GLOSSARY OF FREQUENTLY USED TERMS IN THE INPUT OUTPUT TABLES
Australian production refers to the value at basic prices of goods and services produced in Australia.
The basic price is the amount receivable by the producer from the purchaser for a unit of a good or service produced as output minus any tax payable, and plus any subsidy receivable, on that unit as a consequence of its production or sale. It excludes any transport charges invoiced separately by the producer. Output sold at prices that are not economically significant (see also Economically significant prices) is not valued at these prices. Rather, such output is valued at its cost of production.
Changes in inventories
Changes in inventories represent the difference in value between inventories held at the beginning and end of the reference period by enterprises and general government. For national accounting purposes, physical changes in inventories should be valued at the prices current at the times when the changes occur. For these purposes, changes in inventories are obtained after adjusting the increase in book value of inventories by the inventory valuation adjustment. The need for the latter arises because the changes in the value of inventories as calculated from existing business accounting records do not meet national accounting requirements. The inventory valuation adjustment is the difference between the change in (book) value of inventories and the physical changes valued at current prices. The physical changes at average current quarter prices are calculated by applying average quarterly price indexes to the changes in various categories of inventories in volume terms.
Compensation of employees (CoE)
Compensation of employees is the total remuneration, in cash or in kind, payable by an enterprise to an employee in return for work done by the employee during the accounting period. It is further classified into two sub-components: wages and salaries; and employers’ social contributions. Compensation of employees is not payable in respect of unpaid work undertaken voluntarily, including the work done by members of a household within an unincorporated enterprise owned by the same household. Compensation of employees excludes any taxes payable by the employer on the wage and salary bill (e.g. payroll tax).
Competing imports are those products which are both produced domestically and imported, so that substitution between the two sources of supply is possible.
Coverage ratio (for a product)
A product may be produced by more than one industry. The coverage ration shows what proportion of the total domestic supply of a product is produced by the industry to which the product is primary.
Direct allocation of imports
The direct allocation method of recording imports involves allocating imports to the industries which use them and including them with the primary inputs to these industries in deriving the total production. With this method the intermediate consumption and final demand matrices contain only the use of domestic production, and so the intermediate use matrix does not reflect the full input structure of industries.
Direct requirements coefficients
Direct requirement coefficients refer to the proportion of inputs directly required from industries by industries to produce $100 of output. In calculating the direct requirements coefficients, the flow on effects on industries are not taken into account.
Goods and services tax (GST)
The GST is a tax of 10 per cent on the price of most goods and services in Australia, including those that are imported. It does not apply to sales of goods or services that are either exempt (GST-free) or input-taxed.
Government final consumption expenditure (GFCE)
Net expenditure on goods and services by public authorities, other than those classified as public corporations, which does not result in the creation of fixed assets or inventories or in the acquisition of land and existing buildings or second-hand assets. It comprises expenditure on compensation of employees (other than those charged to capital works, etc.), goods and services (other than fixed assets and inventories) and consumption of fixed capital. Expenditure on repair and maintenance of roads is included. Fees, etc., charged by general government bodies for goods sold and services rendered are offset against purchases. Net expenditure overseas by general government bodies and purchases from public corporations are included. Expenditure on defence assets is classified as gross fixed capital formation.
Gross domestic product (GDP)
Gross domestic product is the total market value of goods and services produced in Australia within a given period after deducting the cost of goods and services used up in the process of production, but before deducting allowances for the consumption of fixed capital. Thus gross domestic product, as here defined, is 'at market prices'. It is equivalent to gross national expenditure plus exports of goods and services less imports of goods and services.
Gross fixed capital formation (GFCF)
Expenditure on new fixed assets plus net expenditure on second-hand fixed assets and including both additions and replacements.
Gross mixed income (GMI)
Gross mixed income of unincorporated enterprises is the term reserved for the surplus accruing to owners of unincorporated enterprises from processes of production (as defined for gross operating surplus) before deducting any explicit or implicit interest, rents or other property incomes payable on the financial assets, non-produced non-financial natural resource assets (such as land) required to carry on the production and before deducting consumption of fixed capital. However, GMI is measured after the deduction of FISIM and the insurance service charge. The owners, or other members of their households, may work without receiving any wage or salary. Mixed income therefore includes both gross operating surplus for unincorporated enterprises and returns for the proprietors' own labour (akin to wages and salaries). In practice, all unincorporated enterprises owned by households that are not quasi-corporations are deemed to fall into this category, except owner-occupiers in their capacity as producers of housing services for own final consumption, and households employing paid domestic staff (an activity which is deemed to generate zero surplus).
