8221.0 - Manufacturing Industry, Australia, 2003-04  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 05/07/2006   
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GLOSSARY

Data presented in this publication have been compiled from the standard financial accounts of businesses; therefore, the definition of each reported item aligns closely with that adopted in standard business accounting practice. Definitions of particular terms, as used in this publication, are also included.


ABN unit


The statistical unit used by the ABS to represent businesses, and for which statistics are reported, in most cases. The ABN unit is the business unit which has registered for an ABN, and thus appears on the ATO administered Australian Business Register. In most cases, the ABN unit represents the legal entity. This unit is suitable for ABS statistical needs when the business is simple in structure. For more significant and diverse businesses where the ABN unit is not suitable for ABS statistical needs, the statistical unit used is the type of activity unit (TAU).


In most cases, employing ABN units / TAUs concorded with the management units used prior to the 2001-02 year.


Acquisitions


See the various capital expenditure entries.


Amount exported by this business or its agent


This represents the sales value of goods produced by the business (or for it on commission) that are exported (or are intended for export) outside Australia by the business or by its agent.


billion


One thousand million.


Business


A business is generally considered to be a person, partnership, or corporation engaged in business or commerce; for example, a textile manufacturing business.


In this publication, the term represents the ABN unit or type of activity unit (TAU), which are the two standard statistical units for the 2003-04 manufacturing collection (these two units are explained under separate entries). For details, see Explanatory Notes paragraphs 4-8.


Business Activity Statement (BAS) total sales


Represented by the form item G1 Total sales on businesses' Business Activity Statements, supplied by them to the ATO. This item comprises all payments and other consideration (including GST) received during the nominated tax period for supplies made in the course of business.


Businesses that do not export


Businesses that reported no exports (either by their business or for them by an agent) of goods that they produced.


Businesses that export more than 50% of sales


Businesses that reported exports (either by their business or for them by an agent) of more than 50% of sales of goods that they produced.


Businesses that export up to and including 50% of sales


Businesses that reported exports (either by their business or for them by an agent) of up to and including 50% of sales of goods that they produced.


Capital expenditure on dwellings, other buildings and structures


Capital expenditure incurred acquiring dwellings, other buildings and structures, including roads, factories, warehouses, offices, bridges, etc. Includes expenses (except capitalised interest) incurred during the year in acquiring such assets.


Capital expenditure on other assets (including land and intangible assets)


Capital expenditure incurred acquiring other assets (including land and intangible assets). Intangible asset purchases may include items such as patents, licences and goodwill. Also included is computer software capitalised, including capitalised computer software licence fees, installation costs, the purchase or development of large databases, software developed in-house (but excluded is software maintenance expenditure), and capitalised payments to contractors and consultants for software development. Note that if the cost of software and hardware cannot be separated, the total cost is included in acquisition of plant, machinery and equipment.


Capital expenditure on plant, machinery and equipment


Capital expenditure incurred acquiring plant, machinery and other equipment, including motor vehicles. Includes expenses (except capitalised interest) incurred during the year in acquiring such assets.


Capital work done for own use


Capitalised work done by the employees or proprietors of a business in manufacturing, constructing, installing or repairing assets, and the in-house development of computer software, for use by the business or for rental or lease. This work is valued at the capitalised costs of the materials and the wages and salaries involved.


Conceptually, under the current international standards, this item should also include own account mineral exploration and own account production of literary, entertainment or artistic originals. However, these activities are relatively unimportant for manufacturers and have not been measured for manufacturing industries.


Capitalised purchases


Goods drawn from inventories for use as fixed tangible assets in capital work done by the employees or proprietors of a business for use by the business or for rental or lease.


Chain volume measures


Annually-reweighted chain Laspeyres volume indexes referenced to the current price values in a chosen reference year (i.e. the year when the quarterly chain volume measures sum to the current price annual values). Chain Laspeyres volume measures are compiled by linking together (compounding) movements in volumes, calculated using the average prices of the previous financial year, and applying the compounded movements to the current price estimates of the reference year. Quarterly chain volume estimates are benchmarked to annual chain volume estimates, so that the quarterly estimates for a financial year sum to the corresponding annual estimate.


Generally, chain volume measures are not additive. In other words, component chain volume measures do not sum to a total in the way original current price components do. In order to minimize the impact of this property, the ABS uses the latest base year as the reference year. A change in reference year changes levels but not growth rates, although some revision to recent growth rates can be expected because of the introduction of a more recent base year (and revisions to the current price estimates underlying the chain volume measures).


