5310.0.55.002 - Information Paper: Implementation of new international statistical standards in ABS National and International Accounts, September 2009  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 28/10/2009  First Issue
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The international framework for economic statistics is centred around two key documents: the System of National Accounts 1993 (SNA93) and the Balance of Payments Manual fifth edition (BPM5), both of which were released in 1993. Since the release of these key standards, a number of new economic phenomena have arisen or assumed greater importance as economies continue to develop in their complexity. In response to this, relevant international organisations and a range of national statistical agencies, including the ABS, have reviewed a range of conceptual and measurement issues that were either not clarified completely at the time of the release of SNA93 and BPM5, or have emerged as important measurement issues since that time. These issues are described in the Information Paper: Introduction of revised international standards in ABS economic statistics in 2009 (cat. no. 5310.0.55.001).

The international standards for national and international accounts were updated concurrently and the standards are compatible. The new standards are presented in the System of National Accounts 2008 (SNA08) and the Balance of Payments and International Investment Position Manual sixth edition (BPM6). The International Monetary Fund's Government Finance Statistics Manual 2001 will be revised in the future. The ABS expects to update Australia's Government Finance Statistics to the revised international standards following this revision. The exception is the treatment of military expenditure, where the SNA08 treatment will be adopted in Government Finance Statistics. See chapter 7 for more details. In addition to implementing the revised international standards, the ABS will implement revised classifications, particularly for industry and institutional sectors.

The revised standards are not radical departures from their former editions. They represent an incremental change in the development of national and international accounting to reflect changing economic behaviour and new policy concerns, as well as an improved understanding of the accounts, their international comparability and harmonisation with other international statistical standards. There have been incremental changes to concepts, classifications and definitions. Some of these represent changes in terminology and presentation, while others impact on the measurement of major summary aggregates such as Gross Domestic Product (GDP) and saving. The revised industry classification will result in a significant change to the presentation of statistics by industry.

This chapter provides a description of changes to concepts, classifications and definitions within the Australian System of National Accounts (ASNA) and the Balance of Payments (BoP) and International Investment Position (IIP) statistics. A discussion of issues that the ABS will either not implement or will continue to research can be found in Chapter 5.


The revised international standards will change the measurement of a number of components of the ASNA, but there will be no major changes to the structure of the accounts. The main changes are listed below, with a detailed discussion of each in following chapters:

  • Introduction of research and development as capital formation (chapter 6 - research and development);
  • Capitalisation of expenditure on defence weapons platforms (chapter 7 - military expenditure);
  • The inclusion of reinvested earnings of investment funds (chapter 9 - reinvested earnings of investment funds).

In addition, the ABS will implement two key changes that were in SNA93 but not implemented by the ABS:
  • Inclusion of orchard growth in the capital and production accounts (chapter 8 - orchard growth);
  • Moving financial auxiliaries to the financial sector (explained later in this chapter).

In addition to the changes described in detail in subsequent chapters, other selected changes are summarised below.


SNA93 recommended capitalising ownership transfer costs and depreciating them over the life of the associated asset. The ABS did not implement this methodology due to concerns that it would overstate balance sheet capital since assets such as buildings often change ownership numerous times during their lives. Instead the ABS adopted a treatment of writing off ownership transfer costs through consumption of fixed capital in the same period in which they arise. This means that the transfer costs are shown as gross fixed capital formation but do not accumulate in the balance sheet.

The standard methodology was altered in SNA08 so that the cost of ownership transfer is written off over the period during which the acquirer expects to hold the asset. If the expectation is met, the costs of ownership transfers will be entirely depreciated when the asset is resold, thus resolving the issue raised of overestimating operating surplus. The ABS will implement the SNA08 treatment.

The new treatment will not have an impact on the current level of gross fixed capital formation, but adopting the longer asset life will increase the size of the capital stock estimates in the balance sheet.


SNA08 affirms the treatment of mineral exploration as an asset and provides further guidance on the appropriate measurement methodology. The current ABS treatment is in line with the recommendations except to separately identify mineral exploration expenditure on the balance sheet.

SNA08 recommends that mineral exploration assets be separately identified in the balance sheet as a produced asset. Mineral exploration assets will be added to intellectual property products in the balance sheet.

