As part of the Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0), the ABS compiles the income, expenditure and production measures of GDP independently as well as the average of all three as GDP(A). In principle, the three measures of GDP should give the same result, but in practice they differ due to the limitations of data sources. These limitations include sampling error, reporting error, incomplete coverage in the numerous individual data sources, and variations in the timing of recording of transactions. On an annual basis, the three measures of GDP are balanced within the Supply and Use Tables (SUT) for all years except the latest year. However, on a quarterly basis the ABS publish unbalanced measures and a statistical discrepancy exists for all three measures. Large and persistent statistical discrepancies can indicate gaps in the coverage of components or other quality issues.
The Quarterly Supply and Use (QSU) framework is used to confront the production and expenditure measures of GDP. To further improve the coherence of the production and income measures of GDP, the ABS has developed quarterly current price GVA estimates. These estimates are informative in their own right as they provide an industry perspective to the income measure of GDP, and can be used to confront the production and income components of GDP.
Since the introduction of annual SUT in the Australian National Accounts, the statistical discrepancy between the production and income measures of GDP are small on a quarterly basis, as seen in graph 1. There have been some instances where the two measures have diverged beyond the accepted levels. For example, in the June 2005 release of the quarterly National Accounts, the production and income measures of GDP diverged significantly, where the production measure indicated that the economy expanded while the income measure showed a contraction. At the time of compiling these estimates, while the QSU was used to confront the expenditure and production measures, there was no method or tool available to link the production and income measures of GDP, and so the discrepancy was published as is.
Graph 1. GDP(I) vs GDP(P)