TECHNICAL NOTE STATEMENT OF STOCKS AND FLOWS
2009-10 STATEMENT OF STOCKS AND FLOWS
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 change in the treatment of Special Drawing Rights to align with the
System of National Accounts 2008, has impacted on the Statement of Stocks and Flows for the Commonwealth General Government. The time series has been revised to reflect this change which, along with other revisions, has altered the value of the opening stocks as at 1 July 2009. The statement for 2009-10 is not comparable to previously published data.
12 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.
13 The statement of stocks and flows for the Commonwealth general government sector is presented in Table 1. During 2009-10 the net worth of the Commonwealth general government sector decreased by $68,644m. This was the result of a GFS net operating balance (which reflects the change in net worth due to transactions) of -$45,699m combined with revaluations of -$23,662m. The key contributor to revaluations on the liabilities side were revaluations to unfunded superannuation and other employee entitlements ($17,198m). Revaluations on the assets side of the statement were driven by other non-equity assets ($6,860m) and equity ($1,650m), offset by advances paid (-$7,864 m).
TABLE 1. COMMONWEALTH, General Government - Statement of Stocks and Flows |
|
| | | Opening Stocks as at 1 July 2009 | Transactions | Revaluations | Other Volume Changes(a) | Closing Stocks as at 30 June 2010 |
| | | $m | $m | $m | $m | $m |
|
Assets | | | | | |
| Financial assets | | | | | |
| | Cash and deposits | 1 622 | 193 | 1 | - | 1 816 |
| | Advances paid | 31 748 | 4 279 | -7 864 | - | 28 163 |
| | Investments, loans and placements | 106 775 | -5 150 | 1 285 | - | 102 910 |
| | Other non-equity assets | 46 822 | - | 6 860 | - | 53 682 |
| | Equity | 50 424 | - | 1 650 | - | 52 074 |
| | Total | 237 391 | -677 | 1 931 | - | 238 645 |
| Non-financial assets | | | | | |
| | Land and fixed assets | 82 062 | 4 450 | -1 021 | 717 | 86 208 |
| | Other non-financial assets | 622 | 2 718 | -1 892 | - | 1 448 |
| | Total | 82 684 | 7 168 | -2 914 | 717 | 87 655 |
| Total | 320 075 | 6 490 | -981 | 717 | 326 301 |
Liabilities | | | | | |
| Deposits held | 3 748 | 149 | -374 | - | 3 523 |
| Advances received | - | - | - | - | - |
| Borrowing | 114 732 | 47 385 | 9 258 | - | 171 375 |
| Unfunded superannuation and other employee entitlements | 134 218 | - | 17 198 | - | 151 416 |
| Other provisions | 11 876 | - | 1 379 | - | 13 255 |
| Other non-equity liabilities | 28 444 | 4 802 | -4 928 | - | 28 318 |
| Total | 293 018 | 52 336 | 22 533 | - | 367 887 |
GFS Net worth | 27 057 | -45 699 | -23 662 | 717 | -41 587 |
Net debt | -21 665 | . . | . . | . . | 42 010 |
Net financial worth | -55 627 | . . | . . | . . | -129 242 |
|
. . not applicable |
- nil or rounded to zero (including null cells) |
(a) Source: Department of Finance and Deregulation, Consolidated Finanical Statements for the Year Ended 30 June 2009, December 2009. |
STATE AND LOCAL GENERAL GOVERNMENT - STATEMENT OF STOCKS AND FLOWS
14 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. The net worth of state governments increased by $25,474m during 2009-10, driven by $22,123m from other economic flows. On the asset side the largest contributors were land and fixed assets ($16,315m) and equity ($13,526m). The most significant contributor to liabilities was unfunded superannuation and other employee entitlements ($10,345m).
15 The net worth of local government increased by $35,043m in 2009-10, driven by $30,515m from other economic flows. The largest contributor to assets was land and fixed assets ($30,861m). The most significant contributor to liabilities was other non-equity liabilities ($590m) which was offset by advance received (-$208m).
TABLE 2. STATE, General Government - Statement of Stocks and Flows |
|
| | | Opening Stocks as at 1 July 2009 | Transactions | Other Economic Flows | Closing Stocks as at 30 June 2010 |
| | | $m | $m | $m | $m |
|
Assets | | | | |
| Financial assets | | | | |
| | Cash and deposits | 14 105 | -815 | -759 | 12 531 |
| | Advances paid | 5 403 | -72 | 481 | 5 812 |
| | Investments, loans and placements | 43 428 | 2 648 | 1 992 | 48 068 |
| | Other non-equity assets | 17 840 | 223 | 988 | 19 051 |
| | Equity | 239 278 | 2 019 | 13 526 | 254 823 |
| | Total | 320 054 | 4 002 | 16 228 | 340 284 |
| Non-financial assets | | | | |
| | Land and fixed assets | 480 125 | 16 986 | 16 315 | 513 426 |
| | Other non-financial assets | 1 939 | 663 | -534 | 2 068 |
| | Total | 482 064 | 17 649 | 15 781 | 515 494 |
| Total | 802 118 | 21 651 | 32 009 | 855 778 |
Liabilities | | | | |
| Deposits held | 2 163 | 344 | 565 | 3 072 |
| Advances received | 3 637 | -123 | 19 | 3 533 |
| Borrowing | 45 444 | 13 871 | 912 | 60 227 |
| Unfunded superannuation and other employee entitlements | 124 046 | -115 | 10 345 | 134 276 |
| Other provisions | 7 501 | - | 329 | 7 830 |
| Other non-equity liabilities | 17 618 | 4 322 | -2 284 | 19 656 |
| Total | 200 409 | 18 300 | 9 885 | 228 594 |
GFS Net worth | 601 709 | 3 351 | 22 123
| 627 183 |
Net debt | -11 691 | . . | . . | 422 |
Net financial worth | 119 645 | . . | . . | 111 690 |
|
. . 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 2009 | Transactions | Other Economic Flows | Closing Stocks as at 30 June 2010 |
| | | $m | $m | $m | $m |
|
Assets | | | | |
| Financial assets | | | | |
| | Cash and deposits | 7 018 | 809 | -304 | 7 523 |
| | Advances paid | 3 | -31 | 32 | 4 |
| | Investments, loans and placements | 6 403 | 275 | 244 | 6 922 |
| | Other non-equity assets | 2 643 | 276 | 247 | 3 166 |
| | Equity | 1 084 | -20 | -344 | 720 |
| | Total | 17 152 | 1 308 | -125 | 18 335 |
| Non-financial assets | | | | |
| | Land and fixed assets | 270 375 | 5 591 | 30 861 | 306 827 |
| | Other non-financial assets | 1 306 | 118 | -60 | 1 364 |
| | Total | 271 680 | 5 709 | 30 803 | 308 192 |
| Total | 288 832 | 7 017 | 30 677 | 326 526 |
Liabilities | | | | |
| Deposits held | 631 | 94 | -89 | 636 |
| Advances received | 63 | 206 | -208 | 61 |
| Borrowing | 6 595 | 2 175 | -51 | 8 719 |
| Unfunded superannuation and other employee entitlements | 2 462 | 191 | -83 | 2 570 |
| Other provisions | 61 | 46 | 3 | 110 |
| Other non-equity liabilities | 3 022 | -224 | 590 | 3 388 |
| Total | 12 833 | 2 489 | 162 | 15 484 |
GFS Net worth | 275 999 | 4 528 | 30 515 | 311 042 |
Net debt | -6 136 | . . | . . | -5 032 |
Net financial worth | 4 319 | . . | . . | 2 850 |
|
. . not applicable |
16 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.