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This document was added or updated on 28/08/2020. Classifying COVID-19 electricity bills support to eligible producers
Other policies to cap electricity price increases are well classified within the economic accounts and are outside the scope of this note. Other subsidies on production For a payment to be considered a subsidy, it must have an influence on production which is defined as “an activity, carried out under the responsibility, control and management of an institutional unit, that uses inputs of labour, capital, and goods and services to produce outputs of goods and services” (2008 SNA, para 6.2). Subsidies are also more specifically defined as “current unrequited payments that government units, including non-resident government units, make to enterprises on the basis of the levels of their production activities or the quantities or values of the goods or services that they produce, sell or import” (2008 SNA, para 7.98). While subsidies may influence the level and/or price of goods and services, they may also influence “the remuneration of the institutional units engaged in production” (2008 SNA, para 7.98). Subsidies on products are defined as “a subsidy payable per unit of a good or service” (2008 SNA, para 7.100). They may be a specific amount of money per unit of quantity of a good or service, or calculated ad valorem as a specified percentage of the price per unit. Other subsidies on production are defined as “subsidies except subsidies on products that resident enterprises may receive as a consequence of engaging in production” (2008 SNA, para 7.106). Other subsidies on production influence the process of production and cover a diverse set of possible payments. The System of National Accounts 2008 provides two examples of other subsidies on production – subsidies on payroll or workforce, and subsidies to reduce pollution. Under these general government policies, for eligible producers to receive a reduction in their electricity bills, they must have an active electricity connection. This indicates a relationship with productive activities and therefore the appropriate treatment for these general government payments are subsidies. The next conceptual decision is on the classification of the payments as either subsidies on products or other subsidies on production. It was determined that these payments should be classified as other subsidies on production. The payments provide a mechanism for state and territory governments to temporarily subsidise eligible producers that have been impacted by COVID-19 shutdowns. These bill reductions target the consumption of electricity and aim to subsidise productive activities of eligible producers by influencing their income as they are engaging in production. This holds regardless of whether the beneficiary is a market or non-market producer. These general government payments to electricity providers are not subsidies on products as there is no direct link to a unit of good or service being produced by the electricity providers. These payments are also not the government’s intermediate consumption as the general government sector never takes economic ownership of the electricity for use in their production of non-market goods and services. Sales of goods and services For other policies where fees and charges are waived by electricity providers without financial assistance from the general government sector, they are classified as a reduction in sales of goods and services. These electricity providers have a reduced income because their prices have been discounted. 1. https://www.mediastatements.wa.gov.au/Pages/McGowan/2020/03/$1-billion-COVID-19-economic-and-health-relief-package-unveiled-.aspx <back 2. https://www.actewagl.com.au/en/support-and-advice/concessions-and-rebates/act-rebates/act-utilities-stimulus-payment-covid-19-support <back 3. https://www.business.qld.gov.au/running-business/energy-business/covid-19-relief <back 4. https://nt.gov.au/industry/support-for-business/programs-and-initiatives <back 5. http://www.premier.tas.gov.au/releases/unprecedented_new_social_and_economic_support_package_released <back 6. https://www.auroraenergy.com.au/covid-19 <back Document Selection These documents will be presented in a new window.
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5261.0 - Economic measurement during COVID-19: Selected issues in the Economic Accounts, May 2020
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 18/05/2020 First Issue