5512.0 - Government Finance Statistics, Australia, 2013-14
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 13/05/2015
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STATEMENT OF STOCKS AND FLOWS

The international Government Finance Statistics (GFS) standard as promulgated by the International Monetary Fund (IMF) recommends that opening and closing 'stock' values be reconciled with all 'flows' occurring throughout the year. The standard is based on an analytical framework in which all changes in the values of stocks from one year to the next can be fully explained by the flows that have occurred during that year.

Institutional units hold assets (financial and non-financial) and incur liabilities (which by definition are financial). The level of these assets and liabilities at any point in time is the stock. The difference between assets and liabilities is net worth, which is a measure of the 'wealth' of units or of government. Anything which causes a change in these stocks of assets and liabilities is a flow. Flows are disaggregated into transactions and 'other economic flows'. A transaction is, for the most part, an interaction between two units by mutual agreement, whereas an 'other economic flow' is a change in the volume or value of a stock of a unit not resulting from a transaction.

By definition, the value of a stock at the end of a period is the sum of the stock at the beginning of the period and all the flows affecting that stock which took place during the period, i.e. S1 = S0 + F1, where S0 and S1 represent the values of a specific stock at the beginning and end of an accounting period, and F1 represents the net value of all flows during the period relevant to that particular stock.

Statistics on transactions giving rise to revenues and expenses are published as part of the GFS operating statement. Revenues are defined as transactions which increase net worth whereas expenses are transactions which decrease net worth. The difference between revenues and expenses, therefore, represents the change in net worth due to transactions. This equates to the GFS net operating balance.

Other economic flows can be disaggregated into movements in asset/liability values resulting from price changes ('revaluations') and those resulting from volume changes ('other volume changes').

Revaluations result from changes to the value of the assets and liabilities held. Revaluations can accrue to financial assets such as bonds and bills, shares and other forms of equity, as well as non-financial assets such as land and buildings.

Other volume changes refer to events that include:

• the recognition or de-recognition of assets or liabilities on the balance sheet – e.g. when resources become economically exploitable, or when an asset is no longer providing an economic benefit, and so is removed from the balance sheet
• changes in the quantity or quality of the existing asset – these typically result from catastrophic losses through natural disasters, changes in the volume of natural assets such as fish or forest stocks, creation, discovery, cancellation or seizure of assets, or quality differences arising from events such as a change in the expected life of the asset
• changes in the classification of assets – these usually arise when the use of an asset changes, e.g. if the use of a parcel of public land changes from recreational use to industrial use.

The net effect of all revaluations and other volume changes occurring through the year represents the change in net worth due to other economic flows.

Since the values of stocks at the end of a year must be equal to their values at the start of a year, plus all transactions and other economic flows affecting them during the year, it follows that the total change in net worth during a given year is equal to the change in net worth due to transactions, plus the change in net worth arising from other economic flows.

When working with reported data, it is often assumed that the difference between opening and closing net worth and the change in net worth due to transactions is attributable to the change in net worth due to other economic flows (i.e. other economic flows is effectively used as a balancing item). However, to ensure data quality it is necessary to independently collect and calculate the change in net worth due to other economic flows. In situations where the reported data do not add through, it is not necessarily the case that the data quality issue is in the other economic flows component of the framework. Where data quality is high throughout the reported data set, the change in net worth as derived via the balance sheet will be consistent with the sum of transaction and other economic flows.

COMMONWEALTH GENERAL GOVERNMENT – STATEMENT OF STOCKS AND FLOWS

The Commonwealth Government publishes a statement of other economic flows for the general government sector. This statement outlines all revaluations and other volume changes occurring throughout the year, which allows a full reconciliation of stocks and flows. This information allows the Australian Bureau of Statistics (ABS) to disaggregate other economic flows into price and volume effects. While some states also publish a statement of other economic flows, the majority currently do not. For local government, information on the components of other economic flows are also generally unavailable. Accordingly, the ABS does not have enough information on which to disaggregate other economic flows into its two components across the state and local levels of government.

The statement of stocks and flows for the Commonwealth general government sector is presented in Table 1. During 2013–14 the net worth of the Commonwealth general government sector decreased by \$39,153m. This was the result of a GFS net operating balance (which reflects the change in net worth due to transactions) of –\$30,734m, revaluations of –\$8,419m and slightly offset by other volume changes of \$313m.

