Chapter 10 Gross Domestic Product – Expenditure approach (GDP(E))

10.1    GDP can be derived as the sum of all final expenditures, changes in inventories of finished goods, work-in-progress and raw materials, and the value of exports of goods and services less the value of imports of goods and services. In this context, final expenditures comprise final consumption expenditure and gross fixed capital formation (GFCF). These expenditures are equivalent to final demand and the measure is commonly referred to as GDP(E).

GDP(E)=Final consumption expenditure
 +Gross fixed capital formation
 +Changes in inventories
 +Net acquisitions of valuables (a)
 +Exports
 Imports

(a) net acquisitions of valuables are not separately identified in the ASNA

Final consumption expenditure

10.2    Final consumption expenditure is expenditure on goods and services that are used for the direct satisfaction of individual or collective needs or wants. It excludes expenditure on fixed assets (including dwellings), valuables and other non-financial assets. In the ASNA it is defined as:

  • the total value of all expenditures on individual and collective consumption goods and services incurred by resident households, resident non-profit institutions serving households (NPISHs) and general government units.

10.3    The main expenditure aggregates are:

  • Household final consumption expenditure – consists of the expenditure, including imputed expenditure, incurred by households on individual consumption goods and services, including those sold at prices that are not economically significant;
  • Final consumption expenditure of NPISHs – consists of expenditure, including imputed expenditure, incurred by resident NPISHs on individual and collective consumption goods and services (however, as NPISHs are not yet treated as a separate sector in the ASNA, their final consumption expenditure is included with that of households in household final consumption expenditure in the ASNA); and
  • Government final consumption expenditure – consists of expenditure, including imputed expenditure, incurred by general government on both individual consumption goods and services and collective consumption services. This expenditure may be divided into:
    • government expenditure on individual consumption goods and services; and
    • government expenditure on collective consumption services.

10.4    The distinction between collective and individual consumption expenditure is of considerable importance in the SNA. Consumption expenditures by general government and NPISHs on behalf of households (their individual consumption expenditures) are undertaken for the purpose of making social transfers in kind. They cover the non-market output of both general government and NPISHs, which is delivered to households free or at prices that are not economically significant, as well as goods and services bought from market producers and provided to households free or at prices that are not economically significant. Social transfers in kind are recorded differently from other transfers in kind.

Individual goods or services

10.5    Individual goods and services are essentially 'private', as distinct from 'public' goods and services. They have the following characteristics:

  • it must be possible to observe and record the acquisition of the good or service by an individual household or member thereof and also the time at which it took place;
  • the household must have agreed to the provision of the good or service and taken whatever action is necessary to make it possible; for example, by attending a school or clinic; and
  • the good or service must be such that its acquisition by one household or person, or possibly by a small, restricted group of persons, precludes its acquisition by other households or persons.

10.6    The reference to a small, restricted group of persons is needed because certain services are provided to small groups of people simultaneously; for example, several persons may travel in the same bus, train, ship or plane or attend the same class, lecture, concert or live theatre performance. However, these are still essentially individual services if there is a restriction on the number of individuals who can consume them. Other members of the community are excluded and derive no benefit from them.

10.7    From a welfare point-of-view, the important characteristic of an individual good or service is that its acquisition by one household, person or group of persons brings no (or very little) benefit to the rest of the community. While the provision of certain individual health or education services (for example, vaccination or immunisation) may bring some external benefits to the rest of the community, in general the individuals concerned derive the main benefit. Thus, when a government unit incurs expenditures on the provision of individual goods or services, it must decide not only how much to spend in total but how to allocate, or distribute, the goods or services among individual members of the community. From the point of view of economic and social policy, the way in which they are distributed may be as important as the total amount spent.

Collective services

10.8    Most goods can be privately owned and are individual in the sense used here. On the other hand, certain kinds of services can be provided collectively to the community as a whole. The characteristics of these collective services may be summarised as follows:

  • collective services are delivered simultaneously to every member of the community or of particular sections of the community, such as those in a particular region of a locality (but not small, restricted groups);
  • the use of such services is usually passive and does not require the explicit agreement or active participation of all the individuals concerned; and
  • the provision of a collective service to one individual does not reduce the amount available to others in the same community or section of the community. There is no rivalry in acquisition

10.9    The collective services provided by government consist mostly of the provision of security and defence, the maintenance of law and order, legislation and regulation, the maintenance of public health, the protection of the environment, research and development, etc. All members of the community can benefit from such services. As the individual use of collective services cannot be recorded, individuals cannot be charged according to their use or the benefits they derive. There is no market to allocate collective services, and these services must be financed collectively, for example, out of taxation or other government revenues.

The borderline between individual and collective services

10.10    Expenditures incurred by governments at a national level in connection with individual services such as health and education are treated as collective when they are concerned with the formulation and administration of government policy, the setting and enforcement of public standards, the regulation, licensing or supervision of producers, etc. For example, the expenditures incurred by Departments of Health or Education at a national level are included in collective consumption expenditures as they are concerned with general matters of policy, standards and regulation. On the other hand, any overhead expenses connected with the administration or functioning of a group of hospitals, schools, colleges or similar institutions are included in individual expenditures. For example, if a group of private hospitals has a central unit which provides certain common services such as purchasing, laboratories, ambulances, or other facilities, the costs of these common services would be taken into account in the prices charged to patients. The same principle is followed when the hospitals are non-market producers: all the costs which are associated with the provision of services to particular individuals, including those of any central units providing common services, are to be included in the value of expenditures on individual services.

Non-market services to enterprises

10.11    Many government expenditures benefit enterprises as much as households; examples are expenditures on the cleaning, maintenance and repair of public roads, bridges, tunnels, etc. including the provision of street lighting. These are individual services for which consumption can be monitored, and for this reason they are frequently provided on a market basis by charging tolls on road usage. However, it would be difficult to separate the services provided free to households from those provided free to enterprises and, by convention, all these expenditures are treated as collective final expenditure.

10.12    Enterprises also benefit from a number of genuinely collective services such as the provision of security by the police, fire services, etc. The use of such collective services by individual enterprises cannot be recorded, so that expenditures on such services have to be treated as government final consumption expenditure.

Household final consumption expenditure

Concept

10.13    In the ASNA, household final consumption expenditure (HFCE) consists of expenditure by resident households on goods and services, whether the expenditure is made within the domestic territory or by Australian residents abroad, and expenditure by NPISHs.

10.14    Specific transactions in household final consumption expenditure include:

  • the value of income received in kind by employees which is treated as simultaneously spent by the employees on final consumption expenditure;
  • the value of goods produced by households for their own consumption, such as agricultural goods produced and consumed on the same farm, and 'backyard' production;
  • FISIM, the service charge component of households' interest payments and receipts (however, FISIM attributed to unincorporated enterprises owned by households is classified as intermediate consumption of the unincorporated business);
  • the service charge component of premiums paid for insurance and pension fund services; and
  • the imputed value of the services of owner-occupied dwellings. The imputation of rent to owner-occupied dwellings enables the services provided by dwellings to their owner-occupiers to be treated consistently with the marketed services provided by rented dwellings to their tenants. This treatment is considered necessary because, if a large number of rented houses were sold to their occupiers and if estimates of imputed rent were not calculated for owner-occupied dwellings, there would be an apparent decrease in gross domestic product without any decrease in the provision of housing services. In effect, owner-occupiers (like other owners of dwellings) are regarded as operating businesses; they receive rents (from themselves as consumers), pay expenses, and make a net contribution to the value of production which accrues to them as owners.

10.15    Any expenditure undertaken for business purposes by unincorporated enterprises (which are part of the household sector) is treated as intermediate consumption expenditure of the unincorporated enterprise, and not part of household final consumption expenditure.

10.16    Expenditures on the purchase of dwellings are explicitly excluded from household final consumption expenditure because dwellings are goods used by owners to produce housing services for those owners. Purchases of dwellings therefore constitute gross fixed capital formation. Similarly, valuables should be excluded from household final consumption expenditure because they are not used up in consumption or production, nor do they deteriorate over time. Valuables are a store of value, and are classified as part of gross capital formation. In the ASNA, however, some expenditure on valuables may be included in HFCE as a separate estimate for valuables is not compiled.

10.17    Expenditures on licences to use or own vehicles, boats and aircraft, and fees for shooting, fishing and hunting permits are also excluded. These are treated as taxes rather than as payments for services. All other kinds of licences, permits, certificates, passports etc., are treated as purchases of services and included in household final consumption expenditure.

10.18    HFCE is a large aggregate covering a wide range of goods and services. It is therefore desirable to further dissect this item. The 2008 SNA (and 1993 SNA) proposes a 'functional' classification to identify the 'functions' – in the sense of 'purposes' or 'objectives' – for which households engage in these transactions. The Classification of Individual Consumption by Purpose (COICOP) is used to classify HFCE by purpose or function. The outlays covered include:

  • expenditure on consumer durables such as cars, furniture and high-value, long-lasting household appliances (but excluding dwellings, which are regarded as the fixed assets of an 'industry');
  • consumer semi-durables such as clothing and footwear, other appliances, and crockery and cutlery;
  • single-use goods such as food, cigarettes and tobacco, and alcoholic drinks; and
  • services of all kinds such as hairdressing, dry cleaning and public transport.

10.19    COICOP provides for HFCE to be classified into the following major categories:

01Food and non-alcoholic beverages
02Alcoholic beverages, tobacco and narcotics
03Clothing and footwear
04Housing, water, electricity, gas and other fuels
05Furnishings, household equipment and routine maintenance of the house
06Health
07Transport
08Communications
09Recreation and culture
10Education
11Hotels, cafes and restaurants
12  Miscellaneous goods and services

10.20    These major categories are further split into subcategories, with the following 17 headline COICOP categories published in original, seasonally adjusted, and trend terms:

01Food
02.1Alcoholic beverages 
02.2Cigarettes and tobacco
03Clothing and footwear
04.1Rent and other dwelling services
04.2Electricity, gas and other fuel
05Furnishings and household equipment
06Health
07.1Purchase of vehicles
07.2Operation of vehicles
07.3Transport services
08Communications
09Recreation and culture
10Education
11Hotels, cafes and restaurants
12.1Insurance and other financial services
12.2Other goods and services

10.21    In the ASNA the classification of HFCE is aligned, as far as possible, with COICOP. However, there are some instances where it is not yet possible for Australia to follow COICOP's recommendations. For example:

  • ASNA does not include an estimate of HFCE on narcotics in COICOP Division 02 Alcoholic beverages, tobacco and narcotics, as reliable data on narcotics expenditure are not available.
  • Expenditure on COICOP Group 09.6 (Package holidays) is not specifically identified in Australia's HFCE, but the components of package holidays (airfares, accommodation and food) are included in the corresponding major categories of HFCE.
  • ASNA does not include an explicit estimate of HFCE on prostitution services in COICOP Group 12.1 (Personal care) as reliable data on such expenditure are not available.

10.22    The COICOP category for Maintenance and repair of the dwelling (Group 04.3) includes minor maintenance and repair of dwellings (e.g. interior decoration and repair to fittings which are commonly carried out by both tenants and owners) but excludes maintenance and repair which is major, such as replastering walls or repairing roofs, which are typically carried out by owners only. Such a distinction is consistent with 2008 SNA.⁴⁴ The ASNA deviates from the 2008 SNA recommendation and has excluded all maintenance and repair of dwellings from HFCE. Expenses associated with these activities are included as intermediate consumption of the Ownership of Dwellings industry and COICOP Group 04.3 is not included in HFCE in the ASNA.

10.23    The final consumption expenditure of NPISHs is included with that of households in the ASNA. 2008 SNA recommends that the final consumption of NPISHs should be classified according to the Classification of the Purposes of Non-Profit Institutions Serving Households (COPNI). The major divisions of COPNI are as follows:

01Housing
02Health
03Recreation and culture
04Education
05Social protection
06Religion
07Political parties, labour and professional organisations
08Environmental protection
09Services n.e.c.

10.24    Consequently, in the ASNA, the final consumption expenditure of NPISHs is classified, as far as possible, to the corresponding category of HFCE. Specifically, expenditure by NPISHs on Health, Recreation and culture, and Education are classified to the corresponding categories of HFCE, while final consumption expenditure for the other divisions is classified to Other goods and services in HFCE. As data sources for estimating the final consumption expenditure of NPISHs are very limited, indirect means are generally employed to compile these estimates. It is often necessary to assume that the final consumption expenditure for NPISHs can be estimated as the sum of income transferred by households, corporations and general government in a period, less an allowance for net property income payments and capital formation.

Endnotes

  1. See SNA, 2008, paras.9.66 and 9.67.

Adjustments made to HFCE

10.25    The following outlines the adjustments that are made to some or all HFCE categories.

Net expenditure overseas

10.26    This item is included in HFCE COICOP categories 01-12 (excluding 04 Housing, water, electricity, gas and other fuels) as an adjustment so that total HFCE reflects the expenditure of resident households (in Australia and overseas) only. This adjustment is necessary because a number of the data sources for HFCE come from sales reported by Australian businesses. These sales include the expenditure by overseas visitors (treated as an export) and do not include expenditure of Australian overseas (recorded as an import).  Expenditures by overseas visitors on fares, meals, accommodation, entertainment, recreation and other goods and services in Australia are deducted from the appropriate HFCE categories while expenditures by Australian residents abroad are added.  

10.27    HFCE net expenditure overseas (NEO) is derived using Services Debits and Credits data obtained from Tables 8 and 9 in Balance of Payments and International Investments Position, Australia

10.28    Calculation of NEO is a two-stage process. The first stage estimates the total value of NEO while the second allocates expenditure to the appropriate HFCE category. The total value of NEO is calculated by offsetting two items against each other; namely, the expenditure of Australian residents abroad (debits) and the expenditure of non-residents in Australia (credits).

10.29    It should be noted that NEO does not include online purchases by Australian households from international websites. These are encompassed in the annual HFCE benchmarks, chiefly through alignment with data obtained from the Household Expenditure Survey (HES).

10.30    The expenditure of residents overseas is calculated as the sum of two items:

  • Personal travel debits; and
  • Expenditure of Australian Government employees.

10.31    Personal travel debits, as adjusted for national accounting purposes, record the acquisition of goods and services abroad by residents travelling at their own expense, including students. Business travellers are not included as their expenditure is largely intermediate consumption of the employing business. Examples are purchases of accommodation, meals, ground transportation and tours.

10.32    The estimate for personal travel debits is calculated as the sum of two original current price Balance of Payments series: Services Debits - Travel - Personal - Education-related and Services Debits - Travel - Personal - Other services. State/Territory splits are derived using proportions from the ABS publication, Overseas Arrivals and Departures, Australia.

10.33    Expenditure of Australian Government employees records the personal expenditure on goods and services by Australian diplomats and their dependants stationed abroad. It is also based on an original current price Balance of Payments series: an unpublished lower level component of Services Debits – Government goods and services n.i.e. State/Territory estimates are derived using figures on the number of Australian government employees abroad.

10.34    The expenditure of non-residents in Australia is derived by aggregating three items:

  • Business travel credits;
  • Personal travel credits; and
  • Expenditure of foreign government employees.

10.35    Business travel credits cover expenditures on goods and services by seasonal and non-resident workers employed in Australia, and by travellers who visit, for business purposes, on behalf of an enterprise resident in another economy. The Balance of Payments series for Business travel credits is Services Credits – Travel – Business. State/Territory splits are derived using proportions from the ABS publication, Overseas Arrivals and Departures, Australia.

10.36    Personal travel credits record expenditures on goods and services in Australia by non-residents travelling at their own expense, for purposes other than business. The estimate for personal travel credits is calculated as the sum of two original current price Balance of Payments series: Services Credits – Travel – Personal – Education-related and Services Credits – Travel – Personal – Other services. State and Territory estimates are again calculated using proportions from Overseas Arrivals and Departures, Australia.

10.37    Expenditure of foreign government employees records the personal expenditure in Australia on goods and services by foreign diplomats and their dependants stationed in Australia. It is based on the unpublished lower level component of the Balance of Payments series Services Credits – Government goods and services i.e. State/Territory estimates of the expenditure of foreign government employees in Australia are derived using information on the number of foreign diplomats.

10.38    Total NEO is calculated by subtracting the expenditure of non-residents in Australia from the expenditure of Australia residents overseas. This is then allocated to various categories of HFCE using information from the International Visitor Survey, published by Tourism Research Australia. Data on expenditure from this survey is used to derive weights for the HFCE categories, which are then applied to the total NEO estimate.

10.39    Quarterly and annual estimates of total NEO in current price terms are published as a memorandum item in Australian National Accounts: National Income, Expenditure and Product and Australian System of National Accounts.

Tourist refund scheme

10.40    An adjustment is made to applicable HFCE categories for the Tourist Refund Scheme (TRS), whereby individuals are able to claim back, under certain conditions, the goods and services tax (GST) and wine equalisation tax (WET) on goods purchased in Australia.

10.41    Information regarding the value of refunds from this scheme, broken down by type of good, is obtained quarterly from the Australian Border Force. These data are then allocated to the appropriate HFCE categories.

10.42    Adjustments for the TRS are made to the following COICOP categories:

2.1Alcoholic beverages;
03Clothing and footwear;
05Furnishings and household equipment;
09Recreation and culture; and
12Miscellaneous goods and services.

Low value threshold

10.43    An adjustment is made to applicable HFCE categories for goods imported into Australia that fall below the Low Value Threshold (LVT) of $1,000. This adjustment covers purchases by Australian households from international websites.

10.44    Information regarding the value of goods imported that fall below the LVT are provided by Australian Customs. Various scope and coverage adjustments are applied to this data. These data are then allocated to the appropriate HFCE categories.

10.45    Adjustments for the LVT are made to the following COICOP categories:

01Food and non-alcoholic beverages
02Clothing and footwear
05Furnishings and household equipment
06Health
07Transport
09Miscellaneous goods and services
12Recreation and culture

Underground economy

10.46    This adjustment attempts to capture the understatement in HFCE due to activities occurring in the underground economy. Measuring the Non-Observed Economy: A Handbook, a publication jointly authored by the OECD, the IMF, the International Labour Organization (ILO) and the Interstate Statistical Committee of the Commonwealth of Independent States, defined the underground economy as covering "those activities that are productive and legal but are deliberately concealed from the public authorities to avoid payment of taxes or complying with regulations".

10.47    In HFCE, the understatement is most likely to result from businesses under-reporting retail turnover in the source data used for the compilation of household expenditure estimates.

10.48    Annual estimates of home production are incorporated into S-U benchmarks. The annual value of self-supplied food is based on estimates of the amount of food produced for home consumption from the ABS publication, Home Production of Selected Foodstuffs, Australia. The value of homemade alcohol is based on estimates of the amount of alcohol produced for home consumption from the publication cited above.

10.49    Estimates for the underground activity occurring in the various HFCE categories are calculated as proportions of the expenditure estimates. The factors used have been compiled based on analysis by the ABS. These are not varied from year-to-year but are subject to periodic review. For more information, refer to Information Paper: The Non-Observed Economy and Australia’s GDP, 2012.

10.50    In ASNA, adjustments for the underground economy are made to the following COICOP categories:

01Food;
03Clothing and footwear;
05Furnishings, household equipment and routine household maintenance;
07Transport;
09Recreation and culture;
11Restaurants and hotels; and
12Miscellaneous goods and services.

Repair and maintenance

10.51    This adjustment represents the expenditure by households on the repair and maintenance of various HFCE products, other than those captured in the Repair and maintenance not identified elsewhere component of HFCE Other Services (COICOP Group 12.5).

10.52    The sources used to derive estimates of household expenditure such as retail sales do not include spending on repairs and maintenance, therefore making it necessary to adjust for this expenditure separately.

10.53    Data on the total repair and maintenance expenditure by households is benchmarked irregularly to the Household Expenditure Survey, Australia: Summary of Results. Quarterly estimates are obtained by interpolating and extrapolating these benchmarks. Total repair and maintenance expenditure is broken down into HFCE product categories by applying weights, also obtained from the Household Expenditure Survey.

10.54    Adjustments for repairs and maintenance expenditure are applied to the following COICOP categories:

03Clothing and footwear;
05Furnishings, household equipment and routine household maintenance;
09Recreation and culture; and
12Miscellaneous goods and services.

Sources and methods - Annual

Benchmark years

10.55    Final consumption expenditure by resident households is calculated as:

Final consumption expenditure in the domestic market
+Expenditure overseas by Australian residents
-Expenditure in Australian by foreign residents
=Household final consumption expenditure

10.56    When the annual compilation method is the sum of the quarters then reconciliation to the annual value is not necessary. When the quarterly series is estimated using an indicator then reconciliation to the annual value is required.

10.57    When the method for quarterly chain volume series is derived as extrapolation by a quarterly indicator the quarterly series is extrapolated from the latest annual estimate available. As each new annual value becomes available, the quarterly estimates are obtained by interpolating between the latest annual values using the quarterly indicator.

10.58    Unlike the quarterly production approach series, which draws most of its annual benchmarks from the balanced industry accounts, there are additional benchmarks for household final consumption expenditure. These include the ABS Economic Activity Survey and the Retail Trade Survey. The information on commodity expenditure from these sources is used to confront the industry production data. All benchmarks are therefore subject to revision. All quarterly current price estimates are reconciled to annual values based on the S-U confrontation. In cases where data are not available for every year, interpolation techniques are used for the intervening time span. Suitable indicators are used to obtain annual estimates for the span of the non-benchmark years. Once produced, these estimates are used in the supply and use framework to allow data confrontation.

10.59    A large proportion of household final consumption expenditure (HFCE) comprises sales by retail stores. Benchmarks are a combination of margin activity data (sales less cost of goods sold) in the Retail Trade and Wholesale Trade industries from the annual Economic Activity Survey, point of sale commodity data from the Retail Industry Survey and Wholesale Industry Survey (conducted every seven years) plus purchasing information from the Household Expenditure Survey which is held each 5 to 6 years. Latest data from these surveys are released in the publications: Retail and Wholesale Industries, Australia, Household Expenditure Survey, Australia: Summary of Results and Household Expenditure Survey, Australia: Detailed Expenditure Items. These surveys contain a product dimension which is classified to COICOP, for HFCE, with annual values being calculated via linear interpolation. For provisional years (that is, not yet balanced within the supply and use framework) and for the quarterly indicator series which are reconciled to these annual values, estimates are derived using movements in sales by outlet type from the Retail Trade Survey. This method is used for all commodities purchased from retail trade outlets except for motor vehicles and tobacco products where alternative information is available. For alcohol, the method is used for purchases from retail outlets and the Quarterly Business Indicator Survey (QBIS) is used for the portion purchased from non-retail outlets such as hotels, clubs and taverns. Quarterly chain volume series are derived by price deflation of commodities using sub-indexes of the Consumer Price Index and Retail Trade Survey outlet type deflators.

10.60    The Alcoholic beverages COICOP category includes only purchases of packaged alcohol which are consumed away from licensed premises. This excludes alcohol consumed on-premises such as pubs, bars, clubs or restaurants, which is considered a consumption of a service and is included under Hotels, cafes and restaurants. For the portion of alcohol purchased from non-retail outlets (QBIS), this captures packaged alcohol purchased on-premises and then consumed off-premise (i.e. a liquor store attached to a pub).

10.61    Retail expenditure estimates by consumption product are derived from retail trade data, which does not distinguish between resident and non-resident sales. Subsequently, estimates are made for expenditure by non-resident households in Australian (as these are recorded as exports) and alternatively expenditure by resident household’s overseas (imports). This ensures no double counting.

10.62    The tables below outline the data sources and methods used in the estimation of annual household final consumption expenditure by COICOP category. They include both the current price estimates and volume estimates.

Table 10.1 Annual household expenditure — Food and non-alcoholic beverages
ItemComment
Current price estimates
 

The periodic Retail and Wholesale Industry Surveys (RIS/WIS) provides the primary benchmark estimates for this series.

The value of self-supplied food is included and is based on estimates of the amount of food produced for home consumption from the ABS publication, Home Production of Selected Foodstuffs, Australia.

The following scope and coverage adjustments are made:

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

Volume estimates
 Current price estimates for purchases of food by Australian residents are re-valued using relevant price deflator from the Consumer Price Index.
Table 10.2 Annual household final consumption expenditure—Alcoholic beverages
ItemComment
Current price estimates

 

The periodic Retail and Wholesale Industry Surveys (RIS/WIS) provides the primary benchmarks for this series.