For details, see Australian National Accounts: National Income, Expenditure and Product, December Quarter 2005 (cat. no. 5206.0).


Change in inventories


The value of total closing inventories less total opening inventories.


Closing inventories


The value of all inventories of finished goods (including inventories for resale), work-in-progress (less progress payments billed), raw materials, fuels, and containers, at the end of the reporting period.


Commission manufacturing


Significant amounts of manufacturing are undertaken on a commission basis by one manufacturer on behalf of another or on behalf of a non-manufacturer for a fee. Typically, commission manufacturing involves a client commissioning the production of goods utilising materials provided by the client. Ownership of these materials remains with the client. Similarly, the goods made using these materials are owned by the client.


For the purposes of the estimates in this publication, the producing business reports the commission fee as service income and the wages and salaries and any other expenses incurred.


If the client is also a manufacturing business then, in addition to data for its own manufacturing operations, the client reports the sales and inventories of the commissioned goods, the cost of the materials provided to the producing business, the commission fee paid and the value of any other intermediate inputs related to the commission transaction. If the client is not a manufacturing business, no data are reported by the client as it is excluded from the manufacturing collection.


Commission expenses


Payments to other businesses and self-employed persons for work done or sales made on a contract or commission basis using materials supplied by the business. Payments to persons paid by commission without a retainer are also included. Excludes commissions paid to persons who receive a retainer, commission paid to the business' own employees, and in-house printing expenses.


Current prices


Estimates at current prices are valued at the prices of the period to which the observation relates. For example, estimates for 2003-04 are valued using 2003-04 prices. This contrasts to chain volume measures, where the prices used in valuation refer to the prices of a previous period.


Disposal of assets


Proceeds from the sale of tangible assets (plant, machinery, equipment, land, dwellings, other buildings and structures), and intangible assets (such as patents, licences and goodwill).


Employer contributions into superannuation


Includes salary sacrifice. Also includes all employer contributions to superannuation funds (including the employer productivity contribution) and provisions for employer contributions to superannuation funds. Employee contributions are excluded.


Employment at end of June


Number of persons working for manufacturing businesses during the last pay period ending in June of the given year. Includes working proprietors and partners, employees absent on paid or prepaid leave, employees on workers' compensation who continue to be paid through the payroll, and contract workers paid through the payroll. Excludes persons paid by commission only, non-salaried directors, voluteers and self-employed persons such as consultants and contractors.


For details of how employment estimates have been derived, see the Appendix.


Enterprise


An institutional unit comprising:

  • a single legal entity or business entity; or
  • more than one legal entity or business entity within the same enterprise group and in the same institutional sub-sector (i.e. they are all classified to a single Standard Institutional Sector Classification of Australia (SISCA) sub-sector).


Enterprise group


A unit covering all the operations in Australia of one or more legal entities under common ownership and/or control. It covers all the operations in Australia of legal entities which are related in terms of the current Corporations Law (as amended by the Corporations Legislation Amendment Act 1991), including legal entities such as companies, trusts and partnerships. Majority ownership is not required for control to be exercised.


Exports as a proportion of sales of goods produced


For an individual business, this represents the percentage of sales of goods produced by the business (or for it on commission) which are exported (or are intended for export) outside Australia by the business or by its agent. (In table 4.2, the proportion is calculated by dividing the value of goods exported by the value of sales of goods produced by all manufacturing businesses, not just the aggregated value for those units which exported.)


Because the ATO data do not contain this export information, businesses whose contribution to manufacturing estimates was sourced from BIT data do not contribute to these export data. The effect of the exclusion of these businesses is likely to be minimal, in view of their small contribution to overall estimates.


These data also exclude those businesses which operated during the given reference year but were not operating at 30 June of that reference year.


Freight and cartage expenses


Excludes the cost of delivery by own vehicles and employees, as well as overseas freight and cartage on goods exported, and payments to couriers.


Fringe benefits tax


As reported by providers.


Funding from government for operational costs


Funding from federal, state and/or local government for operational costs (e.g. wages and salaries, rent, food). Includes bounties, subsidies, export grants, apprenticeship and traineeship schemes, and amounts reimbursed under the Australian Government's Energy Grants (Credits) Scheme.


Gross valued added


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 institutional 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. For details, please refer to Australian National Accounts: National Income, Expenditure and Product, December Quarter 2005 (cat. no.5206.0).


Industry class


The structure of ANZSIC comprises four levels, ranging from industry division (broadest level) to industry class (finest level). Activities are narrowly defined within the industry class level, which is identified by a four-digit code, e.g. Industry Class 2331 Pulp, paper and paperboard manufacturing. Usually, an activity is primarily defined to one class. However, some activities may be primary to more than one class.