 TABLE 1, COMMONWEALTH – General Government Sector – Statement of Stocks and Flows Opening stocks as at 1 July 2013 Transactions Revaluations Other volume changes(a) Closing stocks as at 30 June 2014 \$m \$m \$m \$m \$m Assets Financial assets Cash and deposits 2 094 1 769 –19 – 3 844 Advances paid 37 048 3 138 2 770 – 42 956 Investments, loans and placement's 111 098 7 718 –1 309 – 117 507 Other non-equity assets 63 167 – 4 238 – 67 405 Equity 59 039 12 033 13 311 – 84 383 Total financial assets 272 446 24 658 18 992 – 316 096 Non-financial assets Land and fixed assets 97 870 1 774 3 445 313 103 089 Other non-financial assets 2 187 1 926 –1 561 – 2 552 Total non-financial assets 100 056 3 700 1 885 313 105 641 Total assets 372 502 28 358 20 877 313 421 737 less Liabilities Deposits held 3 786 103 67 – 3 956 Advances received – – – – – Borrowing 300 464 63 146 –415 – 363 195 Unfunded superannuation and other employee entitlements 208 111 – 29 566 – 237 677 Other provisions 14 380 – –143 – 14 237 Other non-equity liabilities 44 010 –4 046 110 – 40 074 Total liabilities 570 753 59 204 29 183 – 659 140 equals GFS Net worth –198 250 –30 734 –8 419 313 –237 403 Net debt 154 010 . . . . . . 202 843 Net financial worth –298 307 . . . . . . –343 044 . . not applicable – nil or rounded to zero (including null cells) (a) Source: Department of Finance, Consolidated Financial Statements for the Year Ended 30 June 2014, November 2014.

STATE AND LOCAL GENERAL GOVERNMENT – STATEMENT OF STOCKS AND FLOWS

During 2013–14 the net worth of the state general government sector increased by \$3,378m, driven by \$3,873m from transactions.

The net worth of the local general government sector increased by \$18,834m in 2013–14. Other economic flows contributed \$12,967m to this movement.

 TABLE 2, STATE – General Government Sector – Statement of Stocks and Flows Opening stocks as at 1 July 2013 Transactions Other Economic Flows Closing stocks at 30 June 2014 \$m \$m \$m \$m Assets Financial assets Cash and deposits 17 686 18 1 840 19 544 Advances paid 11 033 307 –283 11 057 Investments, loans and placement's 58 667 5 110 –478 63 299 Other non-equity assets 24 641 218 –371 24 488 Equity 281 449 –783 11 880 292 546 Total financial assets 393 476 4 870 12 588 410 934 Non-financial assets Land and fixed assets 578 364 9 326 –2 065 585 625 Other non-financial assets 2 735 939 –934 2 740 Total non-financial assets 581 099 10 265 –2 999 588 365 Total assets 974 575 15 136 9 588 999 299 less Liabilities Deposits held 4 112 –798 177 3 491 Advances received 3 020 91 –8 3 103 Borrowing 121 896 9 437 475 131 808 Unfunded superannuation and other employee entitlements 157 274 –75 10 880 168 079 Other provisions 9 701 – 1 070 10 771 Other non-equity liabilities 21 732 2 608 –2 512 21 828 Total liabilities 317 734 11 262 10 085 339 081 equals GFS Net worth 656 840 3 873 –495 660 218 Net debt 41 643 . . . . 44 503 Net financial worth 75 741 . . . . 71 854 . . not applicable – nil or rounded to zero (including null cells)

 TABLE 3, LOCAL – General Government Sector– Statement of Stocks and Flows Opening stocks as at 1 July 2013 Transactions Other Economic Flows Closing stocks at 30 June 2014 \$m \$m \$m \$m Assets Financial assets Cash and deposits 9 095 –366 –5 8 724 Advances paid 26 4 –2 28 Investments, loans and placement's 10 511 879 122 11 512 Other non-equity assets 3 776 –271 255 3 760 Equity 7 176 21 13 7 210 Total financial assets 30 583 267 384 31 234 Non-financial assets Land and fixed assets 333 188 5 498 13 884 352 570 Other non-financial assets 1 926 246 –200 1 972 Total non-financial assets 335 114 5 744 13 683 354 541 Total assets 365 698 6 011 14 066 385 775 less Liabilities Deposits held 460 12 –17 455 Advances received 21 – –2 19 Borrowing 11 393 909 186 12 488 Unfunded superannuation and other employee entitlements 3 195 98 –110 3 183 Other provisions 111 59 –27 143 Other non-equity liabilities 4 023 –936 1 071 4 158 Total liabilities 19 203 144 1 100 20 447 equals GFS Net worth 346 495 5 867 12 967 365 329 Net debt –7 757 . . . . –7 302 Net financial worth 11 380 . . . . 10 787 . . not applicable – nil or rounded to zero (including null cells)

For more information on the statement of stocks and flows, refer to Table 2.1 in Australian System of Government Finance Statistics: Concepts, Sources and Methods (cat. no. 5514.0.55.001) electronic version or (cat. no. 5514.0) pdf version and Chapter 3 of the International Monetary Fund's (IMF) Government Finance Statistics Manual 2014 (GFSM 2014).