The value of home-made alcohol is included and is based on estimates of the amount of alcohol produced for home consumption from the ABS publication, Home Production of Selected Foodstuffs, Australia.

The following scope and coverage adjustments are made:

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

Volume estimates
 Volume estimates for alcoholic beverages are based on the sum of the quarterly volumes.
Table 10.3 Annual household consumption expenditure — Cigarettes and Tobacco
ItemComment
Current price estimates

 

The value of tobacco products consumed by households is estimated using the formula:

Domestic production

                     + imports

                     –  exports

                     –  re-exports

                     + taxes on products

                     + margin estimate

                     = Total consumption.

The value of domestic production is estimated using the estimates of income for sale of goods from the Economic Activity Survey. Exports and re-exports data are obtained from trade data as sourced from the ABS Balance of Payments. Taxes on products are sourced from Government Finance Statistics. Margins data are obtained from the RIS/WIS.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

Volume estimates
 Volume estimates for cigarettes and tobacco are based on the sum of the quarterly volumes.
Table 10.4 Annual household final consumption expenditure — Clothing and footwear
ItemComment
Current price estimates

 

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • sales that are out of scope of the RIS/WIS survey, which are:
    • manufacturing units selling directly to households; and
    • flea market sales.
  • net expenditure overseas.

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

Volume estimates
 Current price estimates for purchases of clothing and footwear by Australian residents are re-valued using the relevant price deflator from the CPI.
Table 10.5 Annual household final consumption expenditure — Housing, water, electricity, gas and other fuels
ItemComment
Imputed rentals for housing
 Current price estimates

 

 

The Census of Population and Housing is the benchmark data source for the number of owner-occupied and rented dwellings and information about rents paid for rented dwellings.

The imputed rent for owner-occupied dwellings is calculated by multiplying average rents (adjusted to exclude rents at less than market value) reported in the census for privately rented dwellings in various categories.

Estimates of imputed rent of owner occupiers for intercensal and post-census periods are obtained by multiplying an estimate of the stock of dwellings by an estimate of the average rent of rented dwellings.

The stock of dwellings is estimated by extrapolating the benchmark estimate. The benchmark stock of dwellings includes all occupied private dwellings and a proportion of unoccupied private dwellings but excludes short-term caravans in caravan parks.

Private dwellings include separate houses, duplexes, town houses, flats including those which are part of a building that is used for commercial purposes (e.g. a retail shop) and caravans used for long-term accommodation. Additions to the stock are calculated from the number of dwelling completions sourced from the ABS publication, Building Activity, Australia. This is then modified by a factor to take into account other changes to the stock of dwellings (demolitions, net conversions from commercial uses and dwelling completions not in the scope of the survey).

For intercensal periods, this factor is calculated by dividing the change in the stock between the census benchmarks by the total number of dwelling completions in the period. For the post-census period, the factor is assumed to be the same as for the latest intercensal period.

After the latest applied benchmarks from the Census of Population and Housing, the total and owner occupied rent prices have been obtained from a combination of the Survey of Income and Housing (SIH), the CPI and real estate bulletins (Australian Property Monitors and Real Estate Institute of Australia).

 Volume estimates
  Volume estimate for imputed rentals for housing is based on the sum of the quarterly volumes compiled using a productive capital stock series which represents the volume of services provided by imputed rent on private dwellings.
Actual rentals for housing
 Current price estimates

 

 

These estimates are produced using the same sources as for the estimates of imputed rentals for housing.

The benchmark calculation gives a direct measure of the dwelling rent paid by households to the owners of dwellings.

 Volume estimates
  Volume estimate for actual rentals for housing is based on the sum of the quarterly volumes compiled using a productive capital stock series which represents the number of private dwellings.
Other services related to the dwelling
 Current price estimates

 

 

Data is sourced from the ABS publication, Household Expenditure Survey, Australia: Summary of Results. HES provides the benchmark estimates for this series which includes water and sewerage and waste services.

The following scope and coverage adjustments are made:

  • household expenses on water and sewerage service charges for rental and investment properties, which are out of scope of HES - based on HFCE estimates of actual rent for housing and imputed rent for owner occupiers;
  • coverage for remote and non-private dwellings which are not in scope of the HES; and
  • to capture final consumption expenditure of NPISH units using waste collection and disposal services, based on current grants information sourced from the Government Finance Statistics.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
  

Volume estimates for water and sewerage services are based on the sum of the quarterly volumes.

Annual current price estimates in relation to waste collection and disposal services are re-valued using relevant price deflators from the Consumer Price Index to derive the annual volume estimates.

Electricity, gas and other fuels
 Current price estimates

 

 

The Household Expenditure Survey provides the benchmark estimates for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
  Current price estimates of purchases of electricity, gas and other fuels are re-valued using relevant price deflators from the Consumer Price Index.
Table 10.6 Annual household final consumption expenditure — Furnishings and household equipment
ItemComment
Furniture and furnishings, carpets and other floor coverings
 Current price estimates

 

 

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • sales that are out of scope of the RIS/WIS survey, which are:
    • manufacturing units selling directly to households;
    • dealers’ margins associated with second-hand goods; and
    • flea market sales and sales by NPISH units.
  • net expenditure overseas.

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Current price estimates of purchases of furnishings and floor coverings in Australia are re-valued using relevant price deflators from the Consumer Price Index.

Household textiles
 Current price estimates

 

 

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • sales that are out of scope of the RIS/WIS survey, which are:
    • flea market sales and sales by NPISH units.
  • net expenditure overseas.

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Current price estimates of purchases of household textiles in Australia are re-valued using relevant price deflators from the Consumer Price Index.

Household appliances
 Current price estimates

 

 

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • sales that are out of scope of the RIS/WIS survey, which are:
    • manufacturing and wholesaling units selling directly to households;
    • electricity, gas and water industry units selling directly to households;
    • dealers’ margins associated with second-hand goods; and
    • flea market sales and sales by NPISH units.
  • net expenditure overseas.

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore. adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Current price estimates of purchases of household appliances in Australia are re-valued using relevant price deflators from the Consumer Price Index.

Glassware, tableware and household utensils
 Current price estimates

 

 

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • sales that are out of scope of the RIS/WIS survey, which are:
    • flea market sales.
  • net expenditure overseas.

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Current price estimates of purchases of glassware, tableware and household utensils in Australia are re-valued using relevant price deflators from the Consumer Price Index.

Tools and equipment for house and garden
 Current price estimates

 

 

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • sales that are out of scope of the RIS/WIS survey, which are:
    • flea market sales.
  • net expenditure overseas.

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Current price estimates of purchases of tools and equipment for house and garden in Australia are re-valued using relevant price deflators from the Consumer Price Index.

Non-durable household goods
 Current price estimates

 

 

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • sales that are out of scope of the RIS/WIS survey, which are:
    • manufacturing and wholesaling units selling directly to households; and
    • flea market sales.
  • net expenditure overseas.

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Current price estimates of purchases of non-durable household goods in Australia are re-valued using relevant price deflators from the Consumer Price Index.

Table 10.7 Annual household final consumption expenditure — Health
ItemComment
Medicines, medical aids and therapeutic appliances
 Current price estimates

 

 

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • net expenditure overseas.

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Volume estimates for the series are based on the sum of the quarterly volumes.

Ambulatory health care
 Current price estimates

 

 

The Household Expenditure Survey provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • to capture current grants from government to NPISH units providing ambulatory health care sourced from annual time series data from the Government Finance Statistics;
  • to capture current grants and donations from corporations and households to NPISH units providing ambulatory health care as extrapolated from the ABS publication, Australian National Accounts: Non-Profit Institutions Satellite Accounts;
  • household claims from private health insurance funds sourced from the Private Health Insurance Administration Council (PHIAC);
  • an estimate of 15 per cent of household claims associated with the health service component of workers’ compensation and motor vehicle and third party insurance sourced from the Australian Prudential Regulation Authority (APRA). This was derived from workers’ compensation and other insurance estimates associated with health services for ANZSIC Subdivision 85 Medical and other health care services, published in Health Care Services; and
  • net expenditure overseas.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Volume estimates for ambulatory health care are based on the sum of the quarterly volumes.

Hospital, ambulance services and nursing home care
 Current price estimates

 

 

The Household Expenditure Survey (HES) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • to capture current grants from government to NPISH units providing ambulatory health care sourced from annual time series data from the Government Finance Statistics;
  • to capture current grants and donations from corporations and households to NPISH units providing ambulatory health care as extrapolated from the ABS publication, Australian National Accounts: Non-Profit Institutions Satellite Accounts;
  • household claims from private health insurance funds sourced from the Private Health Insurance Administration Council (PHIAC); and
  • an estimate of 15 per cent of household claims associated with the health service component of workers’ compensation and motor vehicle and third party insurance sourced from the Australian Prudential Regulation Authority (APRA). This estimate was derived from workers’ compensation and other insurance estimates associated with health services for ANZSIC Subdivision 85 Medical and other health care services published in Health Care Services;
  • an estimate of household expenses associated with nursing home fees. As nursing homes are not in scope of the HES, direct expenditure on these services is estimated using services income associated with Aged care residential services from the Economic Activity Survey; and
  • net expenditure overseas.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Annual volume estimates for healthcare HFCE are estimated in conjunction with direct volume estimates for health output, as described in Chapter 9, Table 9.30.

The sources used are private and public hospital separations and number of non-hospital services provided, stratified at various levels of procedure type, and weighted together by their respective current price value of expenditures.

Public and Private Hospital separations by procedure type and average separation costs are sourced from the Australian Institute of Health and Welfare (AIHW) hospital publication. The number of non-hospital services provided, and costs are sourced from Medicare, the Private Health Insurance Administration Council and the Productivity Commission (PC) Report on Government Services.

Table 10.8 Annual household final consumption — Transport
ItemComment
Purchase of vehicles
 Current price estimates

 

 

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • purchase of vehicles that are out of scope of the survey;
  • dealers’ margins on used vehicles traded between households;
  • the value of private imports of used vehicles are estimated using data supplied from Customs documentation and an average price for used cars sourced from Vehicle Sales from the Federal Chamber of Automotive Industries (FCAI) publication, Vehicle Facts (VFACTs), or Glass' Automotive Business Intelligence (Glass' Guide); and
  • net expenditure overseas.

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
  Volume estimates for this series are based on the sum of the quarterly volumes.
Operation of personal transport equipment
 Current price estimates

 

 

Annual household expenditure on automotive petroleum and coal products are based on the ABS publication, Survey of Motor Vehicle Use, Australia (SMVU).

The SMVU includes information on the fuel consumption of all motor vehicles by motor vehicle type and the private use of all vehicles by type of vehicle. Using this information and the national average retail price per litre of petrol and diesel sourced from the Australian Institute of Petroleum and the Automotive Petroleum Association, respectively, supplemented by Energy Accounts data, annual estimates of household expenditure for automotive petroleum and coal products are estimated.

The Household Expenditure Survey provides the primary benchmarks for the series relating to pneumatic tyres and tubes for motor cars and motor cycles, motor vehicle engines, chassis and panels; transport equipment not elsewhere classified, motor vehicle repair and maintenance expenditure and miscellaneous motoring expenditure.

The proportion of household claims associated with Motor Vehicle Comprehensive and third party insurance that captures estimates for the repair of accident damage to insured motor vehicles owned by the household sector is also included in compilation of Automotive repair and maintenance services.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES; and
  • net expenditure overseas.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
  Volume estimates for operation of personal transport equipment are based on the sum of the quarterly volumes.
Transport services
 Passenger transport by railway
  Current price estimates

 

  

The Household Expenditure Survey provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • to capture the final consumption expenditure of NPISH units using railway passenger transport services based on current grants information as sourced from the Government Finance Statistics;
  • current grants from government to NPISH (sourced from annual Government Finance Statistics); and
  • net expenditure overseas.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

  Volume estimates

 

  

Expenditures on rail fares are re-valued using relevant price deflators from the Consumer Price Index.

Passenger transport by road
 Current price estimates

 

  

The Household Expenditure Survey provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES; 
  • to capture the final consumption expenditure of NPISH units using road passenger transport services based on current grants information as sourced from the Government Finance Statistics;
  • current grants from government to NPISH (sourced from annual Government Finance Statistics); and
  • net expenditure overseas.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

  

Current price annual household expenditures on bus and taxi fares are re-valued using relevant price deflators from the Consumer Price Index.

Passenger transport by air
 Current price estimates

 

  

The Household Expenditure Survey provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • current grants from government to NPISH (sourced from annual Government Finance Statistics); and
  • net expenditure overseas.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

  

Current price annual household expenditures on airfares are re-valued using relevant price deflators from the Consumer Price Index.

Passenger transport by sea and inland water
 Current price estimates

 

  

The Household Expenditure Survey provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • to capture the final consumption expenditure of NPISH units using passenger transport by sea and inland waterway services based on current grants information as sourced from the Government Finance Statistics;
  • current grants from government to NPISH (sourced from annual Government Finance Statistics); and
  • net expenditure overseas.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

  Volume estimates

 

  

Current price annual household expenditures on passenger transport by sea and inland waterway services are re-valued using relevant price deflators from the Consumer Price Index.

 

Table 10.9 Annual household final consumption expenditure — Communications
ItemComment
Postal services
 Current price estimates

 

 

The Household Expenditure Survey provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • current grants from government to NPISH (sourced from annual Government Finance Statistics); and
  • net expenditure overseas.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Current price estimates of expenditure on postal services are re-valued using relevant price deflators from the CPI.

Telecommunication services
 Current price estimates

 

 

The Household Expenditure Survey provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • to capture the final consumption expenditure of NPISH units using telecommunication services based on current grants information sourced from the Government Finance Statistics;
  • current grants from government to NPISH (sourced from annual Government Finance Statistics); and
  • net expenditure overseas.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Current price annual estimates of expenditure on telephone and facsimile services are re-valued using relevant price deflators from the Consumer Price Index.

Volume estimates for internet services are based on the sum of the quarterly volumes.

Table 10.10 Annual household final consumption expenditure — Recreation and culture
ItemComment
Audio visual, photographic and data processing equipment and accessories
 Current price estimates

 

  

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
   Current price estimates of purchases of audio visual, photographic and data processing equipment and accessories in Australia are re-valued using relevant price deflators from the Consumer Price Index.
Other major durables for recreation and culture
 Current price estimates

 

  

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • sales that are out of scope of the RIS/WIS survey, which are:
    • manufacturing units selling directly to the public;
    • a proportion of caravans used as residences is excluded,
    • dealers’ margins for sales of second-hand boats and caravans, excluding transactions between households; and
    • flea market sales.
  • current grants from government to NPISH (sourced from annual Government Finance Statistics); and
  • net expenditure overseas.

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

  

Current price estimates of purchases of other major durables for recreation and culture are re-valued using relevant price deflators from the Consumer Price Index.

Other recreational items and equipment
 Current price estimates

 

  

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • sales that are out of scope of the RIS/WIS survey, which are:
    • manufacturing units selling directly to the public;
    • sales of ‘backyard’ pure bred pets based on a historical value extrapolated using a growth rate for retail sales of pets and live animals over the last seven years from RIS/WIS;
    • sales of toys and other goods provided by NPISH units; and
    • flea market sales.
  • current grants from government to NPISH (sourced from annual Government Finance Statistics); and
  • net expenditure overseas.

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

  

Current price annual estimates of purchases of other recreational items and equipment are re-valued using relevant price deflators from the Consumer Price Index.

Recreational and cultural services
 Sporting and recreational services
  Current price estimates

 

  

Household expenditure for sporting and recreational services not elsewhere classified is based on historical estimates which are rolled forward by multiplying movements associated with the estimated resident population and the CPI for the sports participation series.

The Household Expenditure Survey provides the primary benchmarks for this series relating to the cost of hiring entertainment equipment and facilities and sporting and educational services.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES; and
  • net expenditure overseas.

Current expenditure of NPISHs providing sporting and recreational services is sourced from current grants to NPISH units providing sporting and recreational services. These data are sourced from Government Finance Statistics and current grants and donations from corporations and households to NPISHs units extrapolated from the ABS publication, Australian National Accounts: Non-Profit Institutions Satellite Account.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

  Volume estimates

 

  

Current price estimates of purchases of expenditures on sporting and recreational services are re-valued using relevant price deflators from the Consumer Price Index.

 Cultural and entertainment services
  Current price estimates

 

  

The Household Expenditure Survey provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • to capture the final consumption expenditure of NPISH units providing cultural and entertainment services based on current grants information as sourced from the Government Finance Statistics and donations and sponsorship from households and corporations to NPISH units for providing these services extrapolated from the ABS publication, Australian National Accounts: Non-Profit Institutions Satellite Account; and
  • net expenditure overseas.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

  Volume estimates
   Current price estimates of expenditures on cultural and entertainment services are re-valued using relevant price deflators from the Consumer Price Index.
Net losses from gambling
 Current price estimates

 

  

Current price estimates on Net losses from gambling are sourced from the Australian Gambling Statistics publication (published by the Queensland government). This publication provides comprehensive annual data on gambling in Australia.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
   Net losses from personal outlays on gambling by households are re-valued using relevant price deflators from the CPI.
Newspapers, books and stationery
 Current price estimates

 

  

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
   Annual current price estimates of household expenditures on newspapers, books and stationery are re-valued using relevant price deflators from the Consumer Price Index.

 

Table 10.11 Annual household consumption expenditure — Education services
ItemComment
Current price estimates

 

The Household Expenditure Survey provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • to capture current grants from government to NPISH units providing education services sourced from annual time series data from Government Finance Statistics;
  • to capture current grants and donations from corporations and households to NPISH units providing education services extrapolated from benchmark data in the ABS publication, Australian National Accounts: Non-Profit Institutions Satellite Accounts; and
  • net expenditure overseas.

The household expenditure associated with the tertiary education services Higher Education Loan Program (HELP) was derived from time series data on HELP provided by the Department of Education.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

Volume estimates

 

Annual volume estimates for education are estimated in conjunction with direct volume estimates for education output, as described in Chapter 9, Table 9.29.

The sources used are total numbers of students at both private and government schools, student load of universities, course hours for TAFE and other vocational education providers stratified at various levels of education and weighted together by their respective current price value of expenditures.

Student numbers are sourced from the ABS publication, Schools; annual reports from the departments of Education and Employment for school and university students; and data from the National Centre for Vocational Education Research (NCVER) for vocational students.

Table 10.12 Annual household final consumption expenditure — Hotels, catering and restaurants
ItemComment
Catering
 Current price estimates

 

 

The Household Expenditure Survey provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • to capture current grants from government to NPISH units providing catering services as sourced from annual time series data from Government Finance Statistics, and
  • to capture current grants and donations from corporations and households to NPISH units providing catering services as extrapolated from the ABS publication, Australian National Accounts: Non-Profit Institutions Satellite Accounts; and
  • net expenditure overseas.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
  Expenditures on catering by Australian residents are re-valued using relevant price deflators from the Consumer Price Index.
Accommodation services
 Current price estimates

 

 

The Household Expenditure Survey provides the primary benchmarks for this series.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • to capture current grants from government to NPISH units providing accommodation services as sourced from annual time series data from Government Finance Statistics, and
  • to capture current grants and donations from corporations and households to NPISH units providing accommodation services as extrapolated from the ABS publication, Australian National Accounts: Non-Profit Institutions Satellite Accounts; and
  • net expenditure overseas.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Expenditures on accommodation services by Australian residents are re-valued using relevant price deflators from the Consumer Price Index.

Table 10.13 Annual household final consumption expenditure — Miscellaneous goods and services
ItemComment
Personal care
 Current price estimates

 

  

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for the series relating to personal outlays on personal care products such as perfume, cosmetics and soap.

The Household Expenditure Survey (HES) provides the benchmarks for miscellaneous services including hair dressing and beauty salon services.

The following scope and coverage adjustments are made:

  • sales that are out of scope of the RIS/WIS survey, which are:
    • sales on aircraft and ships; and
    • flea market sales.
  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • current grants from government to NPISH (sourced from annual Government Finance Statistics); and
  • net expenditure overseas.

For the years where RIS/WIS and HES data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS and HES benchmarks become available a linear interpolation technique is used to align the current estimates to best fit the linear model between the benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

  

Expenditures on personal care by Australian residents are re-valued using relevant price deflators from the Consumer Price Index.

Personal effects

 Current price estimates

 

  

The periodic Retail and Wholesale Industry Survey (RIS/WIS) provides the primary benchmarks for this series relating to personal outlays on jewellery and watches etc.

The following scope and coverage adjustments are made:

  • sales that are out of scope of the RIS/WIS survey, which are:
    • sales on aircraft and ships, and
    • flea market sales.
  • current grants from government to NPISH (sourced from annual Government Finance Statistics), and
  • net expenditure overseas.

For the years where RIS/WIS data are not available the annual estimate is the sum of the four quarters.

When the next RIS/WIS benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

  

Expenditures on personal effects by Australian residents are re-valued using relevant price deflators from the Consumer Price Index.

Insurance
 Description
   Included in this item is the service charge paid by householders for insurance. Premiums paid for general insurance of householders' effects, motor vehicle insurance, health insurance, and life insurance and superannuation can be seen to comprise a service charge for insuring, a payment for the risk of insuring and, for life insurance and superannuation funds, an element of saving.
 Current price estimates
  Homeowner and household insurance

 

  

This is the service charge for insuring householders' furniture and effects, generally called home contents insurance. Insurance of the dwelling itself is excluded from household final consumption expenditure as it is considered to be part of the intermediate consumption of the industry, Ownership of dwellings.

Premiums and claims for Homeowner and Household Insurance are obtained from Quarterly General Insurance Performance Statistics; General Insurance Supplementary Statistical Tables; half-yearly General Insurance Bulletin and Selected Statistics on the General Insurance Industry, published by the Australian Prudential Regulatory Authority (APRA) in quarterly, half-yearly and annual bulletins.

Expected claims are derived by using a centred five-year moving average of claims incurred.

Premium supplements are calculated using the proportion of Homeowner and Household premiums to total general insurance premiums multiplied by total investments earnings on general insurance technical reserves.

Premium supplements are added together with personal premiums to give the total value of premiums.

Personal premiums paid plus premium supplements less expected personal claims incurred gives the value of the service charge which is included in household final consumption expenditure.

Taxes on products are added to derive a purchases price value. Taxes on products are allocated to this product using a number of methods. These include the proportion of GST from net of premiums less claims and the supply proportion of Government taxes on insurance n.e.c. for other taxes on products.

  Motor vehicle insurance

 

  

Motor vehicle insurance service charges cover both compulsory third party (personal injury) insurance, and comprehensive and third party property insurance on motor vehicles.

Premiums and claims for motor vehicle property and compulsory third party (personal injury) insurance are obtained from Quarterly General Insurance Performance Statistics; General Insurance Supplementary Statistical Tables; half-yearly General Insurance Bulletin and Selected Statistics on the General Insurance Industry, published by the APRA in quarterly, half-yearly and annual bulletins.

APRA data are classified in a consistent manner to national accounts requirements. Domestic comprehensive motor vehicle insurance is applicable directly to household final consumption expenditure, commercial comprehensive motor vehicle insurance is categorised to business and government. Compulsory third party motor vehicle insurance for householders is obtained by multiplying total compulsory third party motor vehicle insurance by the proportion of personal vehicles to business and government vehicles from the ABS Survey of Motor Vehicle Use, Australia.

Expected claims are derived by using a centred five-year moving average of claims incurred.

Premium supplements are added together with personal premiums to give the total value of premiums for both motor vehicle property and compulsory third party (personal injury) insurance. Premium supplements for each type of motor vehicle insurance are calculated using the proportion of motor vehicle insurance premiums to total general insurance premiums multiplied by total investment earnings on general insurance technical reserves.

Personal premiums paid plus premium supplements less expected personal claims incurred gives the value of the service charge which is included in household final consumption expenditure.

Taxes on products are added to derive a purchases price value. Taxes on products are allocated to this product using a number of methods. These include the proportion of GST from net of premiums less claims and the direct amount of government third party insurance taxes for other taxes on products.

  Health insurance

 

  

The insurance service charge for health insurance is calculated in the same way as for general insurance of householders' effects.