Gross operating surplus (GOS)
Gross operating surplus is a measure of the surplus accruing to owners from processes of production before deducting any explicit or implicit interest charges, rents or other property incomes payable on the financial assets, non-produced non-financial natural resource assets (such as land) required to carry on the production and before deducting consumption of fixed capital. However, GOS is measured after the deduction of FISIM and the insurance service charge. It excludes gross mixed income which is the surplus accruing to owners of unincorporated enterprises. Gross operating surplus is also calculated for general government, where it equals general government's consumption of fixed capital.
Gross value added (GVA)
Gross value added is defined as the value of output at basic prices minus the value of intermediate consumption at purchasers' prices. The term is used to describe gross product by industry and by sector. Basic prices valuation of output removes the distortion caused by variations in the incidence of commodity taxes and subsidies across the output of individual industries.
Household final consumption expenditure (HFCE)
Net expenditure on goods and services by persons and expenditure of a current nature by private non-profit institutions serving households. This item excludes expenditures by unincorporated businesses and expenditures on assets by non-profit institutions (included in gross fixed capital formation). Also excluded are maintenance of dwellings (treated as intermediate expenses of private enterprises), but personal expenditure on motor vehicles and other durable goods and the imputed rent of owner-occupied dwellings are included. The value of 'backyard' production (including food produced and consumed on farms) is included in household final consumption expenditure and the payment of wages and salaries in kind (e.g. food and lodging supplied free to employees) is counted in both household income and household final consumption expenditure.
Indirect allocation of imports
The indirect allocation method of recording imports includes those imports in the intermediate use of industries and in the final use categories without distinguishing the imports from the products with which they compete. This allows the intermediate use matrix to fully reflect the input structures of industries. With this method the imports are also listed under the industries’ use of primary inputs, but after deriving total production.
The chain of calculations of output requirements can be continued beyond the direct requirements of an industry. For example, in order to produce output from the chemicals industry, inputs are required directly from the mining industry. To produce this indirect requirement of the mining industry, the chemical industry needs, in turn, additional output from the mining industry, and so on in a convergent infinite series. The example has been confined to two industries directly dependent on each other, but indirect requirements can arise even in the absence of direct dependence. For example, the mining industry may not directly require any inputs from agriculture, but it requires inputs from chemicals which cannot be satisfied without input from agriculture. Therefore, there is an indirect requirement by mining for agricultural input.
Input output industry group (IOIG)
IOIGs are based on the Australian and New Zealand Standard Industrial Classification (ANZSIC) and the I-O tables are published at this level of industry.
Input output product classification (IOPC)
The IOPC is the detailed level product classification, organised according to the industry to which each product is primary. I-O tables are compiled at this level of product classification.
Input output product group (IOPG)
IOPGs are groups of IOPCs aggregated to the IOIGs to which they are primary. I-O tables are published at this level of product classification.
Intermediate consumption consists of the value of the goods and services consumed as inputs by a process of production, excluding the consumption of fixed capital.
Intra-industry flows refer to the production by units in an industry and use of that production by other units within the same industry. Australian I-O tables include the values of these flows.
Inventories consist of stocks of outputs that are held at the end of a period by the units that produced them prior to their being further processed, sold, delivered to other units or used in other ways, and stocks of products acquired from other units that are intended to be used for intermediate consumption or for resale without further processing.
If the transactions are valued at basic prices, the margins are recorded as intermediate consumption (e.g. transport, wholesale trade) of the intermediate users or final buyers. If transactions are valued at purchasers’ prices the value of margins in included, along with taxes less subsidies on products with the purchasers’ price of the good to which the margin relates.
Other subsidies on production
Other subsidies on production consist of all subsidies, except subsidies on products, which resident enterprises may receive as a consequence of engaging in production. Other subsidies on production include: subsidies related to the payroll or workforce numbers (including subsidies payable on the total wage or salary bill), on numbers employed, or on the employment of particular types of persons, e.g. persons with disabilities or persons who have been unemployed for a long period.