This will change the aggregate values in the balance sheet by recording mineral exploration as an intellectual property product asset, however it will have no effect on GDP.


In the production and income accounts of SNA08, financial auxiliaries are corporations engaged primarily in activities closely related to financial intermediation but which do not themselves perform an intermediation role. They consist of corporations such as securities brokers, loan brokers, flotation corporations (that manage the issue of securities), insurance brokers, and fund managers. Although SNA93 said that financial auxiliaries be classified to the financial corporations sector, no financial auxiliaries were reclassified from the non-financial corporations sector to the financial corporations sector for practical reasons in the ASNA. With the implementation of SNA08, the ABS will implement the recommended treatment and include financial auxiliaries in the financial corporations sector for all ABS statistics.

This will not result in any change to GDP, only a change in where the activity for these units will be recorded.


SNA93 introduced the treatment of computer software as capital formation, but left open the treatment of originals and copies as distinct products. A number of clarifications will be provided with SNA08. The most important of these confirms that 'licences to use' will be treated as capital formation if they are to be used for more than one year, regardless of payment arrangements.

The ABS does not have information on the duration of 'licences to use' and assumes that most software is purchased with the intention to be used beyond one year. The software will therefore be treated as capital formation.


SNA93 recommended that databases be capitalised. The following clarifications have been provided in SNA08:
  • In the absence of a more satisfactory alternative, for the valuation of a database created on own account, the value should be estimated on a sum of costs basis. The value of the software component of the database, the database management system, will be recorded elsewhere as a software asset. All costs to update a database should be recorded as capital formation rather than maintenance. However, the costs of creating the information content will not be capitalised.
  • Databases for sale should be valued at their market price which includes the value of the information content. If the value of a software component is available separately, it should be recorded as the sale of software.

The present ABS treatment is consistent with the new standard. However it is not clear that ABS is capturing the entire scope of database production, particularly the updating of databases. More work will be undertaken in order to ensure ABS is capturing this activity.


SNA93 did not reflect the liabilities that employers, in particular government agencies, incur by promising pensions to households. SNA08 recommends the inclusion of defined benefit schemes in the core accounts. SNA08 recommends the creation of a supplementary table including social security schemes (of which there are none in Australia).

The ASNA reflects the new recommended treatment by including unfunded pension schemes as a liability of employers. Pension schemes have generated substantial interest in the past few years and some new information may need to be collected through changes to the Australian Prudential Regulatory Authority collection vehicles and other associated methods changes, such as changes in actuarial assumptions applied by pension funds, to implement the SNA08 recommendations fully.


SNA08 includes the value of employee stock options as a form of compensation of employees in kind. This will modify the coverage of wages and salaries in kind since at present they are restricted to goods and services and the value of interest foregone when an employer provides low interest loans to staff. The value of employee stock options granted is added to compensation of employees, and the amount is offset by a deduction in gross operating surplus of businesses and will result in no change to the level of GDP.

The financial accounts will include employee stock options in the financial derivatives category.


The SNA93 asset category 'purchased goodwill' will be changed to 'purchased goodwill and marketing assets' under SNA08. Entries will continue to be recorded only when the value of those assets are evidenced by a sale. For all enterprises, whether incorporated or quasi-corporate, the value of purchased goodwill and marketing assets will be valued as the takeover value of the enterprise less the value of other assets and liabilities identified for the enterprise.

This represents a change for incorporated enterprises and makes their treatment consistent with quasi-corporates and unincorporated enterprises. The asset is classified as a non-produced asset.

The value of purchased goodwill will not be included as an asset in the ASNA balance sheets. Work is proposed to be undertaken to assess the possibility of estimating this item using the revised definition. Any changes to the balance sheet due to the recognition of the appearance of goodwill would flow through as increases in both total assets and net worth.


SNA08 proposes unallocated gold accounts (that is, gold held in reserves) be recorded as financial assets (equivalent to assets denominated in a foreign currency) rather than constituting ownership of physical gold. Transactions will be recorded in the financial account. SNA08 also proposes that the treatment of unallocated gold accounts will be extended to other unallocated metal accounts.