Information about premiums paid and claims incurred by households from health insurers is sourced from the Private Health Insurance Administration Council publication, Operations of the Registered Health Benefits Organisations.

Expected claims are derived by using a centred five-year moving average of claims incurred.

Personal premiums paid plus premium supplements less expected personal claims incurred gives the value of the service charge which is included in household final consumption expenditure.

 Premium supplements are added together with personal premiums to give the total value of premiums. Premium supplements are calculated by dividing health insurance premiums by total general insurance premiums multiplied by investment earnings on general insurance technical reserves.

The Medicare levy paid by individuals is considered to be an element of income tax levied by the Commonwealth Government. As such, it is not included in household final consumption expenditure.

  Other non-life insurance by households as consumers

 

  

This is the service charge for various classes of insurance which are taken out by households, but which have not been explicitly discussed above. Included are travel, consumer credit, marine hull, and sickness and accident.

Premiums and claims for the relevant classes of insurance business are obtained from Quarterly General Insurance Performance Statistics; General Insurance Supplementary Statistical Tables; half-yearly General Insurance Bulletin and Selected Statistics on the General Insurance Industry, published by the Australian Prudential Regulation Authority in quarterly, half-yearly and annual bulletins.

The households' share of both premiums and claims for each class of business are estimated using available information and subjective judgement.

Expected claims are derived by using a centred five-year moving average of claims incurred.

Premium supplements are added together with personal premiums to give the total value of premiums.

Premium supplements are calculated using the proportion of households' premiums for the relevant classes of business to total general insurance premiums, multiplied by total investment earnings on general insurance technical reserves.

Personal premiums paid plus premium supplements less expected personal claims incurred gives the value of the service charge which is included in household final consumption expenditure.

Taxes on products are added to derive a purchases price value. Taxes on products are allocated to this product using a number of methods. These include the proportion of GST from net of premiums less claims and supply proportions of government taxes on insurance n.e.c. for other taxes on products.

  Life insurance and superannuation

 

  

Premiums and contributions paid by policyholders to life insurance corporations and superannuation are considered to include an insurance service charge element. A proportion of life insurance and superannuation premiums/contributions is actually paid by employers on behalf of their employees. However, for national accounts purposes these premiums are included in employers' social contributions, which is a component of compensation of employees. The employee pays the insurance service charge (a component of household final consumption expenditure) and invests in life insurance and superannuation funds recorded in the household financial account.

For life insurance corporations and friendly societies, the insurance service charge is equal to the cost of running the business plus a profit margin. The service charge is compiled from data on life insurance statutory funds available from Quarterly Life Insurance Performance Statistics; half-yearly Life Insurance Bulletin and the Annual Friendly Society Bulletin, published by the Australian Prudential Regulatory Authority. The profit margin is calculated by estimating a proxy return on equity (where the return on equity is defined as gross operating surplus over shareholders' funds).

For pension funds the insurance service charge is equal to cost of running the fund, included are administrative and investment expenses. The service charge is compiled from data on pension funds available from the ABS publications, Managed Funds, Australia  and Australian National Accounts: Finance and Wealth; and the APRA publications, Superannuation Performance Statistics and the Annual Superannuation Bulletin.

Taxes on products are added to derive a purchases price value. Other taxes on products are allocated to this product using supply proportions of government taxes on insurance n.e.c.

  Workers’ compensation insurance

 

  

The insurance service charge for workers’ compensation insurance paid by employers is included in household final consumption expenditure. The insurance service charge measures the value of services provided by the insurance enterprises in arranging payments for claims in exchange for the receipts of premiums.

Premiums and claims for the relevant classes of insurance business are obtained from, quarterly General Insurance Performance Statistics; General Insurance Supplementary Statistical Tables; half-yearly General Insurance Bulletin and Selected Statistics on the General Insurance Industry, published by the Australian Prudential Regulation Authority in quarterly, half-yearly and annual bulletins.

Premium supplements are added together with personal premiums to give the total value of premiums. Premium supplements are calculated using the proportion of workers’ compensation insurance premiums to total general insurance premiums, multiplied by total investment earnings on general insurance technical reserves. Personal premiums paid plus premium supplements less expected personal claims incurred gives the value of the service charge which is included in household final consumption expenditure.

Taxes on products are added to derive a purchases price value. Taxes on products are allocated to this product using a number of methods. These include the proportion of GST from net of premiums less claims and supply proportion of government taxes on insurance n.e.c. for other taxes on products.

  Supply and use balancing process for insurance services

 

  

The initial data is compiled at the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

The SUPC level data are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

  Volume estimates

 

  

Current price estimates of purchases of insurance services are re-valued using relevant price deflators from the CPI.

Financial services
 Description

 

  

The scope of this item is household expenditure, both actual and imputed, on services provided by financial institutions other than insurers. Three broad categories of expenditure are covered.

The first relates to the charges that households pay explicitly to financial institutions for services rendered. Examples are account-keeping fees; commission on money orders, travellers' cheques and overseas drafts; brokerage on share trading; and financial advisers' charges.

The second covers taxes on production and imports levied by general government on financial transactions undertaken by households. Examples are financial institutions duty and stamp duty incurred by trading in financial instruments. The stamp duty payable on the transfer of titles to residential property is treated as part of the transfer costs of ownership of dwellings (which are included in gross fixed capital formation) and as such is not part of household final consumption expenditure.

The last component is the indirectly charged service charges of banks and other similar financial intermediaries. In the national accounts an imputation is made for the value of the services provided by financial intermediaries; that is, Financial Intermediation Services Indirectly Measured (FISIM). It is estimated by reference to the difference in interest rates offered to borrowers and depositors and the average levels of outstanding loans and deposits. The payment for financial services is implicit in both the higher interest paid by borrowers and the lower interest received by depositors. That part of this service which relates to personal loans to households to finance household consumption and household deposits held by financial intermediaries is regarded as being paid by persons and included in household final consumption expenditure. FISIM relating to mortgages on dwellings owned by persons is not included in household final consumption expenditure, but is treated as a component of intermediate consumption in the calculation of gross operating surplus for dwellings owned by persons.

 Current price estimates
  Explicit charges

 

  

The total value of explicit charges (e.g. account-keeping fees; commission on money orders; travellers' cheques and overseas drafts; brokerage on share trading; and financial advisers' charges) paid by households is calculated using data from the following sources:

  • Banks', Credit Unions' and Building Societies' performance statistics published quarterly by the Australian Prudential Regulatory Authority (APRA);
  • the Reserve Bank of Australia's Statistical Bulletin;
  • suite of APRA forms – quarterly Bank Statement of Financial Performance and quarterly Registered Financial Corporations Statement of Financial Performance; and
  • Economic Activity Survey

Taxes on products are added to derive a purchases price value. Taxes and subsidies on products are allocated to specific products using a number of methods. These include household final consumption expenditure proportions in the case of the Goods and Services Tax and supply proportions for other taxes on products.

  FISIM

 

  

FISIM is estimated as the difference between the interest rates on loans and deposits and a pure or reference rate of interest, multiplied by the level of loans and deposits, respectively. The total value of FISIM paid by households is calculated using data from the following sources:

  • Balance sheets:
  • Income and expenditure:
    • RBA: Annual Report; Financial Stability Report (6 monthly); Statement of Monetary Policy (quarterly);
    • ABS publications: Balance of Payments and International Investment Position; Statistics of Financial Institutions  (note: Statistics of Financial Institutions has ceased but for completeness it is included as the data in this publication still underpins the estimates);
    • ABS collections – Economic Activity Survey, quarterly Survey of Financial Information, Government Finance Statistics;
    • suite of APRA forms – quarterly Bank Statement of Financial Performance and quarterly Registered Financial Corporations Statement of Financial Performance;
    • APRA publications:  quarterly Banks, Building Societies and Credit Unions Performance Statistics; and
    • ad hoc reports: annual reports for small subsectors such as listed investment companies, bank annual reports and private consultant banking reports.
  • Interest rates:
    • RBA Statistical Bulletin.

To compile household final consumption expenditure FISIM estimates for banks, other depository corporations and securitisers, the total interest receivable and payable estimates by financial instruments (i.e. deposits, bills of exchange, one-name paper, bonds and loans) and counterparty sector and subsector flows for the following five sectors and subsectors are compiled:

  • Rest of the world;
  • Reserve Bank of Australia;
  • Banks;
  • Other depository corporations;
  • Securitisers.

Three datasets are required to compile the interest flows, namely:

  1. total interest payable and receivable;
  2. interest rates for relevant financial instruments for various sectors and subsectors; and
  3. balance sheets for the five sectors and subsectors.

The next step is to calculate FISIM for loans and deposits (banks and other depository corporations) and for loans (securitisers). That is:

  • For banks and other depository corporations, FISIM is derived as the sum of the counterparty sector and subsector stock levels of loans and deposits; that is:

[(counterparty loan rate – reference rate) * counterparty stock of loans] + [(reference rate – counterparty deposit rate) * counterparty stock of deposits]

where the reference rate is the mid-point between the average interest rate on loans and the average interest rate on deposits.

  • For securitisers, FISIM is derived as the sum of the counterparty sector and subsector stock levels of loans; that is:

[(counterparty loan rate – reference rate) * counterparty stock of loan]

where the reference rate is the weighted average bond yield.

The above calculations are undertaken in separate loan and deposit FISIM tables for each of the three FISIM generating institutions. Each table captures the counterparty sector and subsector loan and deposit balances, their respective interest flows and interest margins and the subsequent FISIM estimates.

The FISIM tables mentioned above for loans and deposits enable the allocation of FISIM by final use (i.e. household final consumption expenditure), exports and intermediate use directly.

  Supply and use balancing process for finance services

 

  

The initial data is compiled at the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

The SUPC level data are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results. For more information on the product flow method refer to Chapter 7.

 Volume estimates
  Explicit charges

 

  

Current price estimates of purchases of direct financial services by Australian residents are re-valued using relevant price deflators from the CPI.

  FISIM

 

  

The detailed information from the current price FISIM loan and deposit tables for the four financial intermediaries (i.e. banks, other depository corporations, central borrowing authorities and securitisers) are used to construct chain volume measures.

Chain volume FISIM measures are produced for the total, household final consumption expenditure, intermediate use of ownership of dwellings, intermediate use by general government, total intermediate use, exports and imports:

Laspeyres chain volume estimates of balances (loans and deposits) by counterparty sectors and subsectors are calculated by deflating the current price estimates using the All groups CPI.

The deflated loans and deposits are multiplied by the associated interest margin for the previous year to produce estimates of FISIM in prices of the previous year.

The estimates in the previous step are summed across the four financial intermediaries to produce Laspeyres chain volume estimates of total FISIM, final use (i.e. household final consumption expenditure), exports, imports, total intermediate use and dwellings and general government intermediate use.

Other goods and services
 Current price estimates

 

  

The Household Expenditure Survey provides the primary benchmarks for miscellaneous services including personal outlays on dry cleaning, photographic services, laundering, removalist services, funeral services and professional services (other than health care services) such as legal and accounting services.

The following scope and coverage adjustments are made:

  • coverage for remote and non-private dwellings which are not in scope of the HES;
  • to capture current expenditure of NPISH units providing professional services such as other social assistance services not elsewhere classified (including elderly, disabled, marriage and adoption services), legal services as compiled based on current grants from government to NPISH units as sourced from annual time series data from Government Finance Statistics;
  • to capture current grants and donations from corporations and households to NPISH units providing childcare services, interest groups not elsewhere classified (including welfare fundraising services) as extrapolated from the ABS publication, Australian National Accounts: Non-Profit Institutions Satellite Accounts, and
  • net expenditure overseas.

Current expenditure on NPISHs such as religious services are sourced from current grants and donations from corporations and households to NPISH units providing religious services extrapolated from the ABS publication, Australian National Accounts: Non-Profit Institutions Satellite Accounts.

For the years where HES data are not available, the annual estimate is the sum of the four quarters.

When the next HES benchmark becomes available a linear interpolation technique is used to align the current estimates to best fit the linear model between the two benchmarks.

The initial data is compiled according to the COICOP classification. This is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The HFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial HFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

  

Current price estimates on household expenditures on other goods and services by Australian residents are re-valued using relevant price deflators from the Consumer Price Index.

Latest year

10.63    For the majority of HFCE components, annual estimates are constructed by summing of the quarterly estimates for the years after the latest Supply and Use tables.

Sources and methods - Quarterly

10.64    The tables below outline the data sources and methods used in the estimation of quarterly household final consumption expenditure by COICOP category. They include both the current price estimates and volume estimates.

Table 10.14 Quarterly household final consumption expenditure — Food and non-alcoholic beverages
ItemComment
Current price estimates

 

Quarterly indicator series for Food and non-alcoholic beverages are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Surveys (RIS/WIS).

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for Food and non-alcoholic beverages past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas;
  • backyard production; and
  • underground (or cash) economy.
Volume estimates

 

Current price estimates of purchases of food and non-alcoholic beverages by Australian residents in Australia are re-valued using a weighted average of components from the CPI Food and non-alcoholic Beverages group.

Current price estimates of purchases of food and non-alcoholic beverages by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of Food and non-alcoholic beverages are derived by aggregating the elemental volume components above.

Table 10.15 Quarterly household final consumption expenditure — Alcoholic beverages
ItemComment
Current price estimates

 

Quarterly indicator series for Alcoholic beverages are derived by weighting together series from the ABS publication, Retail Trade, Australia and the quarterly Business Indicators: Australia, based on weights from the 20012-13 Retail and Wholesale Industries Surveys.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for Alcoholic beverages past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas;
  • backyard production; and
  • taxes refunded through the Tourist Refund Scheme.
Volume estimates

 

Current price estimates of purchases of alcohol by Australian residents in Australia are re-valued using a weighted average of components from the CPI Alcoholic beverages sub-group.

Current price estimates of purchases of alcohol by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of Alcoholic beverages are derived by aggregating the elemental volume components above.

Table 10.16 Quarterly household final consumption expenditure — Cigarettes and Tobacco
ItemComment
Current price estimates

 

The quarterly indicator for Cigarettes and tobacco is derived using price and quantity information sourced from the scanner data of the major supermarket chains. The data contains product codes (SKUs), product descriptions, prices, quantities and store metadata. SKUs are aggregated into five major categories: cartons, packs (normal cigarettes and cigars), grams of leaf tobacco sold, filters and papers.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for Cigarettes and tobacco past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
Volume estimates

 

Current price estimates of purchases of cigarettes and tobacco by Australian residents in Australia are re-valued using the CPI for Tobacco.

Current price estimates of purchases of cigarettes and tobacco by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of Cigarettes and tobacco are derived by aggregating the elemental volume components above.

Table 10.17 Quarterly household final consumption expenditure—Clothing and footwear
ItemComment
Current price estimates

 

Quarterly indicator series for Clothing and footwear are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Surveys.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for Clothing and footwear past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas;
  • repair and maintenance;
  • taxes refunded through the Tourist Refund Scheme; and
  • underground (or cash) economy.
Volume estimates

 

Current price estimates of purchases of clothing and footwear by Australian residents in Australia are re-valued using a weighted average of components from the CPI Clothing and footwear group.

Current price estimates of purchases of clothing and footwear by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of Clothing and footwear are derived by aggregating the elemental volume components above.

Table 10.18 Quarterly household final consumption expenditure — Housing, water, electricity, gas and other fuels
ItemComment
Imputed rentals for housing
 Current price estimates

 

 

Quarterly estimates of the imputed rent of owner-occupiers are obtained by multiplying the stock of owner-occupied dwellings by the average rent paid.

Information regarding the stock of owner-occupied dwellings and the rents paid for those dwellings are obtained from the Census of Population and Housing, conducted every five years.

The stock of owner-occupied dwellings includes all occupied private dwellings and a proportion of unoccupied private dwellings but excludes short-term caravans in caravan parks. Private dwellings include separate houses, duplexes, townhouses, flats (including those which are part of a building that is used for commercial purposes such as a retail shop) and caravans used for long-term accommodation.

For intercensal and post-Census periods, the stock is moved forward using the number of dwelling unit completions from the ABS publication, Building Activity, Australia. This is then modified by a factor to take account of other changes to the stock of dwellings; that is, demolitions, net conversions from commercial uses and dwelling completions not in the scope of the survey. For intercensal periods, this factor is calculated by dividing the change in the stock of owner-occupied dwellings between Census benchmarks by the total number of dwelling completions in the period. For the post-Census period, the factor is assumed to be the same as that for the latest intercensal period.

The benchmark average rent paid for owner-occupied dwellings is calculated by multiplying average rents reported in the Census (adjusted to exclude rents at less than market value) for privately rented dwellings in various categories (major urban, other urban, rural etc., cross-classified by the structure of the dwelling and number of bedrooms) by the number of owner-occupied dwellings in those same categories.

For intercensal and post-Census periods, the benchmark average rent paid is updated using data from the Survey of Income and Housing, and industry reports from Australian Property Monitors (APM) and the Real Estate Institute of Australia (REIA).

The latest benchmark of average rent paid is moved forward using a weighted average of price indexes from the CPI for privately-owned dwelling rents. The weights used have been derived from the Census of Population and Housing.

Separate estimates of imputed rentals for housing are published on an annual basis in Australian System of National Accounts.

 Volume estimates
  Chain volume estimates of imputed rentals for housing are derived using the relative proportion of the nominal current price values for imputed rentals to the sum of actual and imputed rentals for housing. The derived ratio is applied to the chain volume estimate for total dwelling rent.
Actual rentals for housing
 Current price estimates

 

 

Quarterly estimates of actual rent for housing is the difference between total dwelling rent and the imputed rent of owner-occupiers.

Separate estimates of actual rent for housing are published on an annual basis in Australian System of National Accounts.

 Volume estimates
  Chain volume estimates of actual rentals for housing are derived using the relative proportion of the nominal current price values for actual rentals to the sum of actual and imputed rentals for housing. The derived ratio is applied to the chain volume estimate for total dwelling rent.
Total dwelling rent
 Current price estimates

 

 

Quarterly estimates of total dwelling rent (the imputed rent of owner-occupiers plus actual rent paid by renters) are obtained by multiplying the total stock of dwellings by the average rent paid.

Similar to imputed rentals for housing, information regarding the stock of total dwellings and rents paid is obtained from the Census of Population and Housing.

The stock of total dwellings includes all occupied private dwellings and a proportion of unoccupied private dwellings but excludes short-term caravans in caravan parks. Private dwellings include separate houses, duplexes, townhouses, flats (including those which are part of a building that is used for commercial purposes such as a retail shop) and caravans used for long-term accommodation.

For intercensal and post-Census periods, the stock of total dwellings is again moved forward using the number of dwelling unit completions from the ABS publication,  Building Activity, Australia. This is then modified by a factor to take account of other changes to the stock of dwellings; that is, demolitions, net conversions from commercial uses, and dwelling completions not in the scope of the survey. For intercensal periods, this factor is calculated by dividing the change in the total stock of dwellings between Census benchmarks by the total number of dwelling completions in the period. For the post-Census period, the factor is assumed to be the same as that for the latest intercensal period.

The benchmark for average rent paid is calculated by multiplying the average rents reported in the Census (adjusted to exclude rents at less than market value) for privately rented dwellings in various categories (major urban, other urban, rural, etc., cross-classified by the structure of the dwelling and number of bedrooms) by the number of rented dwellings in those same categories.

For intercensal and post-Census periods, the benchmark average rent paid is updated using data from the Survey of Income and Housing, and industry reports from Australian Property Monitors and the Real Estate Institute of Australia.

The latest benchmark of average rent paid is moved forward using a weighted average of price indexes from the CPI for privately-owned and government-owned dwelling rents. The weights used have been derived from the Census of Population and Housing.

 Volume estimates

 

 

Quarterly volume estimates for total rent for housing are obtained by quantity revaluing the current price estimates using the average net capital stock of dwellings. Quarterly estimates of capital stock are derived by linearly interpolating and extrapolating the annual estimates.

Initial State allocations are derived using estimated resident population.

Other services related to the dwelling
 Current price estimates

 

 

Quarterly indicator series for other services related to the dwelling are derived by multiplying estimated resident population by the CPI for water and sewerage.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for other services related to the dwelling past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

No additional adjustments are made to current price estimates of other services related to the dwelling.

 Volume estimates
  Current price estimates of purchases of services relating to the dwelling by Australian residents are re-valued using the CPI for water and sewerage.
Total rent and other dwelling services
 Volume estimates
  Chain volume estimates of rent and other dwelling services are derived by aggregating the elemental volume estimates for these subcategories.
Electricity, gas and other fuels
 Current price estimates

 

 

Quarterly indicators for household expenditure on electricity and gas are derived using Energy Retailing Survey (ERS) data from the Survey of Consumer Sales (SOCS) in Table 17 of Retail Trade, Australia. The ERS covers registered electricity and gas suppliers to households.

The quarterly indicator series for other household fuels is derived from sales of heating oil and kerosene from the monthly Australian Petroleum Statistics report, published by the Department of Industry, Science, Energy and Resources (DISER), together with price data from the CPI for gas and other household fuels.

These indicator series are used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates for electricity and gas are derived from the national estimates using the relative proportions in the indicator series. Other household fuels is apportioned according to data from the Household Expenditure Survey, Australia: Summary of Results.

No additional adjustments are made to current price estimates of Electricity, gas and other fuels.

 Volume estimates
  Current price estimates of purchases of electricity, gas and other fuels by Australian residents are each re-valued using relevant components of the CPI Utilities sub-group.
Table 10.19 Quarterly household final consumption expenditure — Furnishings and household equipment
ItemComment
Furniture and furnishings, carpets and other floor coverings
 Current price estimates

 

 

Quarterly indicator series for furniture and furnishings, carpets and other floor coverings are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Surveys.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for furniture and furnishings, carpets and other floor covering past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas;
  • taxes refunded through the Tourist Refund Scheme; and
  • underground (or cash) economy.
 Volume estimates

 

 

Current price estimates of purchases of furniture and furnishings, carpets and other floor coverings in Australia are re-valued using the CPI for Furniture and furnishings.

Household textiles
 Current price estimates

 

 

Quarterly indicator series for household textiles are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Surveys.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for household textiles past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas; and
  • taxes refunded through the Tourist Refund Scheme.
 Volume estimates

 

 

Current price estimates of purchases of household textiles in Australia are re-valued using a weighted average of relevant components from the CPI.

Household appliances
 Current price estimates

 

 

Quarterly indicator series for household appliances are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Survey.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for household appliances past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas;
  • taxes refunded through the Tourist Refund Scheme; and
  • repairs and maintenance.
 Volume estimates

 

 

Current price estimates of purchases of household appliances in Australia are re-valued using a weighted average of relevant components from the CPI Household appliances, utensils and tools sub-group.

Glassware, tableware and household utensils
 Current price estimates

 

 

Quarterly indicator series for glassware, tableware and household utensils are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Survey.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for glassware, tableware and household utensils past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas; and
  • taxes refunded through the Tourist Refund Scheme.
 Volume estimates

 

 

Current price estimates of purchases of glassware, tableware and household utensils in Australia are re-valued using a weighted average of relevant components from the CPI Household appliances, utensils and tools sub-group.

Tools and equipment for house and garden
 Current price estimates

 

 

Quarterly indicator series for tools and equipment for house and garden are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Survey.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for tools and equipment for house and garden past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas;
  • taxes refunded through the Tourist Refund Scheme; and
  • repairs and maintenance.
 Volume estimates

 

 

Current price estimates of purchases of tools and equipment for house and garden in Australia are re-valued using the CPI for Tools and equipment for house and garden.

Non-durable household goods
 Current price estimates

 

 

Quarterly indicator series for non-durable household goods are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Survey.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for non-durable household goods past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas;
  • taxes refunded through the Tourist Refund Scheme; and
  • repairs and maintenance.
 Volume estimates

 

 

Current price estimates of purchases of non-durable household goods in Australia are re-valued using a weighted average of relevant components from the CPI.

Total furnishings and household equipment
 Volume estimates

 

 

Current price estimates of purchases of furnishings and household equipment by non-residents in Australia are re-valued using a weighted average of relevant components from the CPI.

Current price estimates of purchases of furnishings and household equipment by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

In deriving the chain volume estimates of furnishings and household Equipment, the elemental volume estimate of purchases by non-residents in Australia is subtracted from the sum of the other elemental volume components above.

