in prices for agricultural commodities, revisions to the previous year could be substantial if the SNA93 approach were to be adopted. The existing methodology for the seasonal adjustment of crop production also requires crops to be forecast, but this does not have to be done until November, towards the end of the crop year, when there is substantially more information available on the likely outcome of the harvest. A further difficulty is that measurement of the crop production process throughout the season would be quite arbitrary. Allocation of output using costs incurred in each period, including an allowance for the use of own labour, is recommended by SNA93. The major expenses associated with wheat production would be incurred in the June (planting) and December and March (harvesting) quarters, although substantial crop growth would also occur during the September quarter. Notwithstanding the somewhat arbitrary nature of the recommended allocator, quarterly costs data by type of crop are not available.

A2.8 The approach taken to the treatment of crop output in the accounts can have a significant impact on year-to-year growth, especially in a year following the breaking of, or coming into, a drought. In the quarterly accounts, the choice of seasonal adjustment method is of major importance to the interpretation of the data. Because crop output is almost exclusively in the December and the March quarters, it is difficult to seasonally adjust in the standard manner. Instead of the standard multiplicative time series model, where the seasonal and residual components are both directly proportional to each other and to the trend, a pseudo-additive model is used, where the relationship with the trend is preserved but seasonal and residual components are no longer proportionally related to each other. This allows for an adequate seasonal adjustment to be made of time series data, such as crop output, where regular null quarterly estimates are observed in the original time series. This method of seasonal adjustment is applied to aggregate cereal crops (wheat, barley, other cereals) and to wheat marketing costs in both current price and volume terms.

Orchard growth - inclusion within the fixed asset boundary

A2.9 SNA93 recommends that the value of acquisitions less disposals of mature repeat production trees, vines, shrubs, etc., and the acquisition and establishment of immature trees etc. on own account, should be included in gross fixed capital formation. The latter may be valued by the costs incurred in their establishment during the period until maturity. In the existing ASNA, these establishment costs are variously treated as intermediate consumption or gross fixed capital formation, depending on their treatment in business accounts. Although the ABS supports the SNA93 recommendation in principle, it has not been implemented for data availability reasons.

Valuables - inclusion within the fixed asset boundary

A2.10 A new type of asset has been created in SNA93 called 'valuables'. Valuables are defined as goods of considerable value that are not used primarily for purposes of production or consumption, but are held as stores of value over time. The economic benefits that valuables bring is that their values are not expected to decline relative to the general price level. For Australia, the most important of these assets is gold. While this SNA93 recommendation is supported in principle, existing and prospective data availability is a major problem. It has not been possible to implement this change in the ASNA at this stage, although further investigations will be undertaken. In the ASNA, that part of gold production which is retained as a store of value will contribute to the item ‘changes in inventories’ rather than to an item for ‘valuables’.

Inclusion of real estate ownership transfer costs in the valuation of assets

A2.11 SNA93 recommends that the purchaser’s transfer costs (stamp duties, legal fees etc.) should be added to the purchase price when measuring the acquisition of fixed assets, and that the seller’s transfer costs (real estate agents’ commissions, legal fees etc.) should be deducted from the sale price when measuring disposals. The effect of this is to include the whole of the costs of ownership transfer in gross fixed capital formation. In SNA93, ownership transfer costs (except for those on land) are included indistinguishably with the asset being bought and sold, rather than being shown as a separate asset class. As such, they are written off over the lives of the underlying assets.

A2.12 The SNA93 treatment of ownership transfer costs is currently under review internationally. It is the ABS's intention to adopt whatever treatment is agreed upon as a result of this review. In the interim, in the ASNA, ownership transfer costs are included in gross fixed capital formation, but they are shown as a separate asset rather than as part of gross fixed capital formation in the underlying assets. This is in line with longstanding practice in the Australian national accounts. However, because of this treatment, difficulties arise in the context of the balance sheet. As ownership transfer costs do not exist as a separate economic asset in the real world - i.e. they cannot be on-sold and do not retain value over time - the whole of the amount of ownership transfer costs is written off as consumption of fixed capital in the same period as the transactions occur. Therefore, these costs do not appear as an asset in the balance sheet.

Identification of market and non-market transactions

A2.13 SNA93 makes a distinction between market and non-market output in the measurement of production. The latter includes services provided by general government, housing services produced for own consumption by owner occupiers, and own-account capital formation. The ABS does not explicitly make this distinction in either the national income, expenditure and product (NIEP) accounts or the I-O tables. However, some major components of non-market output will continue to be available separately in the ASNA.

Illegal activities

A2.14 SNA93 recommends that, in principle, all economic transactions associated with illegal activities should be included in the accounts. While current estimates in the ASNA do not include any specific estimates for such activities, some transactions arising from them are likely to be included in the data sources used to compile the accounts. For example, some income earned from illegal gambling or prostitution activities may be reported as unincorporated business income in the taxation statistics which are used to compile estimates of gross mixed income.

Non-profit institutions serving households (NPISH)

A2.15 The SNA recommendations are adhered to with regard to the sector allocation of NPIs that are market producers and those that are controlled and mainly financed by government units. In principle the ABS has agreed to identify and implement the NPISH sector. However, due to source data limitations, it will be some time before a complete set of accounts for this sector can be developed, including the provision of an adequate time series. In the interim, NPISHs are included in the household sector.

Presentation of accounts in the ASNA

A2.16 Two main differences exist between the ASNA and SNA93 in the presentation of accounts. First, the ASNA GDP account is a combination of SNA93 production account and generation of income account; and second, the ASNA income accounts are a combination of the SNA93 accounts for allocation of primary income, secondary distribution of income, and use of income. There are also minor differences in the way information is presented within the accounts and in the level of detail shown.

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