The ABS presents unallocated gold accounts as financial assets denominated in foreign currencies, which is consistent with the new standards.


No guidance on the treatment of debt guarantees was provided in SNA93 or BPM5, but this will be provided in BPM6 and SNA08. Under BPM6 and SNA08, there will be three types of guarantee:
      (i) guarantees as financial derivatives should be treated as financial derivatives;
      (ii) standardised guarantees are guarantees that are not provided by means of a financial derivative, but where the probability of default can be well established; and
      (iii) one-off guarantees are guarantees where the loan or the security are so particular that it is not possible for the degree of risk associated with the loan to be calculated with any degree of accuracy.

The ABS considered all guarantees to be contingent liabilities of the guarantor and therefore outside the asset boundary. They were only included in the financial accounts if they were invoked. The liability which was the subject of the guarantee was then extinguished and a new liability created. With the implementation of the new standards, the ABS will adopt a new treatment. For guarantees as financial derivatives and standardised guarantees, the ABS will record the creation of a guarantee as a transaction creating a liability and the activation of the guarantee as a transaction extinguishing the liability. One-off guarantees will be treated as contingent. The impact is expected to be minor as the activation of a guarantee is a rare occurrence in the Australian economy.


The revised international standards will change the measurement of a number of components of the Balance of Payments and International Investment Position. The main changes will be:
  • Inclusion of reinvested earnings of investment funds in the international accounts (chapter 9 - reinvested earnings of investment funds);
  • Inclusion of pension funds in the international accounts (chapter 10 - pension funds in the international accounts);
  • Inclusion of technical reserves for insurance and improved methods for the estimation of insurance services in the international accounts (chapter 11 - insurance in the international accounts);
  • Improved methodology for financial intermediation services indirectly measured (chapter 12 - improved measurement of FISIM in the international accounts);
  • Change of migrant transfers in the capital account to an other volume change in the IIP, and consequential updating of the methodology to calculate the foreign assets and liabilities from permanent residency changes (chapter 13 - accounting for wealth of migrants).

Below is a description of other selected issues that ABS will be implementing as a result of BPM6.


The BPM6 definition of economic territory will be the area under the effective control of the Australian government. This no longer requires that persons, goods, and capital circulate freely within the territory. As a result of this change, the economic territory will include the land area, airspace, territorial waters, including jurisdiction over fishing rights and rights to fuels and minerals of these territories. Australian economic territory will include territorial enclaves in the rest of the world. These are clearly demarcated areas of land, located in other countries and which are owned or rented by the Australian government for diplomatic, military, scientific or other purposes. Specifically, the economic territory of Australia will consist of:
  • Geographic Australia which includes Cocos (Keeling) Islands and Christmas Island
  • Norfolk Island
  • Australian Antarctic Territory
  • Heard Island and McDonald Islands
  • Territory of Ashmore Reef and Cartier Island
  • Coral Sea Islands
  • Australia's territorial enclaves overseas.

The Joint Petroleum Development Area is considered joint territory between Australia and Timor-Leste.

Due to administrative complexities and measurement difficulties, Norfolk Island transactions will not always be captured in all relevant ABS economic statistics. Most of the transactions involving Norfolk Island are not material to Australia's overall economic performance and not capturing these transactions should not distort the economic statistics. However, any significant transactions will be identified and included in the relevant statistics.


BPM6 introduces a number of changes to the treatment and classification of goods and services in the Balance of Payments (BoP). The main changes are described below.


Merchanting (describing trade of goods offshore by residents) will no longer be recorded as services. Merchanting will record three transactions in the goods account. It will measure the flow of goods acquired under merchanting and record these as negative exports. It will measure the flow of goods sold under merchanting (exports). The net position will be calculated as the difference between these two, this is equivalent to sales (exports) minus purchases (negative exports). There will be some changes in the balance on goods and services from this change.

Repairs on goods

Repairs on goods will no longer be recorded as goods. They will be included in services and named maintenance and repair services n.i.e.. Since the same value will be removed from goods and added to services, this will not cause any change to the balance on goods and services.