Industry division


The structure comprises four levels, ranging from industry division (broadest level) to the industry class (finest level). The main purpose of the industry division level is to provide a limited number of categories which give a broad overall picture of the economy. There are 17 divisions within ANZSIC, each identified by an alphabetical letter, that is, 'A' for Agriculture, forestry and fishing, 'B' for Mining, 'C' for Manufacturing, etc.


Industry group


This is the intermediate level within each industry division of ANZSIC and is identified by a three-digit code, e.g. Industry Group 233 for Paper and paper product manufacturing. It gives more detail than the industry subdivision, and is created in a way that groups like industry classes together.


Industry subdivision


This is the broadest level category within each industry division of ANZSIC and is identified by a two-digit code, e.g. Industry Subdivision 23 for Wood and paper product manufacturing. Industry subdivisions are built up from industry groups which, in turn, are built up from industry classes. The manufacturing industry subdivisions are:

      21 Food, beverage and tobacco mfg
      22 Textile, clothing, footwear and leather mfg
      23 Wood and paper product mfg
      24 Printing, publishing and recorded media
      25 Petroleum, coal, chemical and associated product mfg
      26 Non-metallic mineral product mfg
      27 Metal product mfg
      28 Machinery and equipment mfg
      29 Other manufacturing


Industry value added (IVA)


IVA represents the value added by an industry to the intermediate inputs used by the industry. IVA is the measure of the contribution by manufacturing businesses to gross domestic product.


The derivation of IVA is as follows:


Diagram: Derivation of IVA


However, it should be noted that IVA is not a measure of operating profit before tax (OPBT). Wage and salary expenses and most other labour costs are not taken into account in its calculation, and nor are most insurance premiums, interest expenses or depreciation and a number of lesser expenses (see the entry for total expenses for further details). On the income side, OPBT includes total income whereas IVA only includes sales and service income.


Industry value added is related to, but different from, the national accounting variable gross value added above.


For national accounts purposes, gross value added is calculated by adjusting industry value added to include General Government units and to also account for some other effects.


Industry value added per person employed


IVA of manufacturing businesses which operated during the given year ended 30 June divided by the number of persons employed by manufacturing businesses during the last pay period ending in June of that same year.


Insurance premiums


Premiums for fire, general, accident, public liability, optional third-party and comprehensive motor vehicle insurance, and professional indemnity insurance and common law liability. Excludes workers' compensation insurance premiums/costs (included in selected labour costs) and compulsory third party motor vehicle insurance premiums (included in motor vehicle running expenses).


Interest expenses


Includes interest paid on loans from banks, finance companies, partners, related or unrelated businesses, and in respect of finance leases. Includes interest equivalents such as hedging costs and expenses associated with discounted bills.


Interest income


Includes interest from bank accounts, loans and finance leases and earnings on discount bills. Excludes capital repayments received, and charges between companies in the same TAU.


Intermediate input expenses


For details, see the entry for total expenses.


Intermediate inputs


Intermediate inputs consist of materials and certain services which are used up in the production process.


The calculation is:


Diagram: Intermediate inputs equation


Inventories - opening/closing


The value of all inventories of finished goods (including inventories for resale), work-in-progress (less progress payments billed), raw materials, fuels, and containers, at the beginning and end of the reporting period respectively.


Management unit


For collections prior to 2001-02, the management unit was the highest-level accounting unit within a business, having regard to industry homogeneity, for which accounts were maintained. In nearly all cases, it coincided with the legal entity owning the business (i.e. company, partnership, trust, sole operator, etc.).


Manufacturing business


An ABN unit / TAU predominantly engaged in manufacturing activities. The data collected for such units cover all activities of the business (including non-manufacturing activities).


Motor vehicle running expenses


Includes expenditure on registration fees, compulsory third-party insurance premiums, fuel and repair and maintenance expenses. Excludes expenses for off-road motor vehicles (e.g. forklifts, mobile plant).


Net capital expenditure


The value of total capital expenditure less proceeds received from the disposal of assets.


Opening inventories


The value of all inventories of finished goods (including inventories for resale), work-in-progress (less progress payments billed), raw materials, fuels, and containers, at the beginning of the reporting period.


Operating profit before tax (OPBT)


Profit before extraordinary items are brought to account and prior to the deduction of income tax and appropriations to owners (e.g. dividends paid).


Other intermediate input expenses


Comprises intermediate input expenses less current purchases of goods and materials used in production (i.e. excludes any capitalised purchases). Further detail is included in the entry for total expenses.


