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The incorporation of revised estimates sourced from phase 1 of the Economic and Financial Statistics (EFS) modernisation program
This publication incorporates estimates from the first phase of the EFS modernisation program. The modernisation program and its implications for ABS economic outputs are discussed in the previously released information papers:
In introducing the revised EFS data collections, a number of quality, classification and implementation issues arose. APRA, the Reserve Bank of Australia (RBA) and ABS have undertaken extensive and ongoing discussions with data providers on the EFS collection to clarify and address implementation issues. To help with quality assurance, the new and old data collections were conducted in parallel for the March and June quarters 2019. The ABS considers the quality and comparability of the statistics to have improved significantly with the introduction of the new EFS collection. Data quality is expected to continue to improve over time as lenders become accustomed to the new reporting basis and further refine the data they report.
Where the EFS data resulted in a shift in the level from the previous APRA domestic books collection the level shifts were, in most cases, backcast to the June quarter 2002. In a small number of cases the size of the revision required the series to be revised through the entire time series back to June quarter 1988.
This release removes the distinction between Bank and Non-bank ADIs to reflect the 2018 changes to the Banking Act. In line with this, changes have been made to the subsectors of the Depository Corporations Sector. The ‘Banks’ subsector has been renamed ‘Authorised Deposit taking Institutions’ and includes ‘Banks’ and ‘non-bank ADIs’.
The ‘Other Depository Corporations’ sub-sector has been renamed ‘Other Broad Money Institutions’ and excludes ‘non-bank ADIs’.
In March 2018, amendments to the Financial Sector (Collection of Data) Act 2001 broadened the scope of entities that must report information to APRA, resulting in an increased number of Registered Financial Corporations (RFCs). RFCs are classified to the ‘Other Broad Money Institutions’ subsector. This change in the scope of the RFC collection was backcast within the time series to the entry of each new institution into the Australian financial markets. The APRA RFC collection includes Securitisation units. These units are excluded from this sub sector and included in the Securitiser subsector within the publication.
The largest impact of the EFS phase 1 reporting has been the reclassification of financial assets and liabilities between the two subsectors within the ‘Depository Corporations’ sector, and in particular the deposit and loan market for all counterparties. Where the ‘Depository Corporations’ sector loans and deposits have been revised this has been driven by improved measurement from EFS rather than the impact of the reclassification.
Deposit liabilities of the Depository Corporations sector
Graph 1. Revisions to Depository Corporations deposit liabilities by sector - June quarter 2019
In the June quarter 2019 the total deposit liabilities of ‘Authorised Deposit-taking Institutions’ and ‘Other Broad Money institutions were revised down $11.1b, of which other deposits were revised down $168.8b while transferable deposits were revised up $157.7b. The new EFS reporting showed downward revision to household deposits for over a 10 year period, with a revision of $26.8b in the June Quarter 2019.
Self-Managed Superannuation Funds
This release includes a new table which presents separately a balance sheet of SMSFs (Table 19), which is a part of the overall pension fund sector (Table 18) in this publication. In light of this, the ABS reviewed and improved the SMSF modelled estimates provided by the ATO and the subsequent detailed (financial instrument by counterparty) estimates generated by the ABS included within Table 18 and 19. The ABS implemented a new method to estimate the value of quarterly total assets, and types of financial assets and liabilities for the quarters when ATO compliance data is not available. For the detailed ABS model, research was undertaken including contacts with industry specialists to update the assumptions in the model and formulate the detailed financial instruments by counterparty included within the SMSF estimates.
The upward revision to the net equity in reserves of pension funds (Tables 18 and 34) is mainly due to including SMSF investments in non-financial assets which were not previously captured in the estimates.
Graph 3 and 4 below shows the revisions to the time series from the previous quarter for pension fund and household total assets and components due to the implementation of the EFS data and quality assurance work undertaken for the historical revision cycle.
Graph 3. Revisions from the previous quarter to Pension Fund Financial Assets
For the 30 year time series, Graph 3 shows total assets of pension funds were revised up in the early 2000s and the revisions declined after the global financial crisis (GFC) in 2008. Since the GFC total assets have been downwardly revised and have picked up in recent quarters to display small revisions. Within the financial instruments, equity assets have been revised up by nearly $100b in recent quarters (due mainly to holdings of unlisted retail trusts) while accounts payable was revised down by a similar magnitude, for households and rest of the world sectors.
Graph 4. Revisions from the previous quarter to Household Financial Assets
Similarly to pension fund revisions, Graph 4 shows total assets of households for the 30 year time series were revised up in the early 2000s and the revisions declined after the GFC in 2008. Since the GFC, total assets have been downwardly revised and have picked up in last few years, with a significant spike in June quarter 2019 related to an actuarial adjustment of commonwealth general government unfunded superannuation liabilities. The similar revision pattern for total assets between households and pension funds reflects the household’s largest financial asset being insurance technical reserves (ITRs) generated by pension funds. For this revision cycle, these ITRs are driven by SMSFs.
The most significant liability of households are their loans, and the graph shows that the new EFS data has revised up both short and long term loans since the mid-2000s from $20b to nearly $40b in June quarter 2109. The significant downward revision to accounts payable of nearly $60b in the June quarter 2019 was due to misclassification of those payable from pension funds.
The ABS implemented the following improvements to the derivation of transactions:
Review of the sectoral classification of holding companies in EFS data
Recent guidance provided to reporting entities such as ADIs states that the holding company (that is the unit that holds the equity assets of the ADI’s direct investment in their subsidiary corporations such as Life Insurance) be classified as financial auxiliaries. Further, the EFS domestic books consolidation principles specifically states to exclude all subsidiaries. This has resulted in ADIs reporting their unlisted equity assets of their investment in subsidiaries as investment in Financial Auxiliaries (classified as other financial corporation sector within the publication). Ideally, for national accounts purposes, the investment in the holding company (financial axillary) is “looked through” and the ADIs direct investment in the life insurance corporation sector (in this example) is recorded. For the historical revision cycle, we applied a model to look through the significant investment by ADI in the OFC sector to the primary activity of their subsidiaries. This has resulted in upward revisions of ADIs unlisted equity holdings of Life Insurance, Non-Life Insurance corporations and RFCs.
Other quality assurance work
The following additional improvements were made during the historical revision cycle:
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