 

Table 10.20 Quarterly household consumption expenditure—Health
ItemComment
Medicines, medical aids and therapeutic appliances
 Current price estimates

 

 

Quarterly indicator series for total expenditure on medicines, medical aids and therapeutic appliances are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Survey.

The indicator includes both household (out-of-pocket) and government (benefit) expense. HFCE captures the out-of-pocket expenditure of households on medicines, medical aids and therapeutic appliance, so an adjustment is made to remove the government contribution. Government Finance Statistics provide an estimate of the benefits paid by the Government as part of the Pharmaceutical Benefits Scheme. This estimate, at the national level, is apportioned across each State and Territory based on the relative proportions in the indicator series above.

These amounts are then deducted from the retail-based series to obtain indicators for household expenditure on medicines, medical aids and therapeutic appliances.

The national indicator derived from this process is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for medicines, medical aids and therapeutic appliances past the latest available benchmark.

State/Territory estimates are derived from the national estimate using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas.

A further adjustment is made to remove cosmetic and toiletry goods retailing which is included in the Retail Trade indicator for medicines, medical aids and therapeutic appliances. Cosmetic and toiletry goods retailing products are captured in personal care products under the Other goods and services COICOP category.

 Volume estimates

 

 

Current price estimates of purchases of medicines, medical aids and therapeutic appliances in Australia are re-valued using the CPI for Pharmaceutical products.

Ambulatory health care
 Current price estimates

 

 

Quarterly indicator series for total expenditure on ambulatory health care are compiled using data from Services Australia on the fees charged for medical services and procedures where Medicare benefits were paid, as well as information from the Private Health Insurance Administration Council’s (PHIAC) A report on the private health insurance claims by households.

Government Finance Statistics provide an estimate of the benefits paid by the Government under Medicare. This estimate, at the national level, is apportioned across each State and Territory based on the relative proportions in the indicator series above.

These amounts are deducted from DoH and PHIAC based series to obtain indicators for household expenditure on ambulatory health care.

The national indicator derived from this process is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for ambulatory health care past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
 Volume estimates

 

 

Current price estimates of purchases of ambulatory health care in Australia are re-valued using relevant components from the CPI Health group.

Hospital, ambulance services and nursing home care
 Current price estimates

 

 

The Private Health Insurance Administration Council’s series on health insurance benefits paid for hospital care is used as the quarterly indicator for household expenditure on private hospitals.

The indicator for fees paid to public hospitals, nursing homes, and for ambulance services is data from the Department of Health on the fees charged for medical services and procedures where Medicare benefits were paid.

These indicators are used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for hospital, ambulance services and nursing home care past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas
 Volume estimates

 

 

Current price estimates of purchases of hospital, ambulance services and nursing home care are re-valued using relevant component of the CPI Medical, dental and hospital services sub-group.

Total Health
 Volume estimates

 

 

Current price estimates of purchases of health by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Current price estimates of purchases of health by non-residents in Australia as re-valued using a weighted average of relevant components from the CPI Health group.

In deriving chain volume estimates of health, the elemental volume estimate of purchases by non-residents in Australia is subtracted from the sum of the other elemental volume components above.

 

Table 10.21 Quarterly household final consumption expenditure—Transport
ItemComment
Purchase of vehicles
 Current price estimates
  New motor vehicles

 

  

The number of new motor vehicle sales by type of vehicle and sector (private, business and government), and the average price of these sales are obtained quarterly from the Federal Chamber of Automotive Industries’ VFACTS report.

From these data, the quarterly indicator series for purchase of new motor vehicles is derived by multiplying the number of sales of each type of vehicle by their average sale price and aggregating.

The indicators for all the subcomponents of this COICOP category (New motor vehicles, used vehicles from other sectors and Dealers’ margins) are summed to derive an indicator for total purchase of vehicles. The aggregated indicator is used to allocate benchmarked annual estimates of purchase of vehicles to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

The national estimate for purchase of vehicles is apportioned across each State/Territory using the relative proportions in the indicator series.

No additional adjustments are made to current price estimates of new motor vehicles purchases.

  Used vehicles from other sectors

 

  

Quarterly indicator series for purchases of used vehicles from other sectors are based on movements in the average value of new motor vehicle purchases from [q-6] to [q-12].

The indicators for all the subcomponents of this COICOP category (New motor vehicles, used vehicles from other sectors and Dealers’ margins) are summed to derive an indicator for total purchase of vehicles. The aggregated indicator is used to allocate benchmarked annual estimates of purchase of vehicles to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

The national estimate for purchase of vehicles is apportioned across each State/Territory using the relative proportions in the indicator series.

No additional adjustments are made to current price estimates of used vehicles from other sectors.

  Dealers’ margins

 

  

Quarterly indicator series for dealers’ margins on used vehicles traded between households through dealers are based on movements in the average value of new motor vehicle purchases from [q-6] to [q-12].

The indicators for all the subcomponents of this COICOP category (New motor vehicles, used vehicles from other sectors and Dealers’ margins) are summed to derive an indicator for total purchase of vehicles. The aggregated indicator is used to allocate benchmarked annual estimates of purchase of vehicles to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

The national estimate for purchase of vehicles is apportioned across each State/Territory using the relative proportions in the indicator series.

No additional adjustments are made to current price estimates of dealers’ margins.

 Volume estimates

 

  

Current price estimates of purchases of motor vehicles by Australian residents in Australia are re-valued using the CPI for Motor vehicles.

Current price estimates of purchases of motor vehicles by Australian residents overseas are re-valued using a composite index of overseas CPIs.

Chain volume estimates of purchase of vehicles are derived by summing the elemental volume components above.

Operation of personal transport equipment
 Current price estimates
  Motoring goods

 

  

The quarterly indicator for household expenditure on fuel is derived from petroleum sales volumes from the Department of Industry, Science, Energy and Resources (DISER) publication, Australian Petroleum Statistics, together with price data from the CPI for Automotive fuel.

The quarterly indicator for household purchases of tyres is private kilometres travelled from the Survey of Motor Vehicle Use (SMVU) multiplied by the CPI for Spare parts and accessories for motor vehicles.

The quarterly indicator for household expenditure on batteries and car accessories is derived from the number of vehicles registered to households and price data from the CPI.

These indicators are aggregated to derive an indicator for total motoring goods, which is then used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

The national estimate for motoring goods is apportioned across each State and Territory by applying weights derived from the Household Expenditure Survey, Australia: Summary of Results.

The following adjustment is made:

  • net expenditure overseas.
  Repair and maintenance expenditure

 

  

The quarterly indicator for household expenditure on repairs and servicing is private kilometres travelled from the SMVU, multiplied by the CPI for Maintenance and repair of motor vehicles.

For panel beating and smash repairs, the indicator is the number of vehicles registered to households multiplied by the CPI for Motor vehicle insurance.

These indicators are aggregated to derive an indicator for total repair and maintenance expenditure, which is then used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

The national estimate for repair and maintenance expenditure is apportioned across each State and Territory by applying weights derived from the Household Expenditure Survey, Australia: Summary or Results.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
  Miscellaneous motoring expenditure

 

  

The quarterly indicator for miscellaneous motoring expenses paid by households is the CPI for Other services in respect of motor vehicles multiplied by the number of vehicles registered to households.

This indicator is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

The national estimate for miscellaneous motoring expenditure is apportioned across each State and Territory by applying weights derived from the Household Expenditure Survey, Australia: Summary of Results.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
 Volume estimates

 

  

Current price estimates of expenditures on operation of vehicles by Australian residents in Australia are each re-valued using relevant components of the CPI Private motoring sub-group.

Current price estimates of expenditures on operation of vehicles by non-residents in Australia are re-valued using a weighted average of relevant components from the CPI.

Current price estimates of expenditures on operation of vehicles by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

In deriving volume estimates of operation of vehicles, the elemental volume estimate of purchases by non-residents in Australia is subtracted from the total of the other elemental volume components above.

Transport services
 Passenger transport by railway
  Current price estimates

 

  

Quarterly indicator series for passenger transport by railway are derived using the revenue data of government transport authorities, from Government Finance Statistics, and data from private operators of rail services.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for passenger transport by railway past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
  Volume estimates

 

  

Current price estimates of expenditures on passenger transport by railway in Australia are re-valued using the CPI for Urban transport fares.

 Passenger transport by road
  Current price estimates

 

  

Quarterly indicator series for household expenditure on bus fares is derived using the revenue data of government transport authorities, from Government Finance Statistics, and data from major private operators of bus services.

For expenditure on taxi and hire car charges, the indicator is the CPI price data on taxi fares, multiplied by an estimate of usage.

These indicators are used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas; and
  • underground (or cash) economy.
  Volume estimates

 

  

Current price estimates of expenditures on passenger transport by road in Australia are each re-valued using relevant components of the CPI Transport group.

 Passenger transport by air
  Current price estimates

 

  

The quarterly indicator series for domestic air fares is based on revenue data provided by the major airlines.

For international air fares, the indicator is derived using data on imports of transportation services from the ABS Balance of Payments and revenue information provided by the major airlines.

These indicator series are aggregated to derive an indicator for total passenger transport by air, which is then used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

The national estimates for passenger transport by air are apportioned across each State and Territory by applying weights derived from the Household Expenditure Survey, Australia: Summary of Results.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
  Volume estimates
   Current price estimates of expenditures on passenger transport by air in Australia are re-valued using relevant components of the CPI Holiday travel and accommodation sub-group.
 Passenger transport by sea and inland water
  Current price estimates

 

  

Quarterly indicator series for household expenditure on domestic passenger transport by sea are derived using the revenue data of public transport authorities, from Government Finance Statistics.

For international shipping fares, the quarterly data are moved forward using a constant growth rate.

These indicator series are aggregated to derive an indicator for total passenger transport by sea and inland water, which is then used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
  Volume estimates

 

  

Expenditures on domestic shipping fares in Australia are re-valued using the CPI for Urban transport fares.

Expenditures on overseas shipping fares in Australia are re-valued using a specially constructed cruise ship price index.

Total transport services
 Volume estimates

 

  

Current price estimates of expenditure on transport services by non-residents in Australia are re-valued using the CPI for Urban transport fares.

Current price estimates of expenditures on transport services by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

In deriving the chain volume estimates of transport services, the elemental volume estimate of expenditure by non-residents in Australia is subtracted from the total of the other elemental volume components above.

 

Table 10.22 Quarterly household final consumption expenditure — Communications
ItemComment
Postal services
 Current price estimates

 

 

The quarterly indicator series for postal services is estimated from data provided by Australia Post on the sales of stamps and postage labels, and the hire of mail boxes and bags.

This indicator is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for postal services past the latest available benchmark.

The national estimate is apportioned across each State and Territory by applying weights derived from the Household Expenditure Survey, Australia: Summary of Results.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
 Volume estimates
  

Current price estimates of expenditures on postal services in Australia are re-valued using the CPI for Postal services.

Telecommunication services
 Current price estimates

 

 

The quarterly indicators for household expenditure on telephone and internet services are derived using the SOCS Communications Services Survey (CSS) in Table 17 of Retail Trade, Australia. The CSS covers registered telecommunication providers to households.

The quarterly indicators for telephone and internet services are aggregated to derive an indicator for total telecommunication services, which is then used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

The national estimate for telecommunication services is apportioned across each State and Territory by applying weights derived from the Household Expenditure Survey, Australia: Survey of Results.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
 Volume estimates

 

 

Current price estimates of expenditures on telecommunication services in Australia are re-valued using the CPI for Telecommunication equipment and services.

Total communications services
 Volume estimates

 

 

Current price estimates of expenditure on communication services by non-residents in Australia are re-valued using the CPI for Communication.

Current price estimates of expenditures on communication services by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

In deriving the chain volume estimates of communication services, the elemental volume estimate of expenditure by non-residents in Australia is subtracted from the total of the other elemental volume components above.

Table 10.23 Quarterly household final consumption expenditure — Recreation and culture
ItemComment
Goods for recreation and culture
 Audio visual, photographic and data processing equipment and accessories
  Current price estimates

 

  

Quarterly indicator series for audio visual, photographic and data processing equipment and accessories are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Survey.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas; and
  • taxes refunded through the Tourist Refund Scheme.
  Volume estimates

 

  

Current price estimates of purchases of audio-visual, photographic and information processing equipment excluding computers in Australia are re-valued using a weighted average of relevant components from the CPI Audio, visual and computing equipment and services sub-group.

Current price estimates of purchases of computer equipment in Australia are re-valued using the CPI for Computing equipment.

Current price estimates of purchases of audio-visual, photographic and information processing equipment by non-residents in Australia are re-valued using a weighted average of relevant components from the CPI Audio, visual and computing equipment and services sub-group.

Current price estimates of purchases of audio-visual, photographic and information processing equipment by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

In deriving the chain volume estimates of audio-visual, photographic and information processing equipment, the elemental volume estimate of expenditure by non-residents in Australia is subtracted from the total of the other elemental volume components above.

Other major durables for recreation and culture
 Current price estimates

 

  

Quarterly indicator series for other major durables for recreation and culture are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Survey.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for other major durables for recreation and culture past the latest available benchmark.

State/Territory estimates are derived from the national estimate using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas
 Volume estimates

 

  

Current price estimates of purchases of other major durables for recreation and culture by Australian residents in Australia are re-valued using a weighted average of components from the CPI Recreation and culture group.

Current price estimates of purchases of other major durables for recreation and culture by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of other major durables for recreation and culture are derived by aggregating the elemental volume components above.

Other recreational items and equipment
 Current price estimates

 

  

For each of the components of other recreational items and equipment, quarterly indicator series are derived by weighting together the series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Survey.

The indicator at the national level for each of these components is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas;
  • taxes refunded through the Tourist Refund Scheme; and
  • repairs and maintenance.
 Volume estimates

 

  

Current price estimates of purchases of other recreational items and equipment by Australian residents in Australia are re-valued using a weighted average of relevant components from the CPI.

Current price estimates of purchases of other recreational items and equipment by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of other recreational items and equipment are derived by aggregating the elemental volume components above.

 Volume estimates
   Chain volume estimates of goods for recreation and culture are derived by aggregating the elemental volume components for the three subcategories above.
Recreational and cultural services
 Sporting and recreational services
  Current price estimates

 

  

The quarterly indicator series for sporting and recreational services is estimated resident population multiplied by the CPI for Sports participation.

This indicator is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for Sporting and recreational services past the latest available benchmark.

The national estimate is apportioned across each State and Territory by applying weights derived from the Household Expenditure Survey, Australia: Summary of Results.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
  Volume estimates

 

  

Current price estimates of expenditures on sporting and recreational services in Australia are re-valued using the CPI for Sports participation.

Cultural and entertainment services
 Current price estimates

 

  

The quarterly indicator for cinema and other admissions is box office takings provided by the Motion Picture Distributors Association of Australia (MPDAA). For Pay TV, the indicator is revenue information from major service providers.

The quarterly indicator for television and video hire is moved forward using series from the ABS publication, Retail Trade, Australia.

Quarterly indicator series for veterinary and other services for pets are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Survey.

The above indicators are used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates for Cinema and other admissions and Pay TV are derived from the national estimates by applying weights from the Household Expenditure Survey, Australia: Summary of Results. State/Territory estimates of Television and video hire and Veterinary and other services for pets are calculated using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas;
  • taxes refunded through the Tourist Refund Scheme; and
  • underground (or cash) economy.
 Volume estimates

 

  

Current price estimates of expenditures on cultural and entertainment services in Australia are re-valued using a weighted average of relevant components from the CPI Recreation and culture group.

Net losses from gambling
 Current price estimates

 

  

Quarterly indicators for net losses by resident households on gambling are derived using data provided by Government Finance Statistics. These data include taxes levied on gaming machines, casinos and racing, lottery ticket sales and prizes paid, and TAB turnover and dividends paid.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for net losses from gambling past the latest available benchmark.

State/Territory estimates are derived from the national estimate using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
 Volume estimates

 

  

Current price estimates of net losses from gambling in Australia are re-valued using the All groups CPI excluding medical and hospital services. This treatment is not an attempt to measure the quantum of gambling as such, but rather to estimate the purchasing power, over other consumer goods and services, attributable to net losses from gambling.

Total recreational and cultural services
 Volume estimates

 

  

Current price estimates of expenditure on recreational and cultural services by non-residents in Australia are re-valued using the CPI for Services.

Current price estimates of expenditures on recreational and cultural services by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

In deriving the chain volume estimates of recreational and cultural services, the elemental volume estimate of expenditure by non-residents in Australia is subtracted from the total of the other elemental volume components above.

Newspapers, books and stationery
 Current price estimates

 

  

Quarterly indicator series for newspapers, books and stationery are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Survey.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for newspapers, books and stationery past the latest available benchmark.

State/Territory estimates are derived from the national estimate using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas; and
  • underground (or cash) economy.
 Volume estimates

 

  

Current price estimates of purchases of newspapers, books and stationery by Australian residents in Australia are re-valued using the CPI for Newspapers, books and stationery.

Current price estimates of purchases of newspapers, books and stationery by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of newspapers, books and stationery are derived by aggregating the elemental volume components above.

Total recreation and culture services
 Volume estimates
   Chain volume estimates of recreation and culture are derived by aggregating the elemental volume estimates for its subcategories.
Table 10.24 Quarterly household final expenditure —Education services
ItemComment
Education services
 Current price estimates
  Tertiary education

 

  

Data on government receipts from the Higher Education Contribution Scheme (HECS), obtained from the Government Finance Statistics, is used as the indicator to compile estimates of expenditure on HECS.

Quarterly indicator series for the remaining components of tertiary education are derived by multiplying estimated resident population by the CPI for Tertiary education.

The indicators for all the subcomponents of this COICOP category are summed to derive an indicator for total education. The aggregated indicator is used to allocate benchmarked annual estimates of education to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
  Post-secondary education

 

  

Quarterly indicator series for post-secondary education is derived by multiplying estimated resident population by the CPI for Secondary education.

The indicators for all the subcomponents of this COICOP category are summed to derive an indicator for total education. The aggregated indicator is used to allocate benchmarked annual estimates of education to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates are derived from the National estimates using the relative proportions in the indicator series.

The following adjustment is made:

  • net expenditure overseas.
  Primary and secondary education

 

  

The quarterly indicators for household expenditure on government primary and secondary education are benchmarked to the Household Expenditure Survey, Australia: Summary of Results, and moved forward using estimated resident population and CPI price data.

Similarly for private tutoring services, the indicator series are benchmarked to the Household Expenditure Survey, Australia: Summary of Results and moved forward using estimated resident population and the CPI for Secondary education.

Quarterly indicator series for private primary and secondary education are derived by multiplying estimated resident population by the CPI for Secondary education.

The indicators for all the subcomponents of this COICOP category are summed to derive an indicator for total education. The aggregated indicator is used to allocate benchmarked annual estimates of education to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
  Preschools

 

  

The quarterly indicators for preschool education are benchmarked to the Household Expenditure Survey, Australia: Summary of Results and moved forward using estimated resident population and the CPI for Preschool and primary education.

The indicators for all the subcomponents of this COICOP category are summed to derive an indicator for total education. The aggregated indicator is used to allocate benchmarked annual estimates of education to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
 Volume estimates

 

  

Current price estimates of purchases of education services by Australian residents in Australia are re-valued using the CPI for Education.

Current price estimates of purchases of education services by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of education services are derived by aggregating the elemental volume components above.

Table 10.25 Quarterly household final consumption expenditure — Hotels, catering and restaurants
ItemComment
Catering
 Current price estimates

 

 

Quarterly indicator series for catering are derived by weighting together series from the ABS publications, Retail Trade, Australia and Business Indicators, Australia, based on weights from the 2005-06 Retail and Wholesale Industries Survey.

The indicator at the national level is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates for catering past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas; and
  • underground (or cash) economy.

 

 Volume estimates

 

 

Current price estimates of expenditure on catering services by Australian residents in Australia are re-valued using a weighted average of relevant components from the CPI.

Current price estimates of expenditure on catering services by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of catering services are derived by aggregating the elemental volume components above.

Accommodation services
 Current price estimates

 

 

Quarterly indicators for Temporary accommodation services are derived from accommodation turnover data from Business Indicators, Australia.

For hostel accommodation for the aged or handicapped, the indicator is the All groups CPI multiplied by estimated residential population.

These indicators are used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
 Volume estimates

 

 

Current price estimates of purchases of accommodation services by Australian residents in Australia are re-valued using the CPI for Domestic holiday travel and accommodation.

Current price estimates of purchases of accommodation services by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of accommodation services are derived by aggregating the elemental volume components above.

Total hotel, cafes and restaurants services
 Volume estimates
  

Chain volume estimates of hotels, cafes and restaurants are derived by aggregating the elemental volume estimates.

Table 10.26 Quarterly household final consumption expenditure — Miscellaneous goods and services
ItemComment
Personal care
 Current price estimates

 

  

The quarterly indicator series for hairdressers and beauty salons are benchmarked to the Household Expenditure Survey, Australia: Summary of Results  and moved forward using series from the ABS publication, Retail Trade, Australia.

For perfumes and cosmetics, quarterly indicator series are derived by weighting together series from the ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Survey.

The indicators for these two subcomponents are used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas;
  • taxes refunded through the Tourist Refund Scheme; and
  • underground (or cash) economy.
 Volume estimates

 

  

Current price estimates of purchases of personal care by Australian residents in Australia are re-valued using a weighted average of relevant components from the CPI Furnishings, household equipment and services group.

Current price estimates of purchases of personal care by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of personal care are derived by aggregating the elemental volume components above.

Personal effects
 Current price estimates

 

  

The ABS publication, Retail Trade, Australia  is used as the indicator to derive quarterly estimates for this series.

Quarterly indicator series for both jewellery, watches and clocks and Other personal effects are derived by weighting together series from ABS publication, Retail Trade, Australia, based on weights from the 2012-13 Retail and Wholesale Industries Survey (RIS/WIS).

These indicators at the national level are used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates are derived from the national estimates using the relative proportions in the indicator series.

The following scope and coverage adjustments are made:

  • net expenditure overseas; and
  • taxes refunded through the Tourist Refund Scheme.
 Volume estimates

 

  

Current price estimates of purchases of personal effects by Australian residents in Australia are re-valued using a weighted average of relevant components from the CPI.

Current price estimates of purchases of personal effects by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of personal effects are derived by aggregating the elemental volume components above.

Insurance
 Current price estimates
  Homeowner and household insurance
   Quarterly estimates of the insurance service charge for general insurance of householders' effects are derived using linear trend interpolation and extrapolation of the annual estimates.
  Motor vehicle insurance
   Quarterly estimates of the insurance service charge for motor vehicle insurance are derived using linear trend interpolation and extrapolation of the annual estimates.
  Health insurance
   Quarterly estimates of the insurance service charge for health insurance are derived using linear trend interpolation and extrapolation of the annual estimates.
  Other non-life insurance by households as consumers
   Quarterly estimates of the insurance service charge for other non-life insurance are derived using linear trend interpolation and extrapolation of the annual estimates.
  Life insurance and superannuation

 

  

Quarterly estimates of Life insurance and superannuation are derived using an indicator of the insurance service charge for pension funds and life insurance. (See the methodology for current price insurance services output indicator described for quarterly gross value added (GVA), Insurance and superannuation funds in Table 9.64.)

This indicator is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

  Workers’ compensation insurance

 

  

Quarterly estimates of Workers' compensation are derived using linear trend interpolation and extrapolation of the annual estimates.

 Volume estimates

 

  

Current price estimates of purchases of non-life insurance of householders' effects, other non-life insurance, health insurance and life insurance by Australian residents in Australia are each re-valued using the All groups CPI.

Current price estimates of purchases of motor vehicle insurance by Australian residents in Australia are re-valued using the CPI for Vehicle insurance.

Current price estimates of purchases of workers' compensation by Australian residents in Australia are re-valued using the relevant component of the Wage Price Index.

Current price estimates of purchases of insurance by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of Insurance are derived by aggregating the elemental volume components above.

Financial services
 Current price estimates

 

  

Quarterly estimates for the explicit charges levied by financial institutions are obtained by linear interpolation and extrapolation of the annual estimates.

Taxes on financial transactions passed on to households are set to a fixed value each quarter.

Quarterly estimates of Financial Intermediation Services Indirectly Measured (FISIM) are obtained using an indicator of the household use of FISIM generated by banks (see the methodology for quarterly gross operating surplus (GOS), financial corporations and quasi-corporations in Table 11.25.)