Goods for processing

Goods for processing will no longer be recorded as exports and imports of goods. Processing activities will be recorded as manufacturing services on physical inputs owned by others. The existing series have been reviewed. The revised gross values will be removed from goods and the revised net values added to services. This will not cause any change to the balance on goods and services.

Goods procured in ports by carriers

Both the credits and debits series will be re-classified to general merchandise. This will involve allocating the value of the current goods procured in ports by carriers series to appropriate goods credits (i.e. non-rural goods) and debits (i.e. intermediate and other merchandise goods) items. This reclassification within goods will not change either total goods credits or total goods debits.

The remainder of the changes to the goods and services account are mainly reclassifications within services shown in the BoP:
  • postal and courier services will be moved from communications and re-classified to transport services.
  • telecommunications services, and computer and information services will be merged to form a new category named telecommunication, computer and information services.
  • royalties and licence fees will be renamed charges for the use of intellectual property n.i.e.
  • library and archive services currently reported under personal, cultural and recreational services will be re-classified to other computer and information services.


Under BPM5, the ABS used the 'directional principle' for the presentation of Australian direct investment abroad and foreign direct investment in Australia in tables 25 through 29 of the publication 5302.0, and the associated primary income accounts in tables 20 and 21. The directional principle recognises that many direct investment relationships involve 'reverse investment'; that is, a direct investor has an investment in its direct investment enterprise and the direct investment enterprise has an investment in its direct investor. The directional principle will involve subtracting the reverse investment and will present the direct investor's investment in its direct investment enterprise on a net basis.

By contrast, tables 2 through 4 of the publication 5302.0 presented foreign direct assets and liabilities on a gross basis with no netting of reverse investment. As a result, reconciliation of tables 2 through 4 with tables 25 through 29 required a 'direct investment adjustment' to take account of this reverse investment.

Under BPM6, all accounts are presented on a gross assets and liabilities basis. This will mean that tables 2 through 4 and tables 25 through 29 will reconcile without the need for a direct investment adjustment. This treatment will ensure that the international accounts are consistent with the external account of SNA08 which will require presentation on a gross assets and liabilities basis.

Under BPM6, the terms Australian investment abroad (AIA) and foreign investment in Australia (FIA) in tables 25 through 29 will be replaced by the terms foreign assets and foreign liabilities respectively. As a result of these changes, however, the new foreign assets and liabilities series will not be the same as the existing AIA and FIA series.


Modifications were made to the financial corporations classifications so that the BPM6 classifications will be more aligned with SNA08 classifications and be reflected in SESCA08. The SNA08, BPM6 and current and proposed ABS sector classifications are listed below in tables 1, 2 and 3. While SESCA08 and the sector classification from international standards are comparable, more detailed institutional sector classifications will differ due to the Australian economic environment and terminology.

1 Sector classification for international accounts

Current BPM5 classification used in the BoP
and IIP
BPM6 classification Classification to be used

Central bank Central bank Central bank
General government General government Depository corporations
Depository corporations Depository corporations General government
Other sectors Other sectors Other sectors
Other financial corporations Other financial corporations
Money market funds Non-financial corporations, households, NPISH (non-profit institutions serving households)
Other investment funds
Insurance companies
Pension funds
Other non-financial corporations
NPISH (non-profit institutions serving housholds)

2 Financial sector classification for national accounts

Current SNA93 classification used in the ASNA SNA08 classification Classification to be used

Central bank Central bank Reserve Bank
Banks Deposit-taking corporations except the Central Bank Depository corporations
Other depository corporations Money market funds (MMF) Banks
Life insurance corporations Non-MMF investment funds Other depository corporations
Pension funds Other financial intermediaries except insurance corporations and pension funds Pension fund and insurance corporations
Other insurance corporations Financial auxiliaries Pension funds
Central borrowing authorities Captive financial institutions and money lenders Life insurance corporations
Financial Intermediaries n.e.c. Insurance companies Non-life insurance corporations
Pension funds Financial investment funds
Money market funds (MMF)
Non-MMF financial investment funds
Central Borrowing Authorities
Other financial corporations

The revised subsectoring has resulted in new categories requiring detailed data. The ABS may not be able to provide data at such a detailed level for confidentiality reasons. The ABS intends to continue publishing a separate central borrowing authorities category and separately identify securitisers.

