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The annual benchmarks will also be updated to incorporate revisions in Government Finance Statistics, Australia (cat. no. 5512.0) and Balance of Payments and International Investment Position, Australia (cat. no. 5302.0) and also revisions in data received from the Australian Prudential Regulatory Authority (APRA).
CHANGES TO THE GOVERNMENT FINANCE STATISTICS STANDARD
Government Finance Statistics (GFS) are an important indicator of the financial activity of governments and are a major source of data used in compiling the ASNA. The ABS conceptual framework for compiling GFS has been updated to incorporate the changes outlined in the International Monetary Fund Government Finance Statistics Manual 2014 (IMF GFS 2014), which will also bring closer alignment with the System of National Accounts 2008 (2008 SNA).
The updated framework is presented in Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2015 (AGFS 15) (cat. no. 5514.0) and will be implemented from 1 July 2017. The adoption of this new conceptual framework required changes to most of the classifications used to compile GFS, including the economic classification of stocks and flows by type (economic type classification) and selected economic flows by function (classification of the functions of government - Australia, or COFOG-A). The COFOG-A replaces the government purpose classification (GPC) previously used in the compilation of the ASNA.
The adoption of COFOG-A from AGFS 15 will result in the reallocation of superannuation expenses and the improved allocations of social benefits to households in goods and services. Whereas superannuation expenses were previously allocated to the Public Administration and Safety industry, they will now be allocated based on the employees’ industry, resulting in a reallocation of government final consumption expenditure to industries such as Health and Education. Similarly, social benefits to households in goods and services will have improved industry allocations. The result of these changes is improved industry allocations of government final consumption expenditure and correspondingly improved estimates of general government output and intermediate use.
CHANGES TO METHODS
Gross fixed capital formation
A number of the changes being implemented will cause revisions to gross fixed capital formation (GFCF) estimates. These revisions to GFCF will also result in revisions to the estimates of capital stock and consumption of fixed capital.
Capital formation for Machinery & Equipment
GFCF machinery and equipment (M&E) estimates are captured quarterly in Private New Capital Expenditure and Expected Expenditure, Australia (CAPEX) (cat. no. 5625.0). These are adjusted for the acquisitions of second hand fixed assets and industries out of scope of this survey. On the annual side, M&E asset acquisition estimates, along with the production of M&E are captured in the Economic Activity Survey (EAS).
Confrontation between all supply and use data sources identified some annual overestimation of GFCF M&E. In response to this, the annual estimates will be revised down across the time series, to produce annual benchmarks that better align with CAPEX and EAS data.
Capital formation for Computer Software
From 2006-07, the annual estimates of GFCF for computer software will be revised based on data from the EAS. Previously, the annual benchmark estimates of GFCF for computer software were based on Australian National Accounts: Information and Communication Technology, Satellite Account, 2002-03 (cat. no. 5259.0).
Capital formation for Music & Literary Originals
Data from Film, Television and Digital Games, Australia (cat. no. 8679.0) have been used to improve the estimates of private GFCF for film and television. Benchmark data from this survey are available for the reference periods 2006-07, 2012-13 and 2015-16. Estimates between these benchmark years will utilise film and television production data from Screen Australia as an indicator of year on year growth.
Capital formation on Weapons Systems
In the ASNA, expenditure on weapons systems is recorded as capital formation on the delivery of the asset. For Australia, a significant part of weapons systems are purchased from overseas producers. In the Balance of Payments (BoP), imports of weapons systems are recorded when the asset crosses the customs frontier or in cases where it is directly deployed overseas, when the asset is fully completed. However, the accrual GFS framework records progress payments for weapons systems as work proceeds and payments are recorded in the period in which they occurred. To resolve this difference in the time of recording in the ASNA, data from BoP dating back to 2008-09 will be used instead of progress payments from GFS.
International trade in goods and services will be revised as a result of improvements to the model used to estimate trade in travel services. Estimates of the expenditure of all travellers (resident and non-resident, including students) will be now sourced from the International and National Visitors Surveys (IVS/NVS) conducted by Tourism Research Australia (TRA). Other improvements to the trade in travel services model include reinstating the commission on travel and transport services, paid by travellers, which is currently being deducted and the treatment of the expenditure of young persons (under 15 years of age). Finally, traveller’s expenditure on motor vehicle purchases will be excluded from the trade in travel services model. This expenditure is outside the scope of international trade in services. The combination of all these changes will lead to revisions to both exports and imports across the entire time series for international trade in services.
In addition to the changes outlined above, there will be other small revisions to international trade in goods and services estimates as updated data from providers have been incorporated.
Compensation of Employees
Compensation of employees (COE) estimates will be reallocated between industries based on source data from the MLC, EAS and APRA, from 2003-04 onward. This reallocation will be predominately between the Financial and Insurance Services, Administrative Support and Services and Professional, Scientific & Technical Services industries.
Taxes on Products
The measure of GST in the annual benchmarks previously included not only GST revenue, but also fines, interest charges and provisions which reflect penalties on late payment of GST. Using data from the Australian Tax Office (ATO), the fines and interest charges components can be separately identified and removed from the GST time series. This treatment of fines and interest charges are consistent with the recommendation of the new GFS manual and SNA2008. From 2003-04 onward, fines will be separately identified as other current transfers and interest charges recorded to the Income Account.
There is a substantial amount of change foreshadowed in this article, however employing new methodologies and the latest data sources ensures that the best available data are used in the compilation of the ASNA. Ongoing reviews of methods and data sources will continue into the future.
While there will be a noticeable impact on the level of GDP as a consequence of these changes, the impact on the movements in GDP in both current price and volume terms will be minor.
A more detailed article quantifying the magnitude of these revisions will be provided in Australian System of National Accounts, 2016-17 (cat. no. 5204.0). For questions concerning the nature of the revisions, contact the National Information and Referral Service on 1300 135 070 or National Accounts by email <firstname.lastname@example.org>.
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