This indicator is used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

The following scope and coverage adjustments are made:

  • net expenditure overseas.
 Volume estimates

 

  

Current price estimates of purchases of explicitly charged financial services by Australian residents in Australia are re-valued using the All groups CPI.

Current price estimates of taxes levied on financial transactions are re-valued using the All groups CPI excluding Housing.

Quarterly estimates of FISIM are obtained using a chain volume indicator of the household sector's use of FISIM generated by banks. (See the methodology for the quarterly gross value-added finance services described in Table 9.62.) This methodology derives a chain volume estimate for bank total FISIM output and the share of its use allocated to household final consumption expenditure (HFCE).

Current price estimates of purchases of financial services by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of financial services are derived by aggregating the elemental volume components above.

Total insurance and other financial services
 Volume estimates

 

  

Chain volume estimates of insurance and other financial services are derived by aggregating the elemental volume estimates for these subcategories.

Other services
 Current price estimates
  Personal outlays on miscellaneous services

 

  

For dry cleaning and laundering services, the quarterly indicator is estimated resident population multiplied by the CPI for Repairs to household durables.

The quarterly indicator for repair and maintenance not elsewhere included is derived using the estimated resident population estimates and the CPI for Hairdressing and personal grooming services.

For expenditure on funerals, the quarterly indicator is the number of deaths, taken from the ABS publication, National, State and Territory Population.

The quarterly indicators for estimates of household expenditure on child care services are the number of children under 10, from the ABS publication, National, State and Territory Population, and the CPI for Child care.

Household expenditure on photographic services is estimated using the CPI for Photographic services as the indicator.

Estimates of domestic services are moved forward quarterly using estimated resident population and the CPI for Gardening services.

Household expenditure on removalists' services, advertising services, services to students at post-secondary institutions, professional services other than health and other miscellaneous services are all derived using the CPI for Services as the indicator.

The above indicators are used to allocate benchmarked annual estimates to the four quarters of the year, as well as to derive quarterly estimates past the latest available benchmark.

State/Territory estimates are derived from the National using the relative proportions in the indicator series.

Estimates of expenditure on public authority fees (such as passport and marriage certificate charges) are moved forward quarterly using a constant growth rate.

The following scope and coverage adjustments are made:

  • net expenditure overseas; and
  • underground (or cash) economy.
  NPISH

 

  

Quarterly estimates of the current expenditure of non-profit institutions serving households (NPISHs) not elsewhere covered are moved forward using a constant growth rate.

 Volume estimates

 

  

Current price estimates of purchases of other services by Australian residents in Australia are re-valued using relevant components of the CPI and Wage Price Index (WPI).

Current price estimates of purchases of other services by Australian residents overseas are re-valued using a composite index of overseas CPIs adjusted for exchange rate changes.

Chain volume estimates of other services are derived by aggregating the elemental volume components above.

Total other goods and services (i.e. personal care, personal effects and other services)
 Volume estimates
   Chain volume estimates of other goods and services are derived by aggregating the elemental volume estimates for its subcategories.
Total miscellaneous services
 Volume estimates
   Chain volume estimates of miscellaneous goods and services are derived by aggregating the elemental volume components for Insurance and other financial services and other goods and services.

 

Government final consumption expenditure

Concept

10.65    Government final consumption expenditure (GFCE) is current expenditure by general government bodies on services to the community such as defence, education, and public order and safety. 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. Government output has no directly observable market value, and so it is valued in the national accounts at its cost of production. GFCE is estimated by deducting the value of any proceeds from sales of government output (e.g. statistical publications by the ABS) from this value of government output.

10.66    GFCE covers net outlays by general government on goods and services for current purposes; that is, outlays which do not result in the creation of capital assets, or in the acquisition of land and existing buildings or second-hand capital goods. Transfer payments are not included; for example, interest payments on government debt securities and social assistance benefits.

10.67    2008 SNA revised the treatment of defence expenditure. The purchases of durable military equipment such as ships and aircraft used as weapons platforms, and outlays on construction works that can only be used for military purposes are now to be treated as capital expenditure. (Expenditure on major items of military equipment with no equivalent civilian use was included in GFCE in 1993 SNA). The ASNA has adopted the 2008 SNA recommendations in this regard. Current expenditures such as compensation of employees and consumable military items such as boots, petrol and bullets, will continue to be treated as GFCE.

10.68    Government final consumption expenditure can be regarded as comprising the following:

compensation of employees paid to employees of general government bodies (other than any employees producing capital goods)
plusintermediate consumption of goods and services (e.g. purchases of office supplies and the services of consultants)
lessthe value of goods and services sold by general government to other sectors
plusconsumption of fixed capital
plusthe timing adjustment for overseas purchases of defence equipment.

10.69    Intermediate consumption for general government includes general government's share of the imputed financial services provided by banks and other financial intermediaries (FISIM).

10.70    ASNA classifies GFCE according to the functions of government. Two classifications have been developed, namely, the Government Purpose Classification (GPC) and the Local Government Purpose Classification (LGPC). These are designed for classifying current transactions (such as consumption expenditure, subsidies and current transfers), capital outlays (capital formation and capital transfers) and acquisition of financial assets by general government and its subsectors. The categories used in the classifications are in accordance with the 1993 SNA Classification of the Functions of Government (COFOG) and are as follows:

1General public services
2Defence affairs and services
3Public order and safety affairs
4Education affairs and services
5Health affairs and services
6Social security and welfare affairs and services
7Housing and community amenity affairs and services
8Recreational, cultural and religious affairs and services
9Fuel and energy affairs and services
10Agriculture, forestry, fishing and hunting affairs and services
11Mining and mineral resource affairs and services, other than fuels; manufacturing affairs and services; and construction affairs and services
12Transportation and communication affairs and services
13Other economic affairs and services
14Expenditures not classified by major group

10.71    COFOG, and consequently the GPC, is also used to help distinguish between expenditure by government on individual services and collective services. By convention, all government final consumption expenditures under each of the following headings are treated as expenditures on individual services, except for expenditures on general administration, regulation, research, etc.:

4Education
5Health
6Social security and welfare
8Recreation, sport and culture

10.72    In addition, expenditures under the following subheadings should also be treated as individual when they are important:

7Part of the provision of housing, part of the collection of household refuse
12Part of the operation of transport systems

10.73    GFCE covers net outlays by general government on goods and services for current purposes; that is, outlays which do not result in the creation of capital assets, or in the acquisition of land and existing buildings or second-hand capital goods. Transfer payments are not included, for example, interest payments on government debt securities and social assistance benefits.

10.74    Detailed estimates of government final consumption expenditure classified by purpose are available, as a general rule, from 1961-62.

Sources and methods

10.75    GFCE estimates are compiled using Government Finance Statistics (GFS) data. Data is obtained from the Department of Finance, State and Territory Treasuries, local governments and universities. GFS data is classified by Economic Type Framework (ETF) which includes employee expenses, non-employee expenses and revenue from sales of goods and services that are captured in government consumption.

10.76    The current method is based on the Australian System of Government Finance Statistics: Concepts Sources and Methods, Australia 2015 (AGFS15) which was implemented in the Australian National Accounts in 2017. Estimates on an AGFS15 basis which includes data classified by ETF are available back to 2002. Estimates of Government Consumption prior to 2002 have been backcast to ensure consistency across the time series.

10.77    GFCE is compiled as the sum of the following components:

 employee expenses (i.e. wages, salaries, superannuation, and redundancies)
 social benefits to households (i.e. Medicare, Pharmaceutical Benefits, Child Care Subsidy, Aged care, National Disability Insurance Scheme, transport and energy concessions)
 other non-employee expenses (such as supplies, contractors and materials)
(less)sales of goods and services (such as licence fees, tuition fees and hospital fees)
(plus)ASNA adjustments

10.78    ASNA adjustments are scope and coverage adjustments which include the following four components:

  • Consumption of fixed capital (depreciation)
  • Consumption of FISIM
  • State and local consolidation adjustments (i.e. payroll tax paid by departments to own state treasury)
  • (less) Intellectual property which are capitalised (i.e. computer software, research and development and artistic originals)

Sources and methods - Annual

Benchmark years

10.79    Annual estimates of GFCE are disaggregated by level of government. The level of government disaggregation is National (which is further split between defence and non-defence) and State and local, which are combined. The National level of government is defined to include Commonwealth plus government bodies that are considered to be jointly administered by the Commonwealth and State and local governments. Public universities are the only government bodies that are currently considered to be jointly administered.

10.80    The table below outlines the data sources and methods used in the estimation of benchmark years estimates for GFCE. It includes both the current price estimates and volume estimates.

Table 10.27 Benchmark years annual government final consumption expenditure
ItemComment
Current price estimates

 

The data source is annual Government Finance Statistics (GFS). It is obtained from the Department of Finance, State and Territory treasuries, local government and universities.

The following adjustments are made to the GFS data:

  • payroll taxes paid by government agencies to their State/Territory revenue office – a consolidation adjustment;
  • FISIM;
  • current expenditure on developing intellectual property products which is treated as gross fixed capital formation. The products include:
    • computer software development;
    • research and development; and
    • film and television production.
  • consumption of fixed capital on intellectual property products – replace depreciation of these products from GFS.

GFS data are classified according to the General Purpose Classification (GPC). The GPC level data is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

The Supply and Use benchmark is disaggregated to National defence, National non-defence and State and local level. GFCE for each sector is derived using the quarterly data and the proportion of each sector to the total is applied to the supply and use benchmark.

Volume estimates

 

GFCE current price estimates are price deflated to obtain volume estimates and are summed to derive a total GFCE estimate. GFCE estimates are deflated by component using a range of prices indexes and government input cost deflators. A government input cost deflator is a weighted price index that measures input costs incurred by the government to provide the good/service. Given most government services are non-market and have no output price, prices are measured using input costs. The input cost deflator can include several underlying indexes from the Producer Price Index (PPI), Wage Price Index (WPI) and Consumer Price Index (CPI).

Latest year

10.81    GFCE data for the latest financial year (or latest two years for the June quarter in Australian National Accounts: National Income, Expenditure and Product is the sum of data reported for the four quarters for both current price estimates and chain volume measures.

10.80    The tables below outline the data sources and methods used in the estimation of latest year estimates for GFCE by level of government. They include both the current price estimates and volume estimates.

Table 10.28 Latest year annual government final consumption expenditure — National defence
ItemComment
Current price estimates

 

Government Finance Statistics is the data source which provides data relating to defence. It is sourced from the Department of Finance.

The data obtained are for the expenditures on defence employees (i.e. wages and salaries and employer social contributions) and on other defence inputs (i.e. operating expenses such as rent, electricity, stationery, etc.) plus details of the value of sales of goods and services. The estimate for government expenditure on Financial Intermediation Services Indirectly Measured (FISIM) is included as part of the costs (i.e. intermediate consumption) of general government.

Consumption of fixed capital is used in place of the depreciation recorded in government accounts. Consumption of fixed capital is the preferred conceptual treatment as it is compiled on a current replacement basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM).

Current expenditures paid for in-house development of intellectual property are not included as intermediate consumption. They are capitalised and included in gross fixed capital formation.

National Defence expenditure state split ratios are updated on an annual basis from the Defence Force Annual Report. State ratios are compiled using the number of permanent personnel and reserves by location (excluding overseas members).

Volume estimates

 

Quarterly defence current price estimates are price deflated by each component to obtain volume estimates and are summed to derive a total defence estimate. Annual volume estimates are the sum of four quarters.

The deflator for employee expenses is weighted using wages and salaries data on army, airforce, navy, reserves and APS staff. The underlying indexes weighted include WPI Public administration and safety and WPI All industries.

Both sales of goods and services and use of goods and services are price deflated using a Commonwealth defence input cost deflator.

 

Table 10.29 Latest year annual government final consumption expenditure — National non-defence
ItemComment
Current price estimates

 

Government Finance Statistics is the data source. It is obtained from the Department of Finance. Public universities data are sourced from a survey of a sample of universities. Intellectual property products estimates are recorded as gross fixed capital formation in the ASNA.

The data obtained are for the expenditures by Commonwealth agencies (other than those classified to Defence) and by public universities on employees (i.e. wages and salaries and employer social contributions) and on other inputs (i.e. operating expenses such as rent, electricity, stationery, etc.) plus details of the value of sales of goods and services. The estimate for government expenditure on Financial Intermediation Services Indirectly Measured (FISIM) is included as part of the costs (i.e. intermediate consumption) of general government.

Consumption of fixed capital is used in place of the depreciation recorded in government accounts. Consumption of fixed capital is the preferred conceptual treatment as it is compiled on a current replacement basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM).

Current expenditures paid for in-house development of intellectual property are not included as intermediate consumption. They are capitalised and included in gross fixed capital formation.

Commonwealth non-defence expenditure (excluding social benefits to households in kind) state split ratios are updated on an annual basis using Commonwealth public sector cash, wages and salaries from the Survey of Employment and Earnings (SEE).

Commonwealth non-defence social benefits to households in kind are split to state using estimated resident population.

Volume estimates
 

Quarterly national non-defence current price estimates are price deflated by each component to obtain volume estimates and are summed to derive a total national non-defence estimate. Annual volume estimates are the sum of quarters.

Commonwealth non-defence employee expenses are price deflated using WPI All industries (Commonwealth). Social benefits to households are deflated by a weighted index comprised of a Medicare, PBS, Child care and Commonwealth government input cost deflator. Other non-employee expenses are price deflated using a Commonwealth government input cost deflator.

Multi-jurisdictional employee expenses are price deflated using WPI Education and training (public). Sales of goods and services are deflated using CPI Higher education fees, while other non-employee expenses is price deflated using a Commonwealth (Multi-jurisdictional) input cost deflator.

Table 10.30 latest year annual government final consumption expenditure—state and local
ItemComment
Current price estimates

 

The State and Territory treasuries provide the State and Territory level data. Local government data are sourced from annual Government Finance Statistics.

The data obtained are for the expenditures by State and local government agencies on employees (i.e. wages and salaries and employer social contributions) and on other inputs (i.e. operating expenses such as rent, electricity, stationery, etc.) plus details of the value of sales of goods and services. The estimate for government expenditure on Financial Intermediation Services Indirectly Measured (FISIM) is included as part of the costs (i.e. intermediate consumption) of general government.

Consumption of fixed capital is used in place of the depreciation recorded in government accounts. Consumption of fixed capital is the preferred conceptual treatment as it is compiled on a current replacement basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM).

Current expenditures paid for in-house development of intellectual property are not included as intermediate consumption. They are capitalised and included in gross fixed capital formation.

Volume estimates

 

Quarterly state and local current price estimates are price deflated by each component to obtain volume estimates and are summed to derive a total state and local estimate. Annual volume estimates are the sum of quarters.

State and local employee expenses are price deflated using WPI All industries (State and local government). Sales of goods and services are price deflated by a weighted index including a state and local government input cost deflator, state and local health input cost deflator and CPI Vocational Education and Training (VET) fees. Social benefits to households are price deflated using a state and local government input cost deflator. Other non-employee expenses are price deflated by a weighted price index comprised of a state and local government input cost deflator, state and local health input cost deflator and state and local education input cost deflator.

Sources and methods - Quarterly

10.83    Quarterly estimates of GFCE are disaggregated by the same levels of government as the annual benchmarks. The level of government disaggregation is National (which is further split between defence and non-defence) and State and local, which are combined. The National level of government is defined to include Commonwealth plus government bodies that are considered to be jointly administered by the Commonwealth and State and local governments. Public universities are the only government bodies that are currently considered to be jointly administered.

10.84    The tables below outline the data sources and methods used in the estimation of quarterly GFCE by level of government. They include both the current price estimates and volume estimates.

Table 10.31 Quarterly government final consumption expenditure — National defence
ItemComment
Current price estimates

 

The quarterly Government Finance Statistics is the data source which provides data relating to expenditures on defence. It is sourced from the Department of Finance. It is used as an indicator which is applied to the annual benchmarks.

The data obtained are for the expenditures on defence employees (i.e. wages and salaries and employer social contributions) and on other defence inputs (i.e. operating expenses such as rent, electricity, stationery, etc.) plus details of the value of sales of goods and services. The estimate for government expenditure on Financial Intermediation Services Indirectly Measured (FISIM) is included as part of the costs (i.e. intermediate consumption) of general government.

Consumption of fixed capital is used in place of the depreciation recorded in government accounts. Consumption of fixed capital is the preferred conceptual treatment as it is compiled on a current replacement basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM).

Current expenditures paid for in-house development of intellectual property are not included as intermediate consumption. They are capitalised and included in gross fixed capital formation.

Volume estimates

 

Defence current price estimates are price deflated by each component to obtain volume estimates and are summed to derive a total defence estimate.

The deflator for employee expenses is weighted using wages and salaries data on army, airforce, navy, reserves and APS staff. The underlying indexes weighted include WPI Public administration and safety and WPI All industries.

Both sales of goods and services and use of goods and services are price deflated using a Commonwealth defence input cost deflator.

Table 10.32 Quarterly government final consumption expenditure — National non-defence
ItemComment
Current price estimates

 

Quarterly data are directly sourced from the Department of Finance quarterly ledger. Data for universities are collected from a sample of 36 public universities. Intellectual property products estimates are recorded as gross fixed capital formation in the ASNA.

The data obtained are for the expenditures by Commonwealth agencies (other than those classified to Defence) and by public universities on employees (i.e. wages and salaries and employer social contributions) and on other inputs (i.e. operating expenses such as rent, electricity, stationery, etc.) plus details of the value of sales of goods and services. The estimate for government expenditure on Financial Intermediation Services Indirectly Measured (FISIM) is included as part of the costs (i.e. intermediate consumption) of general government.

Consumption of fixed capital is used in place of the depreciation recorded in government accounts. Consumption of fixed capital is the preferred conceptual treatment as it is compiled on a current replacement basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM).

Current expenditures paid for in-house development of intellectual property are not included as intermediate consumption. They are capitalised and included in gross fixed capital formation.

Volume estimates

 

National non-defence current price estimates are price deflated by each component to obtain volume estimates and are summed to derive a total national non-defence estimate.

Commonwealth non-defence employee expenses are price deflated using WPI All industries (Commonwealth). Social benefits to households are price deflated by a weighted index comprised of a Medicare, PBS, Child care and Commonwealth government input cost deflator. Other non-employee expenses are price deflated using a Commonwealth government input cost deflator.

Multi-jurisdictional employee expenses are price deflated using WPI Education and training (public). Sales of goods and services are price deflated using CPI Higher education fees while other non-employee expenses is price deflated using a Commonwealth (Multi-jurisdictional) input cost deflator.

Table 10.33 Quarterly government final consumption expenditure — State and local
ItemComment
Current price estimates

 

The State and Territory treasuries provide the State and Territory level data. The data comes from monthly and quarterly statements of receipts and expenditure, compiled from agency based financial reporting. Local government data are sourced from a quarterly sample (approximately 15 per cent) of local government authorities.

The data obtained are for the expenditures by State and local government agencies on employees (i.e. wages and salaries and employer social contributions) and on other inputs (i.e. operating expenses such as rent, electricity, stationery, etc.) plus details of the value of sales of goods and services. The estimate for government expenditure on Financial Intermediation Services Indirectly Measured (FISIM) is included as part of the costs (i.e. intermediate consumption) of general government.

Consumption of fixed capital is used in place of the depreciation recorded in government accounts. Consumption of fixed capital is the preferred conceptual treatment as it is compiled on a current replacement basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM).

Current expenditures paid for in-house development of intellectual property are not included as intermediate consumption. They are capitalised and included in gross fixed capital formation.

Volume estimates

 

State and local current price estimates are price deflated by each component to obtain volume estimates and are summed to derive a total state and local estimate.

State and local employee expenses are price deflated using WPI All industries (State and local government). Sales of goods and services are price deflated by a weighted index including a state and local government input cost deflator, state and local health input cost deflator and CPI VET fees. Social benefits to households are price deflated using a state and local government input cost deflator. Other non-employee expenses are price deflated by a weighted price index comprised of a state and local government input cost deflator, state and local health input cost deflator and state and local education input cost deflator.

Gross fixed capital formation

Gross capital formation

10.85     Gross capital formation refers to the gross additions to national wealth that result from three categories of investment:

  1. gross fixed capital formation, measured by the total value of a producer's acquisitions, less disposals, of fixed assets during the accounting period;
  2. changes in inventories, equal to the value of inventories acquired by an enterprise less the value of inventories disposed of during the accounting period; and
  3. acquisitions less disposals of valuables.

10.86    Valuables are assets that are not used primarily for production or consumption, that do not deteriorate over time under normal conditions and that are acquired and held primarily as a store of value. Valuables consist of precious stones and metals (provided that they are not intended to be used as intermediate inputs into processes of production); paintings, sculptures, etc. recognised as works of art; antiques; and other valuables such as jewellery fashioned from precious stones and metals. At present, estimates of gross capital formation flowing from acquisitions less disposals of valuables are not included in Australia's national accounts.

10.87    Amounts paid for non-produced, non-financial assets such as land, mineral and energy resources, and contracts, leases and licenses, represent a transfer of wealth, not an addition to it. They are not included in gross fixed capital formation, although such expenditures are classified as being of a capital nature and are included in the relevant capital accounts. Costs associated with the transfer of ownership of such assets are included in GFCF.

10.88    Fixed capital formation estimates are shown on a 'gross' basis; that is, deductions have not been made for the consumption of existing assets during the production process. The estimates, however, are net of the sale of second-hand capital assets at the total level (only to non-residents and sales of used motor vehicles to households for non-business use). However, the net sale of second-hand capital assets can be significant between sectors, such as government and private corporations, in the domestic economy.

Concept

10.89    Gross fixed capital formation is equal to the total value of a producer's acquisitions, less disposals, of fixed assets plus capital work done on own account during the accounting period plus certain additions to the value of non-produced assets realised by the productive activity of institutional units (e.g. land improvements). The latter include reclamation of land from the sea, clearance of forests to bring land into use for the first time, draining of marshes or irrigation of deserts, and prevention of flooding by erection of breakwaters, sea walls or flood barriers. These activities may result in the creation of new structures such as seawalls, flood barriers, dams, etc., that are not used directly in production but are constructed to make additional land available.

10.90    It is necessary to define what constitutes a fixed asset and what does not. All goods and services supplied to the economy by means of production, imports, or the disposal of produced assets must be used for exports, consumption (intermediate or final) or as part of capital formation. The boundary line between those products that are retained in the economy and are used for consumption and those products that are used for capital formation is known as the asset boundary. The asset boundary for produced assets consists of assets that have come into existence as outputs from processes of production, and that are themselves used repeatedly or continuously in other processes of production over periods of time longer than one year. Produced assets include intellectual property products which were previously termed “intangible fixed assets”.

10.91    The fundamental point of distinction between intermediate consumption and gross fixed capital formation is whether products are used up during the course of a particular period or whether they yield benefits beyond that period. In the case of households as consumers, all expenditure except the purchase of dwellings is treated as final consumption expenditure, whether or not it yields future benefits. Therefore, a purchase of a motor vehicle by a household (but not by an associated unincorporated enterprise) is treated as final consumption expenditure, whereas the same purchase by a business would be classified to GFCF.

10.92    The acquisition of non-produced non-financial natural resource assets such as land, mineral and energy resources, and natural timber tracts are not included in GFCF. Capital costs associated with the extension or development of these assets are included, as are outlays on land reclamation and improvement. Expenditure associated with the improvement and alteration of durable assets which significantly extend their productive life is also included, but ordinary repairs and maintenance expenses are not.

10.93    GFCF is not recorded until the ownership of the fixed assets is transferred to the unit that intends to use them in production. For example, new machinery and equipment that has not yet been sold forms part of additions to inventories of finished goods held by the producers of the assets. Similarly, imported machinery and equipment is not recorded as GFCF until it is acquired by the unit that intends to use it. Assets which are purchased under a financial lease arrangement are treated as involving an effective change of ownership, and are therefore recorded as GFCF by the lessee, not the lessor. In contrast operating leases are treated as output for the lessor and a purchase of a service by the lessee, as economic ownership of the underlying asset does not change.