The key change introduced with the SNA08 and BPM6 classifications will be the separate identification of money market funds and other investment funds. Institutions to be included as investment funds will be those institutions which exhibit the following characteristics:
  • pooling of investors' monies to purchase assets;
  • assets are owned by a separate legal entity, such as a trust or company, which issues shares/units to investors on a proportional ownership basis;
  • the fund/company must be open to the public, either via a prospectus or a distribution channel (e.g. a platform); and
  • the investors are able to dispose of their units and/or shares within a reasonable period of time, on a well developed secondary market, such as a stock exchange or through readily accessible redemption facilities offered in association with the fund.

Funds displaying the above characteristics will be classified to the relevant subsector, being either money-market funds, non-money market investment funds, or non-financial investment funds (table 3). Several institutions that pool investor funds will not be classified as investment funds because they are either not open to the public (e.g. property syndicates) or do not have a sufficiently active secondary market for their units and/or shares (eg. agricultural, film and timeshare trusts and venture capital development funds).

Only those investment funds investing predominantly in financial assets will be treated as financial corporations. Those investing in non-financial assets, such as property, will be treated as non-financial corporations. This distinction will be based on whether the institution's primary income is obtained from rentals, or dividends and interest. A detailed classification is given below in table 3. This classification of non-financial investment funds creates a minor departure from the international standards.

3 ABS investment funds classification

ABS treatment
ABS treatment
SNA08 sector Listed investment funds Unlisted investment funds

Non-financial corporations Listed property trusts Unlisted property trusts
Other listed non-financial trusts Property common funds
Other unlisted non-financial trusts
Financial corporations
Money market funds (MMF) n.a. Cash management trusts
Cash common funds
Non-MMF financial investment funds Listed equity trusts Unlisted equity trusts (domestic and international)
Listed mortgage trusts Unlisted mortgage trusts
Listed infrastructure trusts Unlisted other financial trusts
Listed other financial trusts Non-cash common funds
Listed investment companies (LICs) Wholesale trusts


The ABS currently aligns with BPM5 on the treatment of reserve assets. Australia's official reserve assets include monetary gold, special drawing rights (SDRs), reserve position in the International Monetary Fund, and foreign exchange held by the RBA.

BPM6 recommends that each country's SDR allocations be classified as debt under other investment. Reserve-related liabilities will be introduced as a memorandum item. Reserve related liabilities includes short term debt: use of fund credit, debt securities, currency and deposits, and loans (repo loans and other).

The ABS will adopt the BPM6 treatment of recording SDR allocations as a liability and will adopt the standard BPM6 presentation of reserve assets. The reserve related liabilities will be shown as a memorandum item.


The ABS will incorporate changes to key Australian classifications. The changes to SNA08 have introduced some new elements to the Standard Economic Sector Classifications of Australia 2008 (SESCA08) as mentioned above for financial corporations.

A joint project between the ABS and Statistics New Zealand developed a new standard classification of industrial activity, the Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06). This will replace the existing classification, ANZSIC93, with a more contemporary classification system. This new classification was developed in response to changes in the structure and composition of the economy, changing information demands and the need to enhance compatibility with the fourth revision of the International Standard Industrial Classification of all economic activities, which was released on the 28 August 2008. Implementing this revised classification will result in a significant change to the presentation of industry data in the ASNA. In particular:
  • changes to the ANZSIC06 division structure with 19 divisions compared to 17 in ANZSIC93. This includes changes to the internal structure of some divisions as well as creating new ones;
  • adaptation to the emergence of new economic activities including internet publishing and broadcasting, computer retailing and communication equipment manufacturing;
  • introduction of a new industry division, information media and telecommunications. This new division groups units mainly engaged in creating and storing information products in media that allow for their dissemination. This is an industry that has grown rapidly in both Australia and New Zealand since ANZSIC93 was developed;
  • splitting of property and business services division to its component parts of:
      • rental, hiring and real estate services;
      • professional, scientific and technical services;
      • administrative and support services.

Information on the differences between ANZSIC93 and ANZSIC06 can be found in Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 - Class Change Tables, 2006 (cat. no. 1292.0.55.003).