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7.37. The scope of the general government sector in the ASNA is exactly the same as in the GFS system. In the ASNA, public non-financial corporations form part of the non-financial corporations sector and public financial corporations form part of the financial corporations sector. These relationships between the GFS institutional components and the ASNA institutional sectors are illustrated in the diagram below.
The diagram represents the whole economy, which is the scope of the ASNA. The heavy lines in the diagram subdivide the circle representing the economy into the four ASNA institutional sectors: households (including non-profit institutions serving households), non-financial corporations, general government and financial corporations. The lighter line subdivides each of the two corporate sectors between public and private corporations and subdivides the economy into the public sector (the upper right component) with the shadowed text, and the private sector (the lower left component) with the unshadowed text. As previously discussed, the public sector defines the scope of the GFS system, which consists of the general government sector, the public non-financial corporations and the public financial corporations.
7.38. The ASNA distinguishes between the public and private corporations within the non-financial and financial corporations sectors only for selected types of information. When the distinction is made, the scope of the public corporations in ASNA coincides with the scope of the public corporations in the GFS system. It is therefore possible to directly compare common ASNA and GFS information about general government, public non-financial corporations and public financial corporations.
7.39. The ASNA presents information on economic flows and stocks using a framework of linked accounts that differs from the GFS framework of financial statements but includes many common links. The differences arise because of the different objectives of the two systems. In the national accounts, emphasis is placed on economic concepts of production, income, consumption, saving, capital accumulation and wealth, with the aim of measuring the economic performance of the whole economy. In the GFS system, emphasis is placed on fiscal concepts such as revenues, expenses, and financing, with the aim of measuring the financial performance of the public sector.
7.40. The ASNA framework includes the following set of accounts:
7.41. In broad terms, the gross domestic product account records production, the income generated from production and the expenditure of income on final consumption and capital formation. The income account records the disposable income of residents (i.e. after taxes and other current transfers), the current use of that income and the resultant saving, which can be positive or negative. The capital account records the sources (net saving and net capital transfers) of funds available for acquisition of non-financial assets on one side and the actual net acquisition of non-financial assets on the other. The balance of the account can be positive (net lending) or negative (net borrowing). The financial account records the net transactions in financial assets, liabilities and equity that occur as a result of net lending or borrowing. The balance sheet records the opening and closing values of assets and liabilities. The revaluation and other changes in the volume of assets accounts record changes to net worth arising from revaluations and events other than transactions and revaluations. As in the GFS system, the closing values of assets and liabilities are equal to net transactions, plus net revaluations, plus net other changes in the volume of assets.
7.42. Each of the ASNA accounts includes information that can be directly related to GFS data. Information in the gross domestic product, income and capital accounts can be linked to information included in the GFS operating statement; the balance sheet information can be linked to information included in the GFS balance sheet; and information in the revaluation and other changes in volume of assets accounts can be linked to information included in the GFS statement of stocks and flows. The items in the accounts and the links to GFS items are discussed in the next section. There is no equivalent of the GFS cash flow statement in the ASNA, although the change in cash balances is recorded in the system.
7.43. The major aggregates and balancing items included in the main ASNA accounts and the corresponding GFS items and the statements in which they are recorded are shown in table 7.6 below. In the table, items that are recorded as such in the respective GFS financial statements are listed under their name in the GFS system. Items that do not appear in the GFS financial statement but are derived for national accounting purposes are labelled ‘derived’. A ‘b’ against an entry in the right-hand column indicates that the item is identical in concept to the ASNA item but is measured from different sources with the result that values recorded for the item in the two systems are not identical. The content of the table is explained in the following paragraphs.
7.6. MAIN ITEMS IN ASNA ACCOUNTS AND CORRESPONDING ABS GFS STATEMENTS AND ITEMS
(a) Balancing items shown in bold.
(b) Identical in concept to the ASNA item, but the value recorded for the item is not identical because it is measured from a different source than ASNA.
n.a. Not applicable
Note: Throughout the table, ‘liabilities’ includes shares and other contributed capital of corporations and quasi-corporations.