10.94    Conventions have been adopted in the SNA in areas where boundary problems arise. For example, work put in place on structures (including dwellings, roads, dams, ports and other forms of construction) is considered to be GFCF of the unit for which the construction is being carried out, at the time the work is put in place. On the other hand, work on uncompleted heavy machinery and equipment (such as shipbuilding) during an accounting period is included as part of inventories of work-in-progress of the producer of the goods.

Classification of fixed assets

10.95    GFCF is classified by type of asset. There is substantial diversity in the different types of GFCF that may take place. A brief description of asset types used in the ASNA are presented below.

10.96    Dwellings comprises houses and other dwellings such as flats, apartments, home units, villa units, duplexes, mobile homes, caravans, etc. used entirely as the principal residences of households. Dwellings can also include residential dwelling buildings for communities such as retirement homes, military personnel, etc. Expenditure on the construction of hostel-type accommodation, prisons and motels is included in non-dwelling construction as this is not the primary residence for households. Also included are capitalised services, such as design and architectural fees, etc. and alterations and additions which comprises construction activity carried out on existing dwellings. This includes adding to or diminishing floor area, altering the structural design of dwellings and affixing rigid components which are integral to the functioning of the dwelling.

10.97    Ownership transfer costs comprise the various fees which are incurred by either the buyer or seller of real estate, namely legal fees on transfer, real estate sales commissions, stamp duties on transfer and other government charges (e.g. Water boards, Land Tax Office, etc.). Costs associated with acquiring and disposing of assets may be described as costs of ownership transfer. The value of work performed 'in house' (e.g. conveyancing performed by an enterprise's own legal staff) is excluded. It should be noted that estimates of ownership transfer costs are not separately identified for the public sector. In any event, transfer expenses of public authorities are relatively insignificant because the majority of public authorities are exempt from stamp duty, they frequently use their own staff to undertake the associated legal work and they make only limited use of real estate agents.

10.98    Non-dwelling construction comprises such assets as industrial, commercial, and non-dwelling residential buildings; water and sewerage installations; lifts, heating, ventilating and similar equipment forming an integral part of buildings and structures; land development; roads; bridges; wharves; harbours; railway lines; pipelines; and power and telephone lines. The category also includes expenditures that lead to major improvements in the quantity, quality, or productivity of land, or prevent its deterioration. Also included are capitalised services, such as design and architectural fees, etc.

10.99    Machinery and equipment include vehicles; aircrafts; ships; electrical apparatus; office equipment; furniture, fixtures and fittings not forming an integral part of buildings or structures; durable containers; special tooling, etc.

10.100    Weapons systems includes expenditures on defence weapon delivery systems such as warships, submarines, fighter aircraft, bombers, and tanks. In the 2008 SNA these are now capitalised, however the weapons (i.e. ammunition, missiles, rockets, bombs, etc.) are still treated as military inventories. This treatment has been incorporated in ASNA.

10.101    Cultivated biological resources cover animal resources (livestock) that are used repeatedly or continuously to produce products such as milk, wool etc., or are used as breeding stock, for transportation, racing or entertainment and tree, crop and plant resources (orchard growth) yielding repeat products whose natural growth and regeneration are under the direct control, responsibility and management of institutional units. In the ASNA, livestock (cattle, pigs, horses, and sheep) is included in GFCF or work-in-progress (changes in inventories), depending on an animal's role in production. Breeding stock, dairy cattle and sheep raised for wool are capitalised; animals raised for food are treated as work-in-progress until slaughtered.

10.102    Intellectual property products are as a result of creative activity, research and development, investigation or innovations leading to knowledge that the developers can market or use for their own benefit. These are produced fixed assets. Acquisitions, less disposals, of new and existing intellectual property products are subdivided by type of asset:

  • Research and development comprising the value of expenditures on creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and use of this stock of knowledge to devise new applications.
  • Mineral and petroleum exploration consisting of the value of expenditures on exploration for petroleum and natural gas and for non-petroleum deposits and subsequent evaluation of the discoveries made.
  • Computer software covering both purchased software and software developed in-house. Gross fixed capital formation also includes the purchase or development of databases that the enterprise expects to use in production over a period of more than one year. However, the ASNA does not separately identify databases from computer software as recommended by the 2008 SNA.
  • Entertainment, literary and artistic originals comprising the originals of films, sound recordings, manuscripts, tapes, models, etc. on which drama performances, sporting events, literary and artistic output etc. are recorded or embodied.

Sources and methods - Annual

Benchmark years

10.103    Annual estimates of GFCF are primarily disaggregated between the private and public sectors. The private sector GFCF is presented by type of asset. The public sector GFCF is split according to institutional sector (i.e. public corporations and general government).These are further disaggregated into National (which is further split between defence and non-defence) and State and local, which are combined.

10.104    The following outlines the adjustments that are made to the public sector estimates to ensure consistency with the 2008 SNA:

  • Capitalised computer software is modelled based on current expenditure of wages and non-wage expenses by government and purchases of software (obtained from Government Finance Statistics).
  • Public sector mineral exploration has been set to zero since 1988-89 as governments are no longer directly involved in mineral exploration activities. Prior to 1988-89 a small portion of mining exploration was attributed to the government general sector.
  • Artistic originals are based on data obtained from Annual Reports for public broadcasting networks.
  • Research and development expenditure is based on Research and Experimental Development, Government and Private Non-Profit Organisations, Australia.

10.105    The tables below outline the data sources and methods used in the estimation of annual GFCF by asset type for the private sector and level of government for the public sector. They include both the current price estimates and volume estimates.

Table 10.34 Annual private gross fixed capital formation — Dwellings
ItemComment
Description

 

Gross fixed capital formation on dwellings consists of the value of acquisitions of new and existing (used) dwellings less the value of disposals of existing dwellings.

It also includes the value of dwellings created by the conversion of existing non-dwelling buildings to dwellings, and the value of alterations and additions to existing dwellings.

Dwellings are buildings, or designated parts of buildings, that are used entirely or primarily as residences, including any associated structures regarded as fixed assets, such as garages, and all permanent fixtures customarily installed in residences. Houseboats, barges, mobile homes and caravans used as principal residences of households are also included and are regarded as fixed assets.

The costs of clearing and preparing the site for construction are part of the costs of new dwellings (and non-dwelling construction) and are therefore included in the value of the buildings.

Incomplete dwellings are included to the extent that the ultimate user is deemed to have taken ownership, either because the construction is on own-account or as evidenced by the existence of a contract of sale or purchase.

All dwellings must give rise to housing services that are included within the production boundary, regardless of whether the dwellings are occupied by the owners or rented on the market.

In the ASNA, private gross fixed capital formation for dwellings is presented with two sub-components: new and used dwellings and alterations and additions.

Current price estimates

 

The Construction Industry Survey (CIS) and Household Expenditure Survey (HES) are used to periodically set annual levels for the benchmark years. In the off years of CIS and HES, the Building Activity Survey (BACS) growth rates are used to move dwellings estimates forward.

GFCF on dwellings is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7. 

Volume estimates
 The current price estimates are deflated using quarterly price indexes, which have been summed to form the annual estimate. These price indexes include (but are not limited to) Consumer Price Index and the Producer Price Indexes.
Table 10.35 Annual private gross fixed capital formation — Non-dwelling construction
ItemComment
Description

 

Gross fixed capital formation in non-dwelling construction is recorded as the value of the acquisitions of new and existing non-dwelling buildings and structures, less the value of the disposals of existing non-dwelling buildings and structures, and the value of alterations and additions to existing non-dwelling buildings and structures.

Non-dwelling construction comprises three components: new building, new engineering construction and net purchases of second-hand assets.

  • New building consists of newly constructed buildings that are not designated as dwellings. Fixtures, facilities and equipment that are integral parts of the structures are included. Examples of non-residential buildings include warehouses and industrial buildings, commercial buildings, buildings for public entertainment, hotels, restaurants, schools, hospitals, prisons etc.;
  • New engineering construction includes civil engineering works, such as highways, streets, roads, railways and airfield runways; bridges, elevated highways, tunnels and subways; waterways, harbours, dams and other waterworks; long-distance pipelines, communication and power lines; local pipelines and cables, ancillary works; constructions for mining and manufacture; and constructions of sport and recreation facilities; and
  • Net purchases of second-hand assets consist of the purchase and sale of existing non-dwelling buildings and structures.
Current price estimates

 

The Construction Industry Survey (CIS) is used to periodically set annual levels for benchmark years. In the off year of CIS, Building Activity Survey (BACS) and Engineering Construction Survey (ECS) growth rates are used to move non-dwelling construction estimates forward.

Data are compiled by institutional sector and industry using the Economic Activity Survey, Building Activity Survey and the Survey of New Capital Expenditure, providing the elemental detail required by the Perpetual Inventory Method.

New engineering construction GFCF completed overseas is not captured in the ECS collection until the assets are fixed in place. Balance of Payments and the Survey of New Capital Expenditure data are used to make adjustments to recognise the progressive transfer of ownership for large mining projects built overseas.

GFCF on non-dwelling construction is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

Volume estimates
 The current price estimates are deflated using quarterly price indexes, which have been summed to form an annual. These price indexes include (but are not limited) to Producer Price Indexes.
Table 10.36 Annual private gross fixed capital formation — Machinery and equipment
ItemComment
Description 

 

Gross fixed capital formation for machinery and equipment is recorded as the value of the acquisitions of new and existing machinery and equipment, less the value of the disposals of existing machinery and equipment.

  • Machinery and equipment is classified according to six asset types:
  • Computers and peripherals;
  • Electrical and electronic equipment;
  • Industrial machinery and equipment;
  • Motor vehicles;
  • Other transport equipment; and
  • Other machinery and equipment.

ASNA’s machinery and equipment mirrors the 2008 SNA concept.

In the ASNA, private gross fixed capital formation for machinery and equipment is presented with two sub-components: new machinery and equipment and net purchases of second-hand assets.

Current price estimates

 

Prior to 1994-95, estimates are compiled using statistics of depreciable assets available from the Australian Taxation Office (ATO).

From 1994-95, the source of this data is the Economic Activity Survey which covers most large businesses in the economy in addition to the Survey of New Capital Expenditure.

Data are compiled by institutional sector and industry providing the elemental detail required by the Perpetual Inventory Method.

GFCF on machinery and equipment is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

Volume estimates

 

The current price estimates are deflated at the asset level; that is, computers and peripherals; electrical and electronic equipment; industrial machinery and equipment; motor vehicles; other transport equipment; and other machinery and equipment.

A number of price indexes are used some of which include, but are not limited to the Consumer Price Index, Producer Price Indexes and the International Trade Price Index (ITPI).

Table 10.37 Annual private gross fixed capital formation — Cultivated biological resources
ItemComment
Description

 

 

GFCF for orchard growth consists of the value of all acquisitions of mature and immature trees, shrubs, etc., produced on own account, less the value of their disposals. Disposals consist of trees, shrubs, etc., sold or otherwise transferred to other units plus those cut down before the end of their service lives. Disposals do not include exceptional losses of trees due to drought or other natural disasters such as gales or hurricanes, these being recorded in the Other changes in the volume of assets account.

Livestock
 Current price estimates

 

 

Estimates of the value of sheep and cattle used to produce products such as wool and milk, or for breeding, were historically derived from the annual Agricultural Commodity Survey conducted by the ABS, which provided the number of animals in major livestock categories. Results from the survey were published in Agriculture, Australia . More recently, price and quantity data is obtained from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) which is revised during the March quarter each year following the release of the ABS publication, Value of Agricultural Commodities Produced, Australia .

Calculation of sheep and cattle numbers also relies on slaughtering and exports quarterly data from the ABS publication, Livestock Products, Australia. Data on acquisition and disposal prices of other animals are calculated using the ABARES publication, Agriculture Commodity Statistics. Values for sheep and cattle are estimated by multiplying the number of animals by an average price per head.

Historical, estimates for thoroughbred horses, standardbred horses and other horses (quantity and price) were modelled, based on data from the Australian Horse Industry Council (AHIC) and various horse associations.  More recently, estimates of thoroughbred horses are derived using quantity and price data from the Australian Racing Board; estimates of standardbred horses are derived using quantity and price data from Harness Racing Australia; and estimates of other horses is derived using quantity and price data from the Food & Agriculture Organisation (FAO) of the United Nations.

Pigs for breeding estimates are sourced from the ABS publication, Agricultural Commodities, Australia .

 Volume estimates

 

 

Annual volume estimates are derived using the underlying price and quantity information as used in the derivation of current prices.

Orchard growth
 Current price estimates
  Data for the number of trees and hectares of vines are available annually from the ABS publication, Agricultural Commodities, Australia. The current price value is derived by applying average costs incurred in the planting and growing of orchards to this data.
 Volume estimates
  Volume estimates are derived from data for the number of trees and hectares of vines available annually from the ABS publication,  Agricultural Commodities, Australia.
Total cultivated biological resources
 Current prices

 

 

The total current price estimate of cultivated biological resources is the sum of the livestock and orchard growth estimates.

GFCF on cultivated biological resources is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
  The total volume estimate of cultivated biological resources is the sum of the livestock and orchard growth estimates.
Table 10.38 Annual private gross fixed capital formation — Intellectual property products
ItemComment
Research and development
 Description

 

 

Gross fixed capital formation of R&D, as defined in 2008 SNA, consists of the value of expenditures on creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of humankind, culture and society, and use of this stock of knowledge to devise new applications. This does not, however, include human capital as assets within the SNA. It should also be recognised that R&D products are very heterogeneous and not all R&D products are fixed assets and hence their classification should be determined on the economic benefit they are expected to provide in the future. In other words, R&D that does not provide an economic benefit to its owner does not constitute a fixed asset and should be treated as intermediate consumption.

The nature of R&D poses measurement challenges because R&D products are very heterogeneous and not all R&D products are sold in the market. The 2008 SNA recommends that the output of R&D should be valued at market prices if purchased (outsourced) or as the sum of total production costs. R&D undertaken by specialised commercial research laboratories or institutes is valued by receipts from sales, contracts, commissions, fees, etc. R&D undertaken by government units, universities, non-profit research institutes, etc. is non-market production and should be valued on the basis of the total costs incurred excluding a return to capital used.

The ASNA’s treatment of R&D requires a fundamental distinction between R&D services and own account R&D.

The R&D services refer to market transactions in R&D as suggested in the 2008 SNA reference to ‘specialized commercial research laboratories or institutes. The output of these units includes the sale of R&D and is therefore considered other non-market production and hence valued as suggested in 2008 SNA (at the cost of production).

The own account R&D refers to production or R&D undertaken on own account and consists of:

  • Production of R&D by market producers on own account. For example, consider a manufacturing unit producing computer screens and also undertaking R&D to improve methods for computer screen production. This unit will be classified by ANZSIC06 to the Manufacturing Division (where computer screens are primary) and will have output of both computer screens and own account R&D.
  • R&D undertaken by non-market units (either primary production, secondary production or own account).

All output and GFCF of own account R&D is considered to be non-market production and is valued by summing the total production costs. It is also important to note that these costs include intermediate consumption of the R&D product and can be deducted from the GFCF accordingly.

 Current price estimates

 

 

Annual estimates for both own account R&D expenditure and R&D undertaken by other institutions are derived from the ABS Survey of Research and Experimental Development published in Research and Experimental Development, Businesses, Australia with current expenditure estimates calculated as the sum of labour costs and other expenditure.

Estimates of imports and exports of R&D are obtained from Balance of Payments and International Investment Position, Australia , which are directly collected through the Survey of International Trade in Services.

GFCF on R&D is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

The volume of capital expenditure on R&D is calculated by deflating the cost-based expenditure values. These current price estimates are deflated using price indexes for labour inputs and other current expenditure used as inputs into the R&D products.

Mineral and petroleum exploration
 Description

 

 

Mineral and petroleum exploration is the value of expenditures on exploration for petroleum and natural gas and for non-petroleum deposits and subsequent evaluation of the discoveries made. Expenditures on mineral exploration are not treated as intermediate consumption. Whether they are successful or not, they are needed to acquire new reserves and are, therefore, all classified as gross fixed capital formation.

This item covers expenditure on exploration for petroleum (including oil shale), metallic minerals, construction materials, gemstones, and other non-metallic minerals less expenditure on successful bids for offshore petroleum leases (which is regarded as intermediate consumption, not capital formation).

Exploration expenditure covers all exploration activity undertaken on land and in Australia's territorial waters and the continental shelf over which Australia exercises exclusive rights. It includes pre-licence costs, licence and acquisition costs, appraisal costs, expenditure on aerial surveys, (including Landsat photographs), general surveys, report writing, map preparation and other activities indirectly attributable to exploration.

 Current price estimates

 

 

Data on mineral and Petroleum exploration expenditure are obtained from the quarterly publication, Mineral and Petroleum Exploration, Australia.

Annual estimates are obtained by summation of the quarterly series.

GFCF on mineral and petroleum exploration is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates

 

 

Annual data for mineral and petroleum exploration are derived by summing the four quarters of mineral and petroleum exploration estimates obtained from the ABS publication, Mineral and Petroleum Exploration, Australia.

Computer software
 Description

 

 

Computer software consists of computer programs, program descriptions and supporting materials for both systems and applications software. It also includes databases which consist of files of data organised in such a way as to permit resource-effective access and use of the data.

GFCF in computer software can include both the initial in-house development and subsequent extensions of software as well as software purchased on the market.

Software purchased on the market, which is valued at purchasers’ prices, includes both products purchased 'off the shelf' and customised software designed by a specialist for a specific customer. Software developed in-house is valued at its estimated basic price or at its cost of production if it is not possible to estimate the basic price.

GFCF in databases includes the purchase or development of databases that the enterprise expects to use in production over a period of more than one year. Databases may be developed exclusively for own use or for sale as an entity or for sale by means of a licence to access the information contained.

 Current price estimates

 

 

Australian National Accounts: Information and Communication Technology Satellite Account is used to periodically set annual estimates for benchmark years.

For other years, growth rates are calculated from the Economic Activity Survey and applied to the annual estimates for all industries except Financial and Insurance Services. Data on capital and current expenditure of computer software is obtained from the Australian Prudential Regulation Authority for banks and registered financial corporations in order to estimate the Financial and Insurance Services industry.

GFCF on computer software is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
  The current price estimates are deflated using quarterly price indexes, which have been summed to form an annual. The main price index used is the Producer Price Indexes.
Entertainment, literary and artistic originals
 Description
  This item covers the production of originals of films, television programs, music products, and books. 2008 SNA describes the production of entertainment, literary and artistic originals as a two-stage process of which the first stage is the production of the original and the second stage the production and use of copies of the original.
 Current price estimates

 

 

 

 

 

Annual estimates are derived as the sum of the following components:

  • Film and independent television includes master tapes of feature films and independent television drama and documentaries. Capital formation is calculated as the present value of expected future income flows generated from the originals. These flows are discounted to derive the present value of film and television income in any given year.
  • Television (own-account) includes in-house production of programs classified as artistic originals; that is, drama, sporting events and documentaries, by public and private television broadcasters.
  • Recorded music includes master tapes owned by recording companies as used in the production of vinyl records, CDs and cassettes. Capital formation is estimated using a production cost approach. Budgets allocated to develop originals are indicative of expected future returns from those originals.
  • Music publishing covers original musical works produced. Capital formation is estimated by using a market transactions approach. The advance a publisher pays a songwriter or composer on signing best describes the expected future return that the publisher hopes to receive from exploitation of the right assigned to them to use the artistic original, plus the publisher's share of the expected royalties.
  • Literary works covers original manuscripts of books. Capital formation is estimated by a market transactions approach. The lump-sum payment a publisher pays an author is indicative of future benefits the publisher hopes to receive from publishing the literary work.

GFCF on entertainment, literary and artistic originals is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
  The current price estimates are deflated using quarterly price indexes, which have been summed to form an annual. These price indexes include (but are not limited) to the Consumer Price Index and the Producer Price Indexes.
Table 10.39 Annual private gross fixed capital formation — Ownership transfer costs
ItemComment
Description

 

Ownership transfer costs consist of the following components:

  • fees paid to lawyers;
  • fees and commissions paid to real estate agents, auctioneers, architects, surveyors, engineers and valuers;
  • stamp duty; and
  • local government charges.

Ownership transfer costs in the ASNA relate to dwellings, non-dwelling construction, and unoccupied land.

Current price estimates

 

When available, annual estimates for income attributable to real estate agents' commissions and lawyers' conveyancing fees are based on results from the Economic Activity Survey and periodic surveys including Real Estate Agents Industry, Australia; Legal Services, Australia; Accounting Practices, Australia; and Legal and Accounting Services, Australia. For intervening years growth rates in title transfers are used to estimate income from services.

Stamp duties estimates are based on annual Government Finance Statistics (GFS) data, obtained from each state treasury. Local government charges are calculated as a combination of:

  • a fixed-fee component (derived using individual state government schedules);
  • an ad valorem component; and
  • the number of property transfers.

The ad valorem component is calculated based on the median residential property price, and the value at which the ad valorem component is charged per state. The median residential property prices are extracted from Corelogic’s quarterly residential price change data.

Estimates for total ownership transfer costs are allocated to institutional sectors using sectoral estimates of land use in the balance sheets.

GFCF on ownership transfer costs is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

Volume estimates
 Volumes are obtained by quantity revaluing the current price estimates at the state level, using title transfers data obtained from the state titles offices and treasuries. Title transfers exempt from stamp duty are removed from these estimates based on state title office data where available.  Where unavailable, data from the Lending Indicators publication is combined with state specific exemption to estimate the number of transfers exempt from paying stamp duty.
Table 10.40 Annual public gross fixed capital formation — Public corporations
ItemComment
Commonwealth
 Current price estimates

 

 

Government finance statistics is the most important data source used for annual estimates, these are compiled from audited annual returns from the commonwealth department of finance.

Additional data for intellectual property products are sourced from external and internal sources including Research and Experimental Development, Businesses, Australia.

The data collected is by the following assets types:

  • dwellings;
  • non-dwelling construction;
  • machinery and equipment; and
  • intellectual property products (Computer software, mineral and petroleum exploration, artistic originals, and research and development)

Amounts for new and second-hand purchases or disposals are determined in order to derive net second-hand purchases. This allows for the identification of private net sector purchases of fixed capital assets from the public sector which are used in the compilation of private sector gross fixed capital formation.

GFCF undertaken by Commonwealth public corporations is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
  The volume estimates are compiled from current price estimates using price deflation.  Deflation is preformed using a composite deflator made up of various price indexes reflecting the various assets included in the estimate.  The weights of each asset in the composite is based on the current price asset make up.
State and local
 Current price estimates

 

 

Government finance statistics is the most important data source used for annual estimates, these are compiled from audited annual returns from the State treasuries.

Additional data for intellectual property products are sourced from various external and internal sources including Research and Experimental Development, Businesses, Australia.

The data collected is by the following assets types:

  • dwellings;
  • non-dwelling construction;
  • machinery and equipment; and
  • intellectual property products (Computer software, mineral exploration, artistic originals, and research and development)

Amounts for new and second-hand purchases or disposals are determined in order to derive net second-hand purchases. This allows for the identification of private net sector purchases of fixed capital assets from the public sector which are used in the compilation of private sector gross fixed capital formation.

GFCF undertaken by State and local public corporations is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
  The volume estimates are compiled from current price estimates using price deflation.  Deflation is preformed using a composite deflator made up of various price indexes reflecting the various assets included in the estimate.  The weights of each asset in the composite is based on the current price asset make up.
Table 10.41 Annual public gross fixed capital formation — General government
ItemComment
National—defence
 Current price estimates

 

 

Government finance statistics is the most important data source used for annual estimates, these are compiled from audited annual returns from the commonwealth department of finance.

Additional data for intellectual property products are sourced from external and internal sources including Research and Experimental Development, Government and Private Non-Profit Organisations, Australia.

The data collected is by the following assets types:

  • defence weapons systems;
  • dwellings;
  • non-dwelling construction;
  • machinery and equipment; and
  • intellectual property products (Computer software, and research and development)

Defence Weapon Systems built overseas, are reported on a progress payments basis through Government Finance Statistics. Supplementary Balance of Payments and Department of Defence data is used to make adjustments to recognise the acquisition of Defence Weapon Systems when the change of ownership takes place. 

Amounts for new and second-hand purchases or disposals are determined in order to derive net second-hand purchases. This allows for the identification of private net sector purchases of capital from the public sector which are used in the compilation of private sector gross fixed capital formation.