Payroll tax


Excludes Pay as You Go withholding tax.


Production volumes


See the entry for chain volume measures.


Purchases of goods and materials


Purchases of materials, components, containers, packaging materials, fuels, electricity and water, and purchases of finished goods for resale. Also includes capitalised purchases. Excludes purchases of parts and fuels for motor vehicles, but includes fuels for off-road vehicles, such as forklifts and mobile plant.


Reference period


For each collection year, businesses are asked to report data for the financial year ended 30 June. However, if a business has a different financial year, it is asked to report (apart from employment) for the 12 month period which ends between 1 October of the previous year and 30 September of the current year. This period is then used as a substitute for the financial year ended 30 June. For example, for the 2003-04 collection, a business may have reported data for the year ended 31 December 2003.


Rent, leasing and hiring expenses


Payments for the rent, leasing and hiring of land, dwellings, other buildings and structures, motor vehicles, plant, machinery and other equipment (including telecommunication equipment). Includes operating lease payments; excludes finance lease payments.


Rent, leasing and hiring income


For details, see the entry for sales and service income.


Repair and maintenance expenses


Includes computer software and hardware maintenance, and repair and maintenance of off-road motor vehicles. Excludes wages and salaries of own employees and the repair and maintenance costs of on-road motor vehicles.


Sales and service income


Includes:


Sales of goods

  • whether or not manufactured by the business (including goods produced for the business on a commission basis). Includes export sales, sales or transfers to related businesses or to overseas branches of the business, progress payments relating to long term contracts if they are billed in the period, and delivery charges not separately invoiced to customers. Excludes excise and duties received on behalf of the Government, sales of fixed tangible assets, interest income, and delivery charges separately invoiced to customers. Exports are valued free on board (f.o.b.) (i.e. export freight charges are excluded).

Income from services
  • includes income from consulting services, repair, maintenance and service income and fees, contract, subcontract and commission income, management fees/charges from related and unrelated businesses, installation charges, delivery charges separately invoiced to customers, and royalties from intellectual property (e.g. patents, copyrights, etc.). Excludes natural resource royalties income, interest income, and delivery charges not separately invoiced to customers.

Rent, leasing and hiring income
  • derived from the ownership of land, dwellings, buildings and other structures, motor vehicles, plant, machinery and other equipment. Excludes royalties from mineral leases, income from finance leases and payments received under hire purchase arrangements. This item is included in sales and service income, but is not separately published. (Under the current international standards, rent, leasing and hiring income is classified as service income.)

These are valued net of discounts given and exclusive of goods and services tax (GST). Extraordinary items are also excluded.


In order to produce data by state and territory, selected businesses which received mail out questionnaires were also asked to provide sales of goods and services (as well as employment and wages and salaries) for each state and/or territory in which they operated. For details, see Explanatory Notes paragraphs 20-22.


Sales and service income per person employed


The value of sales and service income of manufacturing businesses which operated during the given year end 30 June divided by the number of persons employed by manufacturing businesses during the last pay period ending June of that same year.


Sales of goods produced


Sales of goods produced (manufactured) by the business (including goods produced for the business on a commission basis). Includes export sales, sales or transfers to related businesses or to overseas branches of the business, progress payments relating to long term contracts if they are billed in the period, and delivery charges not separately invoiced to customers. Excludes excise and duties received on behalf of the Government, sales of fixed tangible assets, interest income, and delivery charges separately invoiced to customers. Exports are valued free on board (f.o.b.) (i.e. export freight charges are excluded).


Selected labour costs


See the entry for total expenses.


Selected non-wage labour costs


For the purposes of table 2.5, comprises employer contributions into superannuation, workers' compensation premiums/costs, fringe benefits tax and payroll tax.


Standard Institutional Sector Classification of Australia (SISCA)


The SISCA is the central classification among ABS Standard Economic Sector Classifications. It is based on the System of National Accounts 1993 (SNA93) institutional sector classification, and comprises the sectors: non-financial corporations, financial corporations, general government, households, non-profit institutions serving households, and rest of the world (which includes only non-resident units, these being excluded from all other sectors). For more information, users should refer to Standard Economic Sector Classifications of Australia (SESCA) (cat. no. 1218.0).


Superannuation


See the entry for employer contributions into superannuation.


Total acquisitions


The total capital expenditure on the acquisition of plant, machinery and equipment, dwellings, other buildings and structures, and of other assets (including land and intangible assets). Also included is capital work done for own use.