7.44. The ASNA gross domestic product account records gross domestic product (GDP, the economy’s production), the income generated by GDP (comprising mainly compensation of employees and the gross operating surplus and gross mixed income of producers) and the expenditure of GDP on final consumption, gross fixed capital formation and net exports.
7.45. Most income components included in the gross domestic product account for general government and public corporations can be linked to expense items in the GFS operating statement or can be derived from items in the operating statement. Compensation of employees is shown as not applicable in GFS because in ASNA it includes capitalised wages and salaries and it is not the same as ‘compensation of employees (uncapitalised)’ in the GFS system. Gross operating surplus of public corporations is not recorded in the GFS operating statement but, in the case of public non-financial corporations, the ASNA information is derived from data recorded in the GFS system. It is defined as the excess of gross output over the sum of intermediate consumption, compensation of employees, and taxes less subsidies on production and imports. In the general government sector, most output is not marketed and is valued in the national accounts at its costs of production less any revenues from sales of output. The gross operating surplus of general government is therefore equal to general government consumption of fixed capital, which is the only cost of production not deducted in the derivation of gross operating surplus, less sales. However, because depreciation rather than consumption of fixed capital is recorded in the GFS system, the ASNA values for general government gross operating surplus are not the same as those that can be derived from GFS data. Gross mixed income does not apply to public sector entities.
7.46. The expenditure components included in the gross domestic product account that can be linked to GFS operating statement items are government final consumption expenditure, gross fixed capital formation of general government and public corporations, and changes in inventories. Government final consumption expenditure is current expenditure by general government bodies on services to the community. Because these are provided free of charge or at charges which cover only a small proportion of costs, the government is considered to be the consumer of its own output. This output has no directly observable market value and so is valued in the national accounts at its cost of production. Transfer payments (e.g. interest payments on government debt and social assistance benefits) are not included. The major part of government final consumption expenditure is derived from GFS data but the item is not included in the GFS system because it includes imputed expenses that are not derived in the GFS system. For example, it includes ‘financial intermediation services indirectly measured’ (FISIM), which is an imputed part of the output of financial institutions and part of the final consumption expenditure of general government units that use the financial institutions’ services.
7.47. Gross fixed capital formation is defined and measured in the same way in the GFS system and the ASNA, and the ASNA data for general government and public non-financial corporations are derived directly from GFS data. In the ASNA, capitalised wages and salaries (see paragraph 7.45) are included in gross fixed capital formation as well as in compensation of employees (no duplication is involved because of the linked structure of the national accounts).
7.48. The income receivable items included in the ASNA income and use of income account can, in general, be related to GFS revenue items. Each of the items is discussed in the following paragraphs.
7.49. Gross operating surplus is discussed in paragraph 7.45 and that discussion will not be repeated here.
7.50. Property income receivable comprises interest, dividends, re-invested earnings on direct foreign investment, and rent on natural assets. The data for interest receivable that are recorded in the ASNA are not comparable with the data recorded in the GFS system because the ASNA data are adjusted to exclude FISIM (see paragraph 7.46). As well, in the ASNA, recorded interest is adjusted to treat some results of interest rate changes of marketed securities as revaluations rather than transactions. In the GFS system, FISIM and revaluations arising from interest rates changes are not deducted from interest because the required adjustments have to be made across all sectors and cannot be made unilaterally in the GFS system. Reinvested earnings on direct foreign investment is an imputed item that has no equivalent in the GFS system. It relates to the retained earnings of non-resident enterprises that are treated as earned and reinvested by Australian residents who hold equity in the enterprises. All other items of property income are defined and measured in the ASNA in the same way as in the GFS system, which provides the ASNA data for general government and public non-financial corporations.