GFCF undertaken by National defence is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
  The volume estimates are compiled from current price estimates using price deflation.  Deflation is preformed using a composite deflator made up of various price indexes reflecting the various assets included in the estimate.  The weights of each asset in the composite is based on the current price asset make up.
National—non-defence
 Current price estimates

 

 

Government finance statistics is the most important data source used for annual estimates, these are compiled from audited annual returns from the commonwealth department of finance as well as annual reports of public universities.

Additional data for intellectual property products are sourced from external and internal sources including Research and Experimental Development, Government and Private Non-Profit Organisations, Australia and from Annual Reports for public broadcasting networks .

The data collected is by the following assets types:

  • dwellings;
  • non-dwelling construction;
  • machinery and equipment; and
  • intellectual property products (Computer software, mineral exploration, artistic originals, and research and development).

Amounts for new and second-hand purchases or disposals are determined in order to derive net second-hand purchases. This allows for the identification of private net sector purchases of capital from the public sector which are used in the compilation of private sector gross fixed capital formation.

GFCF undertaken by National non-defence is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

 Volume estimates
  The volume estimates are compiled from current price estimates using price deflation.  Deflation is preformed using a composite deflator made up of various price indexes reflecting the various assets included in the estimate.  The weights of each asset in the composite is based on the current price asset make up.
State and local
 Current price estimates

 

 

Government finance statistics is the most important data source used for annual estimates, these are compiled from audited annual returns from State treasuries. 

Additional data for intellectual property products are sourced from external and internal sources including  Research and Experimental Development, Government and Private Non-Profit Organisations, Australia.

The data collected is by the following assets types:

  • dwellings;
  • non-dwelling construction;
  • machinery and equipment; and
  • intellectual property products (Computer software, mineral exploration, artistic originals, and research and development)

Amounts for new and second-hand purchases or disposals are determined in order to derive net second-hand purchases. This allows for the identification of private net sector purchases of capital from the public sector which are used in the compilation of private sector gross fixed capital formation.

GFCF undertaken by State and local is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCF estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCF estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

Volume estimates

 

 

The volume estimates are compiled from current price estimates using price deflation.  Deflation is preformed using a composite deflator made up of various price indexes reflecting the various assets included in the estimate.  The weights of each asset in the composite is based on the current price asset make up.

 

Latest year

10.106    Public and private gross fixed capital formation (GFCF) data for the latest financial year is the sum of data reported for the four quarters for both current price estimates and chain volume measures.

Sources and methods - Quarterly

10.107    Quarterly estimates of gross fixed capital formation are primarily disaggregated between the private and public sectors. The private sector GFCF is presented by type of asset. The public sector GFCF is initially split by institutional sector (i.e. public corporations and general government). These are further disaggregated into National (which is further split between defence and non-defence) and State and local, which are combined.

10.108    The adjustments that are made to the public sector annual estimates to ensure consistency with 2008 SNA are also applied to the quarterly estimates.

10.109    The tables below outline the data sources and methods used in the estimation of quarterly GFCF by asset type for the private sector and level of government for the public sector. They include both the current price estimates and volume estimates.

Table 10.42 Quarterly private gross fixed capital formation — Dwellings
ItemComment
Description

 

 

Gross fixed capital formation on dwellings consists of the value of acquisitions of new and existing (used) dwellings less the value of disposals of existing dwellings.

It also includes the value of dwellings created by the conversion of existing non-dwelling buildings to dwellings, and the value of alterations and additions to existing dwellings.

Dwellings are buildings, or designated parts of buildings, that are used entirely or primarily as residences, including any associated structures regarded as fixed assets, such as garages, and all permanent fixtures customarily installed in residences. Houseboats, barges, mobile homes and caravans used as principal residences of households are also included and are regarded as fixed assets, as are public monuments identified primarily as dwellings.

The costs of clearing and preparing the site for construction are part of the costs of new dwellings (and non-dwelling construction) and are therefore included in the value of the buildings.

Incomplete dwellings are included to the extent that the ultimate user is deemed to have taken ownership, either because the construction is on own-account or as evidenced by the existence of a contract of sale or purchase.

All dwellings are treated as an asset, all dwellings must give rise to housing services that are included within the production boundary, regardless of whether the dwellings are occupied by the owners or rented on the market.

In the ASNA, private gross fixed capital formation for dwellings is presented with two sub-components: new and used dwellings and alterations and additions.

Current price estimates

 

 

These are primarily based on the value of work done during the period on new residential buildings and on alterations and additions to residential buildings sourced from the quarterly Building Activity Survey (BACS).

This survey covers both public and private sector activity. Dwellings may be purchased by public housing authorities from private builders after being classified as private sector construction. To avoid incorrect classification of completed dwellings, estimates of GFCF for dwellings by the public sector are sourced from Government Finance Statistics. Public expenditure (which also allows for net sales of existing dwellings to the private sector) is deducted from total GFCF for dwellings to derive the correct value for the private sector.

 Private new dwellings

 

 

Estimates are constructed using new residential building data from BACS plus modelled estimates for net expenditure on new dwellings not included within the scope of the BACS (e.g. dwellings on rural properties not requiring local government permits, existing commercial premises converted to dwelling use and caravans bought for use as dwellings) and modelled estimates for services involved in the dwelling construction (e.g. architects' and other professional fees), but excluding ownership transfer costs.

 General Government and Public Corporations - New Dwellings

 

 

Estimates are obtained from Government Finance Statistics from the following Economic Type Framework (ETF) item, Purchases of new assets (ETF 2221) in respect of dwellings (Type of Asset Code 111).

State level estimates are constructed by allocating each State/Territory Level of Government to the relevant state. Estimates for the National jurisdiction are allocated using a proportion based on public employment from the Survey of Employment and Earnings (SEE).

 General Government and Public Corporations - Used Dwellings

 

 

State estimates are obtained directly from Government Finance Statistics by summing the following ETF categories in respect of Dwellings (ETF Type of Asset Code 111):

  • purchases of second-hand non-financial assets (ETF 2222);
  • assets acquired under finance leases (ETF4101); and
  • acquisitions of non-financial assets below fair value (ETF 1152)

minus

  • sales of non-financial assets (ETF 2223); and
  • donations (ETF 1252).

State level estimates are constructed by allocating each State/Territory Level of Government to the relevant state. Estimates for the National jurisdiction are allocated in proportion to employment from the Survey of Employment and Earnings.

 Private used dwellings

 

 

Estimates for the public sector are used to estimate values for the private sector. By way of example, if the general government sector sells two used dwellings for $300k each (one to the private sector and one to a public non-financial corporation) while a public non-financial corporation purchases a used dwelling from the private sector for $275k, estimates derived from Government Finance Statistics will generate -$600k for the general government sector and $575k (= $300k + $275k) for public non-financial corporations. Estimates for the private sector will be set equal to $25k to reflect this sector's net purchases.

It should be noted that dwellings are not allocated to a specific industry; however, they are shown as ownership of dwellings.

 Total private new and used dwellings

 

 

Sum of the total value of dwellings from the quarterly Building Activity Survey (BACS) (including public) less purchases by general government plus sales by general government.

 Alterations and Additions

 

 

Alterations and additions to existing dwellings are estimated using data from the BACS, and BIS Oxford Economics.

BACS provides estimates of the value of work done on alterations and additions with an approval value of $10,000 or more. As a significant part of alterations and additions activity is not covered in the BACS, estimates from BIS Oxford Economics data are used to ensure complete coverage of expenditure on alterations and additions.

State estimates are constructed using Alterations and additions to residential buildings from the BACS and applying a modeled estimate to account for work not captured by this survey (e.g. alterations and additions undertaken with an approval value below $10,000, do-it yourself (DIY) work not requiring a local government permit).

Volume estimates

 

 

Current price estimates of gross fixed capital formation for dwellings are deflated at the State level for each of the three categories: private houses; other dwellings; and alterations and additions, to express them in the prices of the previous year.

These estimates are then aggregated to form volume estimates for new and used dwellings and alterations and additions for Australia, and total dwellings for Australia and each State.

The resulting estimates expressed in the previous period prices are linked to form chain volume measures.

 New and used dwellings

 

 

Current price estimates are deflated using composite state-specific price indexes with each State index derived as a weighted average of a price index for contract-built houses and a price index for other than contract-built houses using the Producer Price Index (PPI) for Outputs of House Construction.

Contract-built house price indexes are derived as a two-quarter ending moving average (i.e. an average of the current quarter and the previous quarter) of the PPI for Outputs of House Construction for the respective state and territory.

The other than contract-built house price indexes are derived as a four quarter ending moving average (i.e. an average of the current quarter and the three preceding quarters) of the PPI for Outputs of House Construction for the respective state and territory.

The two groups for contract-built and other types of dwelling construction are used to reflect the different lags between when prices are determined and when the work is done.

 Alterations and additions
  Current price estimates are deflated by applying a two quarter ending moving average of the Producer Price Index (PPI) for Outputs of House Construction to the respective State current price estimates.
Table 10.43 quarterly private gross fixed capital formation — Non-dwelling construction
ItemComment
Description

 

 

Gross fixed capital formation in non-dwelling construction is recorded as the value of the acquisitions of new and existing non-dwelling buildings and structures, less the value of the disposals of existing non-dwelling buildings and structures, and the value of alterations and additions to existing non-dwelling buildings and structures.

Non-dwelling construction comprises of three components: new building, new engineering construction and net purchases of second-hand assets.

  • New building consists of buildings that are not designated as dwellings. Fixtures, facilities and equipment that are integral parts of the structures are included. Examples of non-residential buildings include warehouses and industrial buildings, commercial buildings, buildings for public entertainment, hotels, restaurants, schools, hospitals, prisons etc.
  • New engineering construction includes civil engineering works, such as highways, streets, roads, railways and airfield runways; bridges, elevated highways, tunnels and subways; waterways, harbours, dams and other waterworks; long-distance pipelines, communication and power lines; local pipelines and cables, ancillary works; constructions for mining and manufacture; and constructions of sport and recreation facilities; and.
  • Net purchases of second-hand assets consist of the purchase and sale of existing non-dwelling buildings and structures.
Current price estimates
 New non-dwelling buildings

 

 

The main source is the quarterly Building Activity Survey (BACS). This survey covers work done on private sector owned non-residential building valued at $50,000 or more.

The following adjustments are made:

  • for work done on non-residential building with an approval value of less than $50,000;
  • where approvals are not obtained such as for farm buildings; and
  • for services involved in the construction of the building such as architect fees.
 New engineering construction

 

 

The main source is the Engineering Construction Survey (ECS). As farm non-dwelling construction is not included in the ECS, adjustments are made to capital formation to estimate expenditure of farm on non-dwelling construction.

New engineering construction GFCF completed overseas is not captured in the ECS collection until the assets are fixed in place. Balance of Payments and the Survey of New Capital Expenditure data are used to make adjustments to recognise the progressive transfer of ownership for large mining projects built overseas.
 Net purchases of second-hand assets
  The estimates from both the BACS and the ECS are adjusted to reflect net purchases of second-hand assets from the public sector by using Government Finance Statistics data.
 Total private non-dwelling construction
  New building (BACS private for private) plus engineering construction (ECS private for private) plus net purchases of second-hand assets from the public sector.
Volume estimates

 

 

Current price estimates of gross fixed capital formation for non-dwelling construction are deflated at the State level for each component.

 New non-dwelling buildings
  State specific price indexes are derived as a three quarter ending moving average of new building price indexes compiled by the ABS.
 New engineering construction
  

Current price estimates are deflated using a composite of price indexes for roads, dams, sewerage, electricity infrastructure and telecommunications infrastructure. For all but road construction, these price indexes are derived for Australia only.

The price indexes used are from sourced from ABS publications:  Producer Price Indexes, Australia; Wage Price Index, Australia; and the Consumer Price Index, Australia.
 Net purchases of second-hand assets
  Current price estimates are deflated for each State using the State specific implicit price deflator of the aggregate of private new non-dwelling building and new engineering construction.
Table 10.44 Quarterly private gross fixed capital formation — Machinery and equipment
ItemComment
Description

 

 

Gross fixed capital formation in machinery and equipment is recorded as the value of the acquisitions of new and existing machinery and equipment, less the value of the disposals of existing machinery and equipment.

ASNA’s machinery and equipment mirrors the 2008 SNA concept.

In the ASNA, private gross fixed capital formation in machinery and equipment is presented with two sub-components: new machinery and equipment and net purchases of second-hand assets.

Current price estimates
 New machinery and equipment

 

 

The main data source is the Survey of New Capital Expenditure (Private New Capital Expenditure and Expected Expenditure, Australia). This survey provides estimates of new capital expenditure by private businesses for selected industries.

The following outlines adjustments that are made to industries that are out of scope of the survey:

  • Agriculture, Forestry and Fishing industry - import statistics from International Trade in Goods and Services, Australia are used; and
  • Public Administration and Safety, - estimates are obtained by applying the average movement of the industries covered in the ABS Survey of New Capital Expenditure.

Data from the Survey of New Capital Expenditure is also used to calculate industry weights for both new machinery and equipment and net purchases of second-hand assets.

 Net purchases of second-hand assets

 

 

Net purchase of second-hand assets covers the purchases of second-hand assets from the public sector (which are added to private GFCF), used motor vehicle sales from businesses to households and used equipment sold overseas (both of which are deducted from private GFCF).

An estimate of the value of net purchases of second-hand assets from the public sector is derived using data from quarterly surveys of public financial and non-financial corporations and Government Finance Statistics data for general government units.

An estimate of the value of motor vehicle sales from businesses to households is deducted. This estimate is first derived on an annual basis using a Perpetual Inventory Method of the stock of vehicles incorporating data from the ABS Survey of Motor Vehicle Use and motor vehicle sales data available through the VFACTS services. Quarterly estimates are then interpolated and extrapolated according to new motor vehicle sales.

An estimate of the value of used equipment sold overseas is also deducted. This estimate is derived from the international trade statistics.

Volume estimates

 

 

Current price estimates of GFCF for new machinery and equipment and net purchases of second-hand machinery and equipment are deflated at the State level using State-specific chain price indexes.

The price indexes used for deflation are sourced from ABS publications,  Consumer Price Index, Australia; Producer Price Indexes, Australia; International Trade Price Indexes, Australia; and several price indexes from overseas, including the hedonic computer price index published by the US Bureau of Economic Analysis (BEA).

Table 10.45 Quarterly private gross fixed capital formation — Cultivated biological resources
ItemComment
Description

 

Cultivated biological resources include animal resources (livestock) and tree, crop and plant resources (orchard growth) yielding repeat products whose natural growth and regeneration are under the direct control, responsibility and management of an institutional unit.

Livestock (cattle, pigs, horses and sheep) includes breeding stocks, dairy cattle, draft animals, sheep or other animals used for wool production and animals used for transportation, racing or entertainment.

Orchard growth includes all fruit and nut bearing plants such as trees, vines, bushes, shrubs etc. (i.e. any plant that can produce a marketable quantity of fruit for more than one year where the grower intends to obtain a future benefit from the sale of the fruits grown).

GFCF for livestock is measured by the total value of all acquisitions of mature and immature animals produced on own account by users of the livestock less the value of their disposal. Disposals consist of animals sold or otherwise disposed of, including those sold for slaughter, plus those animals slaughtered by their owners. Exceptional losses of animals due to major outbreaks of disease, contamination, drought, or other natural disasters are recorded in the Other changes in the volume of assets account and not as disposals. Incidental losses of animals due to occasional deaths from natural causes form part of consumption of fixed capital.

GFCF for orchard growth consists of the value of all acquisitions of mature and immature trees, shrubs, etc., produced on own account, less the value of their disposals. Disposals consist of trees, shrubs, etc., sold or otherwise transferred to other units plus those cut down before the end of their service lives. Disposals do not include exceptional losses of trees due to drought or other natural disasters such as gales or hurricanes, these being recorded in the Other changes in the volume of assets account.

Current price estimates

 

Quarterly estimates of cultivated biological resources are interpolated and extrapolated from the annual estimates using a harvest model to create the seasonal pattern. Refer to table 10.37 for the main inputs into the model. In addition to the annual inputs quarterly data is sourced from the Department of Agriculture, Water and Environment (ABARES), agricultural commodities and trade data publication.

Volume estimates
 Quarterly estimates of cultivated biological resources are interpolated and extrapolated from the annual estimates using a harvest model to create the seasonal pattern.
Table 10.46 Quarterly private gross fixed capital formation — Intellectual property products
ItemComment
Research and development
 Description

 

 

Gross fixed capital formation of R&D, as defined in 2008 SNA, consists of the value of expenditures on creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and use of this stock of knowledge to devise new applications. This does not, however, include human capital as assets within the SNA. It should also be recognised that R&D products are very heterogeneous and not all R&D products are fixed assets and hence their classification should be determined by the economic benefit they are expected to provide in the future. In other words, R&D that does not provide an economic benefit to its owner does not constitute a fixed asset and should be treated as intermediate consumption.

The nature of R&D poses measurement challenges because R&D products are very heterogeneous and not all R&D products are sold in the market. The 2008 SNA recommends that the output of R&D should be valued at market prices if purchased (outsourced) or at the sum of total production costs. R&D undertaken by specialised commercial research laboratories or institutes is valued by receipts from sales, contracts, commissions, fees, etc. R&D undertaken by government units, universities, non-profit research institutes, etc. is non-market production and should be valued on the basis of the total costs incurred excluding a return to capital used.

The ASNA’s treatment of R&D requires a fundamental distinction between R&D services and own account R&D.

The R&D services refer to market transactions in R&D as suggested in the 2008 SNA reference to ‘specialized commercial research laboratories or institutes. The output of these units includes the sale of R&D and is therefore considered other non-market production and hence valued as suggested in 2008 SNA (at the cost of production).

The own account R&D refers to production or R&D undertaken by own account and consists of:

  • Production of R&D by market producers on own account. For example consider a manufacturing unit producing computer screens and also undertaking R&D to improve methods for computer screen production. This unit will be classified by ANZSIC06 to the Manufacturing Division (where computer screens are primary) and will have output of both computer screens and own account R&D.
  • R&D undertaken by non-market units (either primary production or own account).

All output and GFCF of own account R&D is considered to be non-market production and is valued by summing the total production costs. It is also important to note that these costs include intermediate consumption of the R&D product and should be deducted from the GFCF accordingly.

 Current price estimates
  Quarterly estimates of R&D are interpolated and extrapolated from the annual estimates using linear trend methodology.
 Volume estimates
  Quarterly estimates of R&D are interpolated and extrapolated from the annual estimates using linear trend methodology.
Mineral and petroleum exploration
 Description

 

 

Mineral and petroleum exploration is the value of expenditure on exploration for petroleum and natural gas and for non-petroleum deposits and subsequent evaluation of the discoveries made. Expenditure on mineral exploration is not treated as intermediate consumption. Whether they are successful or not, they are needed to acquire new reserves and are, therefore, all classified as gross fixed capital formation.

This item covers expenditure on exploration for petroleum (including oil shale), metallic minerals, construction materials, gemstones, and other non-metallic minerals less expenditure on successful bids for offshore petroleum leases (which is regarded as intermediate expenditure, not capital formation).

Exploration expenditure covers all exploration activity undertaken on land and in Australia's territorial waters and the continental shelf over which Australia exercises exclusive rights. It includes pre-licence costs, licence and acquisition costs, appraisal costs, expenditure on aerial surveys, (including Landsat photographs), general surveys, report writing, map preparation and other activities indirectly attributable to exploration.

 Current price estimates
  Quarterly estimates are obtained from the ABS publication, Mineral and Petroleum Exploration, Australia.
 Volume estimates
  Current price estimates are deflated using a composite price index of the Wage Price Index (ANZSIC Division B Mining) and the Producer Price Indexes (PPI) (for equipment and material categories associated with exploration—steel pipes and tubes, non-ferrous pipe fittings, iron and steel casting and forging, and other industrial machinery).
Computer software
 Description

 

 

Computer software consists of computer programs, program descriptions and supporting materials for both systems and applications software. It also includes databases which consist of files of data organised in such a way as to permit resource-effective access and use of the data.

Gross fixed capital formation in computer software can include both the initial in-house development and subsequent extensions of software as well as software purchased on the market.

Software purchased on the market, which is valued at purchasers’ prices, includes both products purchased 'off the shelf' and customised software designed by a specialist for a specific customer. Software developed in-house is valued at its estimated basic price or at its cost of production if it is not possible to estimate the basic price.

GFCF in databases includes the purchase or development of databases that the enterprise expects to use in production over a period of more than one year. Databases may be developed exclusively for own use or for sale as an entity or for sale by means of a licence to access the information contained.

 Current price estimates
  Quarterly estimates of computer software are interpolated and extrapolated from the annual estimates using linear trend methodology.
 Volume estimates
  Current price estimates are deflated using the Producer Price Indexes.
Entertainment, literary and artistic originals
 Description
  This item covers the production of originals of films, television programs, music products, and books. The 2008 SNA describes the production of entertainment, literary and artistic originals as a two-stage process of which the first stage is the production of the original and the second stage the production and use of copies of the original.
 Current price estimates
  Quarterly estimates for film, television and recorded music are interpolated and extrapolated from the annual estimates using linear trend methodology.
Volume estimates

 

 

Current price estimates are deflated as follows:

  • Film and television: current price estimates of gross fixed capital formation for film and television originals are deflated using a price index for entertainment services (Consumer Price Index, Australia)) as the future revenue/ royalty streams are likely to be driven by box office sales.
  • Music originals: current price estimates of gross fixed capital formation for music originals are deflated using the All groups CPI (Consumer Price Index, Australia).
  • Literary works: current price estimates of gross fixed capital formation for literary originals are deflated using the PPI component index for books, newspapers and magazines (Producer Price Indexes, Australia).
Table 10.47 Quarterly private gross fixed capital formation — Ownership transfer costs
ItemComment
Description

 

Ownership transfer costs consist of the following components:

  • fees paid to lawyers;
  • fees and commissions paid to real estate agents, auctioneers, architects, surveyors, engineers and valuers;
  • stamp duty; and
  • local government charges.

Ownership transfer costs in the ASNA relate to dwellings, non-dwelling construction, and unoccupied land.

Current price estimates

 

Quarterly estimates for lawyers' fees are derived from annual benchmarks using movements in State data for the number and value of real estate transactions.

Quarterly estimates for real estate agents' commissions are derived based on the number of title transfers and an average fee per dwelling by state.

Periodic changes in scheduled fees are taken into account as well as changes in average charges from the declining rate schedules that generally apply.

Data on the number of transactions are obtained from State Titles Offices (Land Title Transfers) and median residential property prices are sourced from Corelogic quarterly change in dwelling values data.

Stamp duty estimates are based on quarterly Government Finance Statistics data sourced from  state government treasuries. Local government charges are estimated from the number of transactions occurring in each quarter and state government land registry fees .

Volume estimates

 

Volume estimates for ownership transfer costs are derived by quantity revaluation at the State level, using title transfers data obtained from the State Title Offices and Treasuries.  Title transfers exempt from stamp duty are removed from these estimates based on state title office data where available.  Where unavailable, data from the Lending Indicators publication is combined with state specific exemptions to estimate the number of transfers exempt from stamp duty.

Table 10.48 Quarterly public gross fixed capital formation — Public corporations
ItemComment
Commonwealth
 Current price estimates

 

 

The most important quarterly data source is Government Finance Statistics which is obtained from individual returns from Commonwealth public non-financial corporations.

Estimates for intellectual property products are estimated using a linear trend interpolation to split the annual value over the four quarters.  These are then added to the estimated total of dwellings, non-dwelling construction, and machinery and equipment.

Amounts for new and second-hand purchases or disposals are determined in order to derive net second-hand purchases. This allows for the identification of private net sector purchases of capital from the public sector which are used in the compilation of private sector gross fixed capital formation.

 Volume estimates
  The volume estimates are compiled from current price estimates using price deflation.  Deflation is performed using a composite deflator made up of various price indexes reflecting the various assets included in the estimate.  The weights of each asset in the composite deflator is based on the current price asset make up.
State and local
 Current price estimates

 

 

The most important quarterly data source is Government Finance Statistics which is obtained from a mixture of centralised quarterly returns from State and Territory treasuries for approximately half the jurisdictions, while survey forms from individual public corporations make up the remainder of the source data.