Total expenses


For the purposes of calculating economic and accounting variables for manufacturing industries, expenses incurred by businesses are divided into several categories. However, some expenses are excluded entirely from all such calculations: excluded are capital repayments, costs associated with the transfer of real estate, dividends, donations, export freight charges, extraordinary losses, foreign exchange losses, goods and services tax (GST), excise and duties payable to governments, income tax and other direct taxes, losses on asset sales, and unrealised gains/losses from revaluations of assets.


Those expenses used for calculations are categorised as follows:


Intermediate input expenses

This category covers the major expenses incurred by businesses in producing and distributing goods and services (except labour costs), and comprises two sub-categories of operating expenses:


Purchases of goods, materials and services used in production, which include:

  • purchases of materials, components, containers and packaging materials, electricity, fuels and water
  • purchases of goods for resale (without any further processing or assembly)
  • motor vehicle running expenses
  • freight and cartage expenses
  • repair and maintenance expenses
  • rent, leasing and hiring expenses (excluding finance lease payments)
  • contract, subcontract and commission expenses.

Expenses related to the sale of goods and administrative expenses, which include:
  • management fees/charges paid to related and unrelated businesses
  • bank charges other than interest
  • audit and other accounting expenses
  • legal fees
  • advertising expenses
  • postal and telecommunication expenses
  • office supplies and printing expenses
  • travelling, accommodation and entertainment expenses
  • staff training
  • payments for royalties from intellectual property (e.g. patents and copyrights)
  • payments to employment agencies for staff.

Excluded from intermediate input expenses are selected labour costs and other operating expenses as detailed below.

Selected labour costs
  • wages and salaries (including provisions for employee entitlements)
  • employer contributions into superannuation (including salary sacrifice)
  • workers' compensation premiums/costs.

Other operating expenses

Some expenses are excluded from the calculation of intermediate input expenses and selected labour costs, but are included in the calculation of the accounting variable operating profit before tax (OPBT). These expenses include:
  • bad and doubtful debts
  • computer software expenses not capitalised by businesses
  • depreciation and amortisation
  • insurance premiums (except workers' compensation and compulsory third party motor vehicle insurance premiums)
  • interest expenses
  • land tax and land rates
  • other expenses not capitalised by businesses
  • natural resource royalties expenses
  • payroll tax and fringe benefits tax.


Total factor income


That part of the cost of producing the gross domestic product which consists of gross payments to factors of production (labour and capital). It represents the value added by these factors in the process of production, and is equivalent to gross domestic product less taxes plus subsidies on production and imports. For details, please refer to Australian National Accounts: State Accounts, 2003-04 (cat. no. 5220).


Type of activity unit (TAU)


The TAU is the statistical unit used by the ABS to represent businesses, and for statistics are reported, in cases where the ABN unit is not suitable for ABS statistical needs.


The TAU comprises one or more business entities, sub-entities or branches of a business entity within an enterprise group that can report production and employment data for similar economic activities. When a minimum set of data items are available, a TAU is created which covers all the operations within an industry subdivision (and the TAU is classified to the relevant subdivision of the ANZSIC). Where a business cannot supply adequate data for each industry, a TAU is formed which contains activity in more than one industry subdivision.


In most cases, employing ABN units / TAUs concorded with the management units used prior to the 2001-02 year.


Wages and salaries


The gross wages and salaries (including capitalised wages and salaries) of all employees of the business. The item includes severance, termination and redundancy payments, salaries and fees of directors and executives, retainers and commissions of persons who received a retainer, bonuses, and annual and other types of leave. Provision expenses for employee entitlements (e.g. provisions for annual leave and leave bonus, long service leave, sick leave, and severance, termination and redundancy payments) are also included. Payments related to salary sacrifice and payments to self-employed persons such as consultants, contractors and persons paid solely by commission without a retainer are excluded. The drawings of working proprietors and partners are also excluded.


In order to produce data by state and territory, selected businesses which received mail out questionnaires were also asked to provide wages and salaries (as well as employment and sales of goods and services) for each state and/or territory in which they operated. For details, see Explanatory Notes paragraphs 20-22.


Wages and salaries per person employed


The value of wages and salaries paid by manufacturing businesses which operated during the given year ended 30 June divided by the number of persons employeed by manufacturing businesses during the last pay period ending in June of the same year.


Wages and salaries to sales and service income ratio


The wages and salaries paid by manufacturing businesses which operated during the year ended 30 June as a proportion of the sales and service income of manufacturing businesses which operated during the same year.


Workers' compensation premiums/costs


As reported by providers.