7.51. Taxes on production and imports represents taxation revenue of general government, and the ASNA values are derived directly from GFS data. The GFS categories of revenue included in the item are taxes on products (which comprises all taxes included in the GFS tax item ‘taxes on provision of goods and services’) and other taxes on production (which comprises all taxes included in the tax items ‘taxes on employers’ payroll and labour force’, ‘taxes on immovable property’, ‘taxes on financial and capital transactions’, ‘motor vehicle taxes’, ‘franchise taxes’, and ‘other taxes on use of goods and performance of activities’). Because some of these taxes are payable by non-producers as well as producers, adjustments (based on non-GFS data) are made to eliminate taxes payments made by non-producers.
7.52. Net non-life insurance premiums are receivable by some public financial corporations. The ASNA data are not derived from the GFS system, which does not obtain separate information on the premiums.
7.53. Taxes on income and wealth receivable is an item that is unique to general government, and the ASNA data are derived directly from GFS data. The GFS revenue categories included in the item are taxes on income (which comprises all taxes included in the tax item ‘taxes on income, profits and capital gains’) and other current taxes (which comprises all taxes included in the tax items ‘motor vehicle taxes’ (except road transport and maintenance taxes) and ‘departure tax’). Because some of these taxes when paid by producers are classifiable as taxes on production and imports, other non-GFS information is used to identify and eliminate such tax payments made by producers. The ASNA data for this item therefore cannot be related directly to the GFS data.
7.54. Other current transfers receivable that are relevant to the public sector include: (i) current grants and subsidies receivable by public corporations, which are defined and measured in the ASNA as in the GFS system; and (ii) regulatory fees and fines collected by general government, which are also defined and measured as in the GFS system. ASNA data for these components are derived from GFS data.
7.55. The use of income items included in the ASNA income account can, in general, be related to GFS expense items. They are discussed in the following paragraphs.
7.56. Property income payable includes the same components as property income receivable and the discussion in paragraph 7.50 relating to property income receivable applies equally here. That is, all property income payable except interest is recorded in the same way in ASNA and the GFS system and interest payable in ASNA is not comparable with GFS interest payable for the same reasons as given in paragraph 7.50 in relation to interest receivable. The item also includes nominal interest payable by general government on unfunded superannuation (see chapter 5 for a discussion of this nominal interest). The ASNA data for this item are taken directly from the GFS system and are therefore directly comparable across the two systems.
7.57. Subsidies and social assistance benefits in cash to residents are items unique to general government that are defined and measured in the ASNA in the same way as in the GFS system, which provides the data that are included in the ASNA. In the GFS system, social benefits in cash to residents is called ‘current monetary transfers to households’ and is included in expenses under other current transfers.
7.58. In the GFS system, current taxes on income and wealth payable are payable only by public non-financial and financial corporations (any taxes payable by general government units are eliminated in the consolidation of GFS output). The ASNA data for current taxes payable by all sectors are derived from GFS data for taxation revenue receivable and distinguish taxes payable by public non-financial corporations.
7.59. Non-life insurance claims payable, which would apply to some public financial corporations, are not recorded separately in the GFS system.
7.60. Other current transfers payable consists mainly of inter-governmental grants and transfers to other sectors made by the general government sector. The data for such grants and transfers are defined and measured in the ASNA in the same way as in the GFS system, which is the sole source of the ASNA data.
7.61. Items in the ASNA capital account correspond to items recorded in the GFS operating statement, mainly in the section relating to net acquisition of non-financial assets.
7.62. The balancing item net saving is the balance of the income account and is carried forward to the capital account. Net saving is not recorded in the GFS financial statements but can be derived, albeit with measurement differences.
7.63. Consumption of fixed capital is also not recorded in the GFS system, which uses instead the accounting measure of depreciation. The concept of consumption of fixed capital is very similar to the concept of depreciation, but is measured in the ASNA in a very different way using a perpetual inventory method that does not provide estimates in sufficient detail for use in the GFS system (information about the perpetual inventory method is provided in Australian System of National Accounts: Concepts, Sources and Methods (ABS Cat. no. 5216.0)).
7.64. Capital transfers (receivable and payable) in the ASNA capital account are defined and measured in the same way as in the GFS system. They include capital grants between levels of government, ASNA data for which come directly from the GFS system. Also included are so-called ‘capital taxes’, which in Australia are confined to the GFS tax classification category ‘estate, inheritance and gift taxes’, which is the sole source of information for the ASNA capital taxes item.