Other taxes on production
Other taxes on production consist of all taxes that enterprises incur as a result of engaging in production, except taxes on products. Other taxes on production include: taxes related to the payroll or workforce numbers excluding compulsory social security contributions paid by employers and any taxes paid by the employees themselves out of their wages or salaries; recurrent taxes on land, buildings or other structures; some business and professional licences where no service is provided by the Government in return; taxes on the use of fixed assets or other activities; stamp duties; taxes on pollution; and taxes on international transactions.
Primary input content
The primary input content per $100 of use by an industry shows the ultimate content (resulting from total requirements) of each primary input in $100 of that industry’s use.
Primary inputs include compensation of employees, gross operating surplus and gross mixed income, taxes less subsidies on products, other taxes less subsidies on production and imports.
The purchaser's price is the amount paid by the purchaser, excluding any deductible tax, in order to take delivery of a unit of a good or service at the time and place required by the purchaser. The purchaser’s price of a good includes any transport charges paid separately by the purchaser to take delivery at the required time and place.
Quadrants in an Input–Output Table
The following link Input output table diagram contains a simplified input–output table for illustration purposes. In this illustration, Quadrant 1 represents the industry (row) by industry (column) dimension, quadrant 2 represents the industry by final demand dimension, quadrant 3 represents primary input by industry dimension and quadrant 4 represents the primary input by final demand dimension.
- Quadrant 1
Flows between domestic industries are shown in Quadrant 1. This is usually referred to as the inter–industry quadrant. Each column in this quadrant shows the intermediate inputs into an industry in the form of goods and services produced by other industries, and each row shows those parts of an industry's output which have been absorbed by other industries. For example, the cell at the intersection of row i and column j shows how much output of industry i has been absorbed by industry j for current production.
- Quadrant 2
Disposition of output to categories of final demand is shown in Quadrant 2. Quadrants 1 and 2 together show the total usage of the goods and services supplied by each industry.
- Quadrant 3
Quadrant 3 shows entries usually referred to as primary inputs: compensation of employees; gross operating surplus and gross mixed income; imports; and various types of taxes on production.
- Quadrant 4
Quadrant 4 shows primary inputs to final demand. In the Australian Input Output Tables, only the primary input 'Taxes less subsidies on products' has values in this quadrant.
Re-exports are goods imported into Australia and then exported without having been used or transformed in any way.
Specialisation ratio (for an industry)
An industry may produce a number of products, some of which may be primary to that industry and some of which may be primary to other industries. The specialisation ratio shows the proportion of an industry’s output that is primary to that industry.
Subsidies on products
A subsidy on a product is a subsidy payable per unit of a good or service. The subsidy may be a specific amount of money per unit of quantity of a good or service, or it may be calculated ad valorem as a specified percentage of the price per unit. A subsidy may also be calculated as the difference between a specified target price and the market price actually paid by a purchaser. A subsidy on a product usually becomes payable when the product is produced, sold or imported, but it may also become payable in other circumstances, such as when a product is exported, leased, transferred, delivered or used for own consumption or own capital formation.
Taxes on products
A tax on a product is a tax that is payable per unit of some good or service. The tax may be a specific amount of money per unit of quantity of a good or service (quantity being measured either in terms of discrete units or continuous physical variables such as volume, weight, strength, distance, time, etc.), or it may be calculated ad valorem as a specified percentage of the price per unit or value of the goods or services transacted. A tax on a product usually becomes payable when it is produced, sold or imported, but it may also become payable in other circumstances, such as when a good is exported, leased, transferred, delivered, or used for own consumption or own capital formation.
Total requirements coefficients
A total requirement coefficient at the intersection of a row i
and column j
of a table represents the value of output of industry i
required directly and indirectly to produce 100 units of output absorbed by final demand (i.e. final output) of industry j
Trade margin is defined as the difference between the actual or imputed price realised on a good purchased for resale and the price that would have to be paid by the distributor to replace the good at the time it is sold or otherwise disposed of.
Transport margins include any transport charges invoiced separately. The costs arising through the transport of goods from a producer to a purchaser by a third party even without separate invoice is excluded from the basic price of the good being transported and is recorded as a transport margin. The latter treatment is adopted for the I-O tables only and is a deviation from the treatment outlined in the 2008 SNA and applied in the ABS S-U tables.