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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15.1 Gross capital formation refers to the gross additions to national wealth that result from three categories of investment:
15.2 Changes in inventories, as well as the data sources and methodology used in their estimation, are described in detail in Chapter 17.
15.3 Valuables are assets that are not used primarily for production or consumption, that do not deteriorate over time under normal conditions and that are acquired and held primarily as a store of value. Valuables consist of precious stones and metals (provided that they are not intended to be used as intermediate inputs into processes of production); paintings, sculptures, etc. recognised as works of art; antiques; and other valuables such as jewellery fashioned from precious stones and metals. At present, estimates of gross capital formation flowing from acquisitions less disposals of valuables are not included in Australia's national accounts.
15.4 Amounts paid for non-produced, non-financial assets such as land, subsoil assets and intangible non-produced assets represent a transfer of wealth, not an addition to it. Therefore, although such expenditures are classified as being of a capital nature, and are included in the relevant capital accounts, they are not included in gross fixed capital formation (see paragraphs 15.105 to 15.108 for more information on these expenditures). However, costs associated with the transfer of ownership of such assets are included in gross fixed capital formation.
15.5 Fixed capital formation estimates are shown on a 'gross' basis (i.e. deductions have not been made for the consumption of existing assets during the production process). However, the estimates are net of the sale of second-hand capital assets.
15.6 Gross fixed capital formation is made up of the outlays of producers on commodities which do not add to their inventories or enter into the intermediate consumption for the period. The fundamental point of distinction between intermediate consumption and gross fixed capital formation is whether commodities are used up during the course of a particular period or whether they yield benefits beyond that period. In the case of households as consumers, all expenditure except the purchase of dwellings is treated as final consumption expenditure, whether or not it yields future benefits. Therefore a purchase of a motor vehicle by a household (but not by an associated unincorporated enterprise) is treated as final consumption expenditure, whereas the same purchase by a business would be classified to gross fixed capital formation.
15.7 The related concepts of gross and net capital stock, capital services and the consumption of fixed capital, as well as the data sources and methodology used in their estimation, are described in detail in Chapter 16.