7.65. Gross fixed capital formation, changes in inventories and acquisitions less disposals of non-produced non-financial assets are defined and measured in the ASNA in the same way as in the GFS system. ASNA data for general government and public non-financial corporations are derived directly from the GFS system. Gross fixed capital formation comprises acquisitions less disposals of new and second hand produced assets whereas acquisitions less disposals of non-financial non-produced assets relates to assets, such as mineral deposits and virgin forests, that have not been produced.
7.66. The balancing item net lending(+)/borrowing(–) in the ASNA is equivalent to the balancing item of the same name in the GFS system. The item is not subject to most of the measurement differences cited above because the items affected by the differences cancel out in the derivation. For example, consumption of fixed capital cancels out in the derivation, and the FISIM adjustments make no difference because both interest and FISIM are included in the derivation of net lending(+)/borrowing(–).
7.67. Similarly, the ASNA item gross saving and capital transfers is equivalent, apart from minor measurement differences, to the GFS net operating balance plus depreciation (sometimes referred to as the ‘gross operating balance’). The measurement differences affecting the equivalence are those, discussed in previous paragraphs, which affect comparability of common components of gross saving and the gross operating balance.
7.68. The ASNA financial account records all changes to financial assets and liabilities arising from transactions. It corresponds to the financial assets and liabilities section of the transactions column in the GFS statement of stocks and flows. Net acquisition of financial assets refers to acquisition less disposal of financial assets and net acquisition of liabilities refers to acquisition less disposal of liabilities and equity. These items are equivalent in concept to the GFS items relating to net transactions in financial assets and net transactions in liabilities and equity, respectively. However, the GFS system is not the source of data for the ASNA financial account, with the result that these items are unlikely to carry exactly the same values in ASNA and the GFS system. There are also differences between ASNA and the GFS system in the way that these broad items are broken down into financial instrument categories. The ASNA financial instrument classification is more detailed, but does not include the GFS distinction between acquisition of financial assets for policy and liquidity management purposes.
7.69. The balancing item net change in financial position in the ASNA financial account is identical conceptually to net lending/borrowing, but is derived differently. As a result of the different methods of derivation, recorded values for the two items are usually quite different. In the ASNA, the difference between the two items is recorded in an item called ‘errors and omissions’. Thus, although GFS values for net lending/borrowing should be equal to the ASNA values for change in financial position, in practice they are not.
7.70. The ASNA balance sheet records the value of assets and liabilities (including equity) and is identical in concept to the GFS balance sheet. However, GFS data are not used in the compilation of the ASNA balance sheet and the values recorded are therefore not likely to be identical. Most of the ASNA data are compiled using the perpetual inventory method previously mentioned in relation to the estimation of consumption of fixed capital (see paragraph 7.63) whereas the GFS data are obtained directly from public sector accounting records. The classification of assets and liabilities in the two systems have points of concordance at a broad level, but the ASNA classification is generally more detailed than the GFS classification.
7.71. The ASNA accumulation and revaluation accounts record net capital formation, financial transactions, and changes to the balance sheet values of assets, liabilities and equity arising from revaluations (i.e. price changes) and events other than transactions and revaluations. The accounts record the same information (albeit in a different format) to that recorded respectively in the columns relating to transactions, revaluations and other changes in the volume of assets in the GFS statement of stocks and flows. The item net capital formation is equal to net acquisition of non-financial assets less consumption of fixed capital and cannot be derived exactly in the GFS system because it uses depreciation in lieu of consumption of fixed capital. The item financial transactions refers to net acquisition of financial assets and liabilities and can be derived in the GFS system but will carry different values due to the use of different data sources, as discussed in paragraph 7.68. The ASNA data relating to revaluations and other changes in the volume of assets are identical in concept to the GFS items of the same name, but the data for the items are derived from different sources and the recorded values are unlikely to be the same. As well, revaluations arising from interest rate changes to marketed securities are not captured in the GFS system (see paragraph 7.50).