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 2016-17 the net worth of the Commonwealth general government sector increased by $18,631m. This was the result of revaluations of $51,067m and partially offset by a GFS net operating balance (which reflects the change in net worth due to transactions) of -$32,436m.
TABLE 1, STATEMENT OF STOCKS AND FLOWS, General Government Sector, Commonwealth |
|
 |  |  | Opening stocks as
at 1 July 2016 | Transactions
| Revaluations
| Other volume
changes(a) | Closing stocks as
at 30 June 2017 |
 |  |  | $m | $m | $m | $m | $m |
|
Assets |  |  |  |  |  |
 | Financial assets |  |  |  |  |  |
 |  | Cash and deposits | 3 638 | 1 503 | -1 | - | 5 140 |
 |  | Advances paid | 52 243 | 6 115 | -11 254 | - | 47 104 |
 |  | Investments, loans and placements | 149 995 | 37 318 | 5 938 | - | 193 251 |
 |  | Other non-equity assets | 66 033 | - | 2 175 | - | 68 208 |
 |  | Equity | 87 244 | 73 86 | -4 618 | - | 90 012 |
 |  | Total financial assets | 359 152 | 52 322 | -7 759 | - | 403 715 |
 | Non-financial assets |  |  |  |  |  |
 |  | Land and fixed assets | 128 976 | 1 478 | 2 239 | - | 132 693 |
 |  | Other non-financial assets | 3 073 | 1 590 | -1 399 | - | 3 264 |
 |  | Total non-financial assets | 132 050 | 3 068 | 838 | - | 135 956 |
Total assets | 491 202 | 55 390 | -6 921 | - | 539 671 |
less |  |  |  |  |  |
Liabilities |  |  |  |  |  |
 | Deposits held | 10 005 | 104 | -222 | - | 9 887 |
 | Advances received | - | - | - | - | - |
 | Borrowing | 495 998 | 84 908 | -21 071 | - | 559 835 |
 | Unfunded superannuation and other employee entitlements | 332 529 | - | -34 937 | - | 297 592 |
 | Other provisions | 12 335 | - | 6 671 | - | 19 006 |
 | Other non-equity liabilities | 42 785 | 2 921 | -8 537 | - | 37 169 |
 | Total liabilities | 893 651 | 87 933 | -58 095 | - | 923 489 |
equals |  |  |  |  |  |
GFS Net worth | -402 449 | -32 436 | 51 067 | - | -383 818 |
Net debt | 300 127 | . . | . . | . . | 324 228 |
Net financial worth | -534 499 | . . | . . | . . | -519 774 |
|
. . not applicable |
- nil or rounded to zero (including null cells) |
(a) Source: Department of Finance, Consolidated Financial Statements for the Year Ended 30 June 2017, December 2017. |
STATE AND LOCAL GENERAL GOVERNMENT - STATEMENT OF STOCKS AND FLOWS
During 2016-17 the net worth of the state general government sector increased by $76,113m, driven by $66,236m from other economic flows and $9,877m from transactions.
The net worth of the local general government sector increased by $23,365m in 2016-17. Other economic flows contributed $13,747m to this movement.
TABLE 2, STATEMENT OF STOCKS AND FLOWS, General Government Sector, State Government |
|
 |  |  | Opening stocks as at 1 July 2016 | Transactions | Other Economic Flows | Closing stocks at 30 June 2017 |
 |  |  | $m | $m | $m | $m |
|
Assets |  |  |  |  |
 | Financial assets |  |  |  |  |
 |  | Cash and deposits | 15 654 | 4 778 | -736 | 19 696 |
 |  | Advances paid | 9 194 | 22 | 90 | 9 306 |
 |  | Investments, loans and placements | 74 807 | 15 671 | -7 376 | 83 102 |
 |  | Other non-equity assets | 24 968 | 285 | 1 936 | 27 189 |
 |  | Equity | 313 025 | -22 427 | 41 628 | 332 226 |
 |  | Total financial assets | 437 648 | -1 672 | 35 543 | 471 519 |
 | Non-financial assets |  |  |  |  |
 |  | Land and fixed assets | 647 129 | 15 414 | 8 215 | 670 758 |
 |  | Other non-financial assets | 4 087 | 1 270 | 142 | 5 499 |
 |  | Total non-financial assets | 651 216 | 16 683 | 8 358 | 676 257 |
Total assets | 1 088 864 | 15 011 | 43 900 | 1 147 775 |
less |  |  |  | |
Liabilities |  |  |  |  |
 | Deposits held | 3 393 | -18 | 344 | 3 719 |
 | Advances received | 3 956 | 1 328 | -110 | 5 174 |
 | Borrowing | 131 717 | -1 177 | 2 044 | 132 584 |
 | Unfunded superannuation and other employee entitlements | 206 409 | -19 | -23 487 | 182 903 |
 | Other provisions | 11 917 | - | 882 | 12 799 |
 | Other non-equity liabilities | 23 162 | 5 020 | -2 007 | 26 175 |
 | Total liabilities | 380 554 | 5 134 | -22 335 | 363 353 |
equals |  |  |  |  |
GFS Net worth | 708 310 | 9 877 | 66 236 | 784 423 |
Net debt | 39 412 | . . | . . | 29 373 |
Net financial worth | 57 094 | . . | . . | 108 166 |
|
. . not applicable |
- nil or rounded to zero (including null cells) |
TABLE 3, STATEMENT OF STOCKS AND FLOWS, General Government Sector, Local Government |
|
 |  |  | Opening stocks as at 1 July 2016 | Transactions | Other Economic Flows | Closing stocks at 30 June 2017 |
 |  |  | $m | $m | $m | $m |
|
Assets |  |  |  |  |
 | Financial assets |  |  |  |  |
 |  | Cash and deposits | 10 554 | 1 693 | -316 | 11 931 |
 |  | Advances paid | 35 | 1 | 6 | 42 |
 |  | Investments, loans and placements | 13 133 | 1 841 | 238 | 15 212 |
 |  | Other non-equity assets | 3 949 | -146 | 510 | 4 313 |
 |  | Equity | 7 167 | -50 | 338 | 7 455 |
 |  | Total financial assets | 34 838 | 3 339 | 776 | 38 953 |
 | Non-financial assets |  |  |  |  |
 |  | Land and fixed assets | 406 348 | 5 665 | 13 971 | 425 984 |
 |  | Other non-financial assets | 1 656 | 143 | -110 | 1 689 |
 |  | Total non-financial assets | 408 004 | 5 808 | 13 861 | 427 673 |
Total assets | 442 841 | 9 146 | 14 639 | 466 626 |
less |  |  |  |  |
Liabilities |  |  |  |  |
 | Deposits held | 553 | 1 | 33 | 587 |
 | Advances received | 16 | 12 | -13 | 15 |
 | Borrowing | 11 013 | 50 | 181 | 11 244 |
 | Unfunded superannuation and other employee entitlements | 3 398 | 60 | -21 | 3 437 |
 | Other provisions | 127 | 83 | -120 | 90 |
 | Other non-equity liabilities | 4 465 | -676 | 829 | 4 618 |
 | Total liabilities | 19 572 | -471 | 891 | 19 992 |
equals |  |  |  |  |
GFS Net worth | 423 269 | 9 618 | 13 747 | 446 634 |
Net debt | -12 139 | . . | . . | -15 338 |
Net financial worth | 15 266 | . . | . . | 18 961 |
|
. . 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, 2005 (cat. no. 5514.0) and Chapter 3 of the International Monetary Fund's
(IMF)
Government Finance Statistics Manual 2014 (GFSM 2014).