5512.0 - Government Finance Statistics, Australia, 2011-12
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 30/04/2013
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STATEMENT OF STOCKS AND FLOWS, 2011–12

1 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.

2 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.

3 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.

4 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.

5 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').

6 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.

7 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.

8 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.

9 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.

10 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

11 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.

12 The statement of stocks and flows for the Commonwealth general government sector is presented in Table 1. During 201112 the net worth of the Commonwealth general government sector decreased by \$150,894m. This was the result of a GFS net operating balance (which reflects the change in net worth due to transactions) of –\$39,017m combined with revaluations of –\$112,458m offset by other volume changes of \$581m. The key contributor was revaluations on the liabilities side which was driven by unfunded superannuation and other employee entitlements (\$93,208m), and borrowing (\$21,439m). Revaluations on the assets side of the statement were less significant and driven by other non–equity assets (\$4,246m) and land and fixed assets (\$3,381m).

 TABLE 1. COMMONWEALTH, General Government – Statement of Stocks and Flows Opening Stocks as at 1 July 2011 Transactions Revaluations Other Volume Changes(a) Closing Stocks as at 30 June 2012 \$m \$m \$m \$m \$m Assets Financial assets Cash and deposits 2 435 160 –116 – 2 479 Advances paid 30 701 3 987 –726 – 33 962 Investments, loans and placements 98 675 –1 031 848 – 98 492 Other non–equity assets 52 862 – 4 246 – 57 108 Equity 50 355 1 879 –2 196 – 50 038 Total 235 029 4 995 2 055 – 242 079 Non–financial assets Land and fixed assets 89 037 2 632 3 381 581 95 631 Other non–financial assets 1 759 2 541 –2 084 – 2 216 Total 90 796 5 173 1 297 581 97 847 Total 325 825 10 168 3 352 581 339 926 Liabilities Deposits held 3 614 91 –4 – 3 701 Advances received – – – – – Borrowing 212 305 46 154 21 439 – 279 898 Unfunded superannuation and other employee entitlements 156 649 – 93 208 – 249 857 Other provisions 12 440 – 1 486 – 13 926 Other non–equity liabilities 40 238 3 047 –427 – 42 858 Total 425 247 49 293 115 701 – 590 241 GFS Net worth –99 421 –39 017 –112 458 581 –250 315 Net debt 84 108 . . . . . . 148 666 Net financial worth –190 218 . . . . . . –348 162 . . not applicable – nil or rounded to zero (including null cells) (a) Source: Department of Finance and Deregulation, Consolidated Financial Statements for the Year Ended 30 June 2012, December 2012.

STATE AND LOCAL GENERAL GOVERNMENT – STATEMENT OF STOCKS AND FLOWS

13 Both the state and local general government Statements of Stocks and Flows (Table 2 and Table 3 respectively) highlight the significance of other economic flows. During 201112 the net worth of the state general government sector decreased by \$46,501m, driven by –\$47,518m from other economic flows. The key contributor was other economic flows on the liabilities side which was driven by unfunded superannuation and other employee entitlements (\$44,857m). On the assets side, the main contributors to other economic flows were land and fixed assets (\$10,767m) offset by equity (–\$9,957m) and cash and deposits (–\$2,657m).

14 The net worth of the local general government sector increased by \$14,907m in 2011–12. Other economic flows contributed \$8,602m to this movement.

 TABLE 2. STATE, General Government – Statement of Stocks and Flows Opening Stocks as at 1 July 2011 Transactions Other Economic Flows Closing Stocks as at 30 June 2012 \$m \$m \$m \$m Assets Financial assets Cash and deposits 17 935 471 –2 657 15 749 Advances paid 6 053 –31 1 037 7 059 Investments, loans and placements 53 197 1 275 1 188 55 660 Other non–equity assets 21 401 268 –383 21 286 Equity 266 301 1 274 –9 957 257 618 Total 364 887 3 257 –10 773 357 371 Non–financial assets Land and fixed assets 535 675 13 171 10 767 559 613 Other non–financial assets 2 064 1 526 –1 526 2 064 Total 537 740 14 698 9 239 561 677 Total 902 627 17 955 –1 533 919 049 Liabilities Deposits held 3 905 391 129 4 425 Advances received 3 388 –52 –14 3 322 Borrowing 80 746 16 767 –190 97 323 Unfunded superannuation and other employee entitlements 136 036 –123 44 857 180 770 Other provisions 8 360 – 673 9 033 Other non–equity liabilities 19 981 –46 531 20 466 Total 252 416 16 937 45 986 315 339 GFS Net worth 650 211 1 017 –47 518 603 710 Net debt 10 853 . . . . 26 603 Net financial worth 112 472 . . . . 42 032 . . not applicable – nil or rounded to zero (including null cells)

 TABLE 3. LOCAL, General Government – Statement of Stocks and Flows Opening Stocks as at 1 July 2011 Transactions Other Economic Flows Closing Stocks as at 30 June 2012 \$m \$m \$m \$m Assets Financial assets Cash and deposits 8 251 1 055 –273 9 033 Advances paid 16 25 –22 19 Investments, loans and placements 11 269 249 353 11 871 Other non–equity assets 3 487 251 –207 3 531 Equity 8 942 8 69 9 019 Total 31 964 1 588 –80 33 472 Non–financial assets Land and fixed assets 299 334 4 593 10 528 314 455 Other non–financial assets 1 641 181 38 1 860 Total 300 976 4 774 10 565 316 315 Total 332 940 6 362 10 486 349 788 Liabilities Deposits held 420 26 –15 431 Advances received 23 –1 –1 21 Borrowing 9 066 924 74 10 064 Unfunded superannuation and other employee entitlements 2 781 362 327 3 470 Other provisions 328 162 –134 356 Other non–equity liabilities 3 664 –1 417 1 633 3 880 Total 16 282 56 1 885 18 223 GFS Net worth 316 658 6 305 8 602 331 565 Net debt –10 027 . . . . –10 405 Net financial worth 15 682 . . . . 15 249 . . not applicable

15 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 4 of the International Monetary Fund's Government Finance Statistics Manual 2001.