Estimates for intellectual property products are estimated using a linear trend interpolation to split the annual value over the four quarters.  These are then added to the estimated total of dwellings, non-dwelling construction, and machinery and equipment.

Amounts for new and second-hand purchases or disposals are determined in order to derive net second-hand purchases. This allows for the identification of private net sector purchases of capital from the public sector which are used in the compilation of private sector gross fixed capital formation.

 Volume estimates
  The volume estimates are compiled from current price estimates using price deflation.  Deflation is performed using a composite deflator made up of various price indexes reflecting the various assets included in the estimate.  The weights of each asset in the composite is based on the current price asset make up.
Table 10.49 Quarterly public gross fixed capital formation — General government
ItemComment
National—defence
 Current price estimates

 

 

The most important quarterly data source is Government Finance Statistics which is obtained from quarterly returns from Commonwealth Department of Finance.

Defence Weapon Systems built overseas, are reported on a progress payments basis through Government Finance Statistics. Supplementary Balance of Payments and Department of Defence data is used to make adjustments to recognise the acquisition of Defence Weapon Systems when the change of ownership takes place. 

Estimates for intellectual property products are estimated using a linear trend interpolation to split the annual value over the four quarters. These are then added to the estimated total of dwellings, defence weapons systems, non-dwelling construction, and machinery and equipment.

Amounts for new and second-hand purchases or disposals are determined in order to derive net second-hand purchases. This allows for the identification of private net sector purchases of capital from the public sector which are used in the compilation of private sector gross fixed capital formation.

 Volume estimates
  The volume estimates are compiled from current price estimates using price deflation.  Deflation is performed using a composite deflator made up of various price indexes reflecting the various assets included in the estimate.  The weights of each asset in the composite is based on the current price asset make up.
National—non-defence
 Current price estimates

 

 

The most important quarterly data source is Government Finance Statistics which is obtained from quarterly returns from Commonwealth Department of Finance and a  census of public universities.

Estimates for intellectual property products are estimated using a linear trend interpolation to split the annual value over the four quarters. These are then added to the estimated total of dwellings, non-dwelling construction, and machinery and equipment.

Amounts for new and second-hand purchases or disposals are determined in order to derive net second-hand purchases. This allows for the identification of private net sector purchases of capital from the public sector which are used in the compilation of private sector gross fixed capital formation.

 Volume estimates
  The volume estimates are compiled from current price estimates using price deflation.  Deflation is performed using a composite deflator made up of various price indexes reflecting the various assets included in the estimate.  The weights of each asset in the composite is based on the current price asset make up.
State and local
 Current price estimates

 

 

The most important quarterly data source is Government Finance Statistics which is obtained from quarterly returns from state and territory treasuries as well as a 20 percent sample of local governments.

Estimates for intellectual property products are estimated using a linear trend interpolation to split the annual value over the four quarters. These are then added to the estimated total of dwellings, non-dwelling construction, and machinery and equipment.

Amounts for new and second-hand purchases or disposals are determined in order to derive net second-hand purchases. This allows for the identification of private net sector purchases of capital from the public sector which are used in the compilation of private sector gross fixed capital formation.

 Volume estimates
  The volume estimates are compiled from current price estimates using price deflation. Deflation is performed using a composite deflator made up of various price indexes reflecting the various assets included in the estimate.  The weights of each asset in the composite is based on the current price asset make up.

Changes in inventories

Concept

10.110   Changes in inventories are measured by the value of the entries into inventories less the value of withdrawals and less the value of any recurrent losses of goods held in inventories during the accounting period.

10.111   Changes in inventories are defined to include changes in holdings of:

  • goods for sale, whether of own production or purchased for resale;
  • work-in-progress; and
  • raw materials and stores to be used as intermediate inputs into production.

10.112    It should be noted that work-in-progress on cultivated biological resources is recorded for single use resources only, that is, plants, trees and livestock that produce an output once only (e.g. when the plants and trees are cut down or uprooted or the livestock slaughtered). For repeat yield resources (e.g. livestock producing milk, wool, etc. and fruit and nut trees), that are cultivated on own account or under an agreed contract with another enterprise, the growth is counted as fixed capital formation and is excluded from inventories. Any remaining cultivation of resources with repeat yields, such as nurseries and breeding of racehorses, is treated as work-in-progress.

10.113    Work which has commenced and is ongoing for structures, including dwellings, and on other forms of construction (e.g. roads, dams, ports) is excluded from inventories and included in GFCF. However, work on incomplete heavy machinery and equipment (e.g. shipbuilding) is included in changes in inventories. Land and financial assets are not regarded as inventories.

Valuation of changes in inventories

10.114    The value of inventories recorded in business accounts at the end of each accounting period is known as the book value. Period to period changes in the book value of inventories can be calculated by deducting the book value of inventories at the end of the previous accounting period from the book value at the end of the current accounting period.

10.115    For national accounting purposes, the physical changes in inventories during a period should be valued at the prices prevailing at the time that inventory change occurs. Therefore, the goods transferred out of inventories (i.e. raw materials and stores) are valued at purchasers' prices current at the time of the withdrawal from inventories. Finished goods transferred into inventories are valued as if they were sold at that time and additions to work-in-progress are given the value they have at the time they are added to inventories.

10.116    In practice, many businesses adopt historical cost measurement whereby inventories are valued at the lower of cost or market prices. Beginning-of-period inventories are valued at costs or prices prevailing at the beginning of the accounting period, and end-of-period inventories are valued at costs or prices prevailing at the end of the period. As a result, in periods of rising prices the book value of inventories will frequently include an element of capital gain, even if there has been no change in the physical quantity of inventories held. Conversely, if prices are falling, the book value of inventories will include an element of capital loss even with no change in the quantity of inventories on hand. Therefore, in times of rising prices, the change in the book value measured on a historical cost basis will include both the value of the physical increase or decrease in inventories and an increase in value due to the effect of rising prices on the value of inventories held. The latter effect is an element of holding gain (or holding loss if prices are falling), which should be excluded from changes in inventories and included in revaluations.

10.117    In the ASNA, an inventory valuation adjustment (IVA) is made to remove the effects of such gains or losses from book values of changes in inventories. As initial estimates of gross operating surplus incorporate the effect of the value of inventories derived on a historical cost basis, the IVA is also deducted from those estimates.

10.118    There are several methods used to measure inventories in business accounts. These include:

  • First in first out (FIFO) – items held in store for the longest time are assumed to be the first to be drawn from store, so that inventories will consist of the most recently acquired items.
  • Last in first out (LIFO) – this system uses the opposite assumption to FIFO. The most recently acquired items are assumed to be the first drawn from store, so that inventories consist of the items first purchased.
  • Historical cost – inventories are valued at the actual cost of acquisition, with no allowance for inflation.
  • Current cost – inventories are valued at replacement cost, rather than the cost of acquisition. This measure is generally derived by adjusting values obtained under historical cost for the effect of inflation.
  • Average cost – running totals are held of the value and volume of inventories. The average price of goods held in inventories is recalculated periodically; for example, when new goods are received. Any subsequent withdrawal from inventories is then made at that price until the average is recalculated.
  • Standard cost – under a standard cost system, items held in stock are each given a unit value, which may be based on recent costs, current costs, or expected future costs. Once this standard has been set, the value of a company's inventories is determined by multiplying the quantity of each commodity in stock by its standard cost. The standard is generally maintained for a fixed period (usually a company's financial year), or until changing prices make the standard inappropriate for current conditions.

10.119    The current methodology underlying the derivation of the IVA in the ASNA assumes that businesses generally value their inventories at historical cost and employ the FIFO method of handling inventories.

10.120    In general, the IVA is calculated in three basic steps:

  1. an estimate is made of the value of inventories at constant prices at the end of each quarter by revaluing end of quarter book values to base year prices using price indexes; the value of changes in inventories at constant prices is then derived as the difference between successive end of quarter levels;
  2. the estimates of the values of changes in inventories at constant prices are multiplied by price indexes that reflect current quarter average prices; this calculation gives an estimate of the physical change in inventories at average current quarter prices; and
  3. the IVA is the difference between the value of changes in the book value of inventories obtained from business accounting records and the value of changes in inventories estimated in 2.

10.121    The following table illustrates how the IVA is calculated by way of an example.

Example of the calculation of the IVA
(1) Change in book value
Book value of inventories at end of quarter (t)=51,000
Book value of inventories at end of quarter (t+1)=55,056
Change in book value=4,056
Base of price index=100
Price index at end of quarter (t)=120
Price index at end of quarter (t+1)=124
Average price index for quarter (t+1)=122
(2) Revaluation to constant prices
Constant price levelbook value ÷ price index x 100
End quarter (t)51,000 ÷ 120 x 10042,500
End quarter (t+1)55,056 ÷ 124 x 10044,400
Constant price change in inventories44,400- 42,5001,900<
(3) Revaluation to current quarter prices
Change in inventories at current quarter prices=change at constant prices x average price index for current quarter ÷ 100
 =1,900 x 122 ÷ 100
 =2,318
(4) Derivation of the IVA
IVA=change in book value - physical change at current quarter prices
 =4,056 - 2,318
 =1,738

10.122    Beside the assumption that book values are based on historical cost and FIFO conventions, the method used to estimate the IVA rests on four other assumptions:

  1. sales prices for finished goods held in inventories can be used to adjust inventory levels valued at cost; that is, the selling price of finished goods is established as a fixed mark-up on the costs incurred in the current quarter;
  2. each commodity (or group of commodities) held in inventories has a fixed turnover period; that is, the ratios 'inventory level of materials to value of purchases' and 'inventory level of finished goods to value of sales' remain constant for each commodity;
  3. the commodity composition of inventories held by any particular industry remains fixed; and
  4. the rate of physical increase (or decrease) in inventories is constant throughout the quarter.

Sources and methods - Annual

Benchmark years

10.123    Annual S-U benchmarks for change in inventories are economy-wide and are not split by industry or sector. Unbenchmarked values of changes in inventories are calculated from quarterly data for three sectors: private non-farm; farm; and public authorities. The sources and methods relating to calculation of the total changes in inventories (i.e. the S-U benchmarks) and each of the sectoral categories (including how they are benchmarked to the S-U benchmark) are discussed in the tables that follow.

Table 10.50 Annual changes in inventories - Total
ItemComment
Current price

 

The Economic Activity Survey (EAS) is the source for the private sector as well as public non-financial corporations. EAS provides the following data:

  • raw materials;
  • work-in-progress;
  • and finished goods.

Government Finance Statistics is the source for the general government sector changes in inventories. It provides changes in inventories in total which is allocated to industry in proportion to government output.

Changes in inventories of raw materials are classified to the IOPC level by applying the proportion of the inventory products of intermediate use from the input and output tables to the total changes in inventories of raw materials.

Changes in inventories of work-in-progress and finished goods for all industries are classified to the IOPC level by applying the proportion of the inventory products of supply from the input and output tables to the total changes in inventories of work-in-progress and finished goods. The IOPC level data for all changes in inventories components are aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The inventories’ estimates at the SUPC level, are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial inventories estimate to obtain a balance between supply and use.

The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

Chain volume measures
 Current price estimates of inventories at the IOPC level are deflated using the supply deflator for that IOPC.
Table 10.51 Annual changes in inventories - Private non-farm inventories
ItemComment
Current price
 The difference between the annual S-U benchmark for changes in inventories and the sum of the unbenchmarked quarterly estimates for each year is derived. This difference is then prorated across the following categories of private non-farm change in inventories: mining, manufacturing, wholesale trade and retail trade.
Chain volume measures

 

The most successful means of deriving chain volume changes in inventories has been found to be differencing chained estimates of the levels. The steps involved are as follows:

  1. Re-value quarterly book value levels to levels valued in the prices of the previous year;
  2. Sum to the required level of aggregation;
  3. Calculate quarter to quarter indexes which show the volume growth in levels between the present and previous quarter;
  4. Compound these indexes to form a chained index;
  5. Reference the chained index to the June quarter book value level of the reference year to give a chain volume series of levels; and
  6. Difference the resultant values to derive the chain volume estimates of changes in inventories.

The price indexes that are used to re-value book value levels of inventories are formed by weighting together component price indexes from ABS publications: Consumer Price Index, Australia; Producer Price Indexes, Australia; and International Trade Price Indexes, Australia. The regimen and weights for these price and wage price indexes are derived using data from the various censuses and surveys conducted by the ABS.

Chain volume estimates of changes in private non-farm inventories are published in the following detail in the national accounts:

  • mining;
  • manufacturing;
  • wholesale trade;
  • retail trade; and
  • other non-farm industries.

It is noteworthy that, unlike other national accounts aggregates, quarterly chaining and annual chaining of volumes of changes in inventories produce identical annual chain volume estimates of changes in inventories. This is because chain volume estimates of changes in inventories are derived by differencing the chain volume estimates of the levels of inventories which relate to the end of quarterly and annual periods and coincide for the June quarter.

Table 10.52 Annual changes in inventories - Farm inventories
ItemComment
Current price

 

Changes in farm inventories include changes in:
 

  • inventories held on farms (including wool, wheat, barley, oats, maize, sorghum, hay, fertiliser, apples and pears, and livestock);
  • produce (e.g. vegetables) held in cold store where ownership remains with the primary producer.

Annual changes in the book value of inventories of wool are estimated as the difference between inventory levels based on available information obtained from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Australian Wool Exchange (AWEX), and various ABS agricultural statistics. Annual changes in the book value of inventories of apples and pears are estimated as the difference between inventory levels, which was modelled from data provided by the Tasmanian Department of Primary Industries, Parks, Water and Environment.

Annual changes in the book value of inventories of grain crops held on farms are derived as the difference between the value of production and disposals; that is, exports and domestic usage of the various commodities. Annual values of gross value of farm production of crops are obtained from the ABS publication, Value of Agricultural Commodities Produced, Australia and ABARES publication, Agricultural Commodities. Disposals are estimated from export statistics, estimates of seed purchased or retained on farms for use as seed or fodder, and materials used in manufacturing statistics, which are modelled from data obtained from the ABS publications, International Trade in Goods and Services, Australia, Value of Agricultural Commodities Produced, Australia and the Quarterly Business Indicators Survey. Although exports data are available quarterly from ABS trade statistics, various indicators must be used to derive quarterly data relating to production of grain crops. For example, annual data on gross value of production and on seed and fodder use are allocated to quarters according to fixed proportions based on harvest and planting seasons and assumed seasonal requirements for fodder.

Animals reared for slaughter are regarded as work-in-progress. The estimates are derived from numbers of animals collected annually by the ABS, and prices from the Australian Bureau of Agricultural and Resource Economics and Sciences. Animals reared for breeding purposes or recurrent production (such as dairy cattle and sheep reared for wool production) are regarded as gross fixed capital formation.

Chain volume measures

 

The techniques used to calculate chain volume estimates of changes in farm inventories are only slightly different to those shown above for private non-farm inventories. The difference is that for many of the detailed components of the former it is difficult to obtain true book value levels of inventories. Therefore, constant price estimates of changes in inventories that preceded the introduction of chain volume estimates are used in the calculations.

The steps followed are:

  1. Derive constant price levels of inventories for each component by accumulating the constant price changes over time and add these to a base level (i.e. the level at a particular time for which there is an estimate). The base level is often only an approximation of the true level and is sometimes only derived as a figure which will ensure that subsequent levels remain positive. These constant price levels are then converted to levels valued in the prices of the previous year;
  2. Sum to the required level of aggregation;
  3. Calculate quarter to quarter indexes which show the volume growth in levels between the present and previous quarter;
  4. Compound these indexes to form a chained index;
  5. Reference the chained index to the June quarter book value level of the reference year to give a chain volume series of levels; and
  6. Difference the resultant values to derive the chain volume estimates of changes in inventories.

For farm commodities, the price indexes used to convert constant price levels into levels valued in the prices of the previous year are calculated using production unit values.

Table 10.53 Annual changes in inventories - Public authority inventories
ItemComment
Current price

 

Changes in public authorities’ inventories include estimates for general government, public non-financial corporations and public financial corporations. Recorded inventories include demonetised gold transactions (gold sales and gold loans) by the Reserve Bank of Australia and the construction of military equipment for export. Annual estimates of changes in the current price value of other public authorities’ inventories are derived from information in the annual ABS Government Finance Statistics. They are derived from a detailed analysis of annual reports and Auditors-General Reports, together with Commonwealth and State government budget papers and other financial statements.

Chain volume measures

 

The techniques used to calculate chain volume estimates of changes in public authorities’ inventories are only slightly different to those shown above for private non-farm inventories. The difference is that for many of the detailed components of the former it is difficult to obtain true book value levels. Use is therefore made of the constant price estimates of changes in inventories that preceded the introduction of chain volume estimates and which are still calculated.

The steps followed are:

  1. Derive constant price levels of inventories for each component by accumulating the constant price changes over time and add these to a base level (i.e. the level at a particular time for which there is an estimate). The base level is often only an approximation of the true level and is sometimes only derived as a figure which will ensure that subsequent levels remain positive. These constant price levels are then converted to levels valued in the prices of the previous year;
  2. Sum to the required level of aggregation;
  3. Calculate quarter to quarter indexes which show the volume growth in levels between the present and previous quarter;
  4. Compound these indexes to form a chained index;
  5. Reference the chained index to the June quarter book value level of the reference year to give a chain volume series of levels; and
  6. Difference the resultant values to derive the chain volume estimates of changes in inventories.

For the other public authorities’ inventories component, a price index is constructed in a similar way to that described above for private non-farm inventories.

Latest year

10.124    Latest year annual estimates of the changes in inventories are essentially an aggregation of the quarterly estimates.

10.125    Current price changes in inventories data are further disaggregated by institutional sector, with results published in the annual sectoral capital accounts in Australian System of National Accounts. General government and public non-financial corporation’s annual estimates for changes in inventories are derived from Government Finance Statistics. Private non-financial sector estimates are derived internally from quarterly data used to compile estimates for private non-farm and farm inventories. Estimates for financial corporations are based on data on transactions in non-monetary gold provided by the Reserve Bank of Australia; the assumption being that inventories for private financial corporations are relatively small. A ratio split is calculated for incorporated and unincorporated entities when deriving changes in inventories for the household sector.

Sources and methods - Quarterly

10.126    Quarterly estimates for change in inventories are aligned to annual benchmarks by calculating the difference between the annual economy-wide benchmark and the sum of the unbenchmarked quarterly estimates for each year, and prorating the difference across the following categories of private non-farm change in inventories: mining, manufacturing, wholesale trade, and retail trade. Quarterly changes in inventories for other private non-farm, farm, and public authorities are not adjusted as part of the annual benchmarking process. A quarterly value of the changes in inventories is obtained by deducting the IVA from the corresponding quarterly value of the changes in the book value of inventories.

10.127    The quarterly values of changes in inventories are calculated separately for three sectors: private non-farm; farm; and public authorities. The sources and methods relating to each of these sectoral categories and the IVA are discussed in the tables that follow

Table 10.54 Quarterly changes in inventories Private non-farm inventories
ItemComment
Current price

 

The Quarterly Business Indicators Survey provides the data for estimating changes in private non-farm inventories. This survey collects estimates of the closing book value level of inventories from which changes are derived. The levels are also used in deriving the estimates of the inventories to sales ratio that is published in the quarterly national accounts.

The Quarterly Business Indicators Survey provides the quarterly movements in inventories for mining; manufacturing; wholesale trade; retail trade; electricity, gas; water and waste services; accommodation and food services; and telecommunication services.

The survey does not include some non-farm industries with only minor inventory holdings. For these industries, data are modelled from historical data, which was compiled from the periodic economic censuses and Taxation Statistics using the estimates for in-scope industries.

Chain price volume

 

The most successful means of deriving chain volume changes in inventories has been found to be differencing chained estimates of the levels. The steps involved are as follows:

  1. Re-value quarterly book value levels to levels valued in the prices of the previous year;
  2. Sum to the required level of aggregation;
  3. Calculate quarter to quarter indexes which show the volume growth in levels between the present and previous quarter;
  4. Compound these indexes to form a chained index;
  5. Reference the chained index to the June quarter book valuelevel of the reference year to give a chain volume series of
  6. Difference the resultant values to derive the chain volume estimates of changes in inventories.

The price indexes that are used to re-value book value levels of inventories are formed by weighting together component price indexes from ABS publications: Consumer Price Index, Australia; Producer Price Indexes, Australia; and International Trade Price Indexes, Australia; and wage rate indexes from the publication, Wage Price Index, Australia. The regimen and weights for these price and wage rate indexes are derived using data from the various censuses and surveys conducted by the ABS.

Chain volume estimates of changes in private non-farm inventories are published in the following detail in the national accounts:

  • mining;
  • manufacturing;
  • wholesale trade;
  • retail trade; and
  • other non-farm industries.

It is noteworthy that, unlike other national accounts aggregates, quarterly chaining and annual chaining of volumes of changes in inventories produce identical annual chain volume estimates of changes in inventories. This is because chain volume estimates of changes in inventories are derived by differencing the chain volume estimates of the levels of inventories which relate to the end of quarterly and annual periods and coincide for the June quarter.

Table 10.55 Quarterly changes in inventories Farm inventories
ItemComment
Current price

 

Changes in farm inventories include changes in:

  • inventories held on farms (including wool, wheat, barley, oats, maize, sorghum, hay, fertiliser, apples and pears, and livestock);
  • produce (e.g vegetables) held in cold store where ownership remains with the primary producer.

Quarterly changes in the book value of inventories of wool are estimated as the difference between inventory levels derived from available information obtained from the ABARES publication, Agricultural Commodities; the Australian Wool Exchange; and from ABS publications, Value of Agricultural Commodities Produced, Australia and Livestock Products, Australia. Quarterly changes in the book value of inventories of apples and pears are estimated as the difference between inventory levels, which was modelled from historical data, provided monthly by the Tasmanian Department of Primary Industries, Parks, Water and Environment.

Animals reared for slaughter are regarded as work-in-progress. The estimates are derived from numbers of animals collected annually by the ABS, and prices from the Australian Bureau of Agricultural and Resource Economics and Sciences. Animals reared for breeding purposes or recurrent production (such as dairy cattle and sheep reared for wool production) are treated as gross fixed capital formation.

Chain volume measures

 

The techniques used to calculate chain volume estimates of changes in farm inventories are only slightly different to those shown above for private non-farm inventories. The difference is that for many of the detailed components of the former it is difficult to obtain true book value levels. Therefore, constant price estimates of changes in inventories that preceded the introduction of chain volume estimates are used in the calculations.

The steps followed are:

  1. Derive constant price levels of inventories for each component by accumulating the constant price changes over time and add these to a base level (i.e. the level at a particular time for which there is an estimate). The base level is often only an approximation of the true level and is sometimes only derived as a figure which will ensure that subsequent levels remain positive. These constant price levels are then converted to levels valued in the prices of the previous year;
  2. Sum to the required level of aggregation;
  3. Calculate quarter to quarter indexes which show the volume growth in levels between the present and previous quarter;
  4. Compound these indexes to form a chained index;
  5. Reference the chained index to the June quarter book value level of the reference year to give a chain volume series of levels; and
  6. Difference the resultant values to derive the chain volume estimates of changes in inventories.

For farm commodities, the price indexes used to convert constant price levels into levels valued in the prices of the previous year are calculated using production unit values.

Table 10.56 Quarterly changes in inventories Public authority inventories
ItemComment
Current price

 

Changes in public authorities’ inventories include estimates for general government, public non-financial corporations and public financial corporations.

Quarterly estimates of changes in the book value of marketing authorities’ inventories are derived from information supplied by the authorities concerned.

Recorded inventories include demonetised gold transactions (gold sales and gold loans) by the Reserve Bank of Australia and the construction of military equipment for export.

Quarterly data are obtained from ABS Government Finance Statistics and Balance of Payments quarterly collections covering all significant public corporations/organisations and from the Department of Finance’s Quarterly Ledger.

Chain volume measures

 

The techniques used to calculate chain volume estimates of changes in public authorities’ inventories are only slightly different to those shown above for private non-farm inventories. The difference is that for many of the detailed components of the former it is difficult to obtain true book value levels. Use is therefore made of the constant price estimates of changes in inventories that preceded the introduction of chain volume estimates and which are still calculated.

The steps followed are:

  1. Derive constant price levels of inventories for each component by accumulating the constant price changes over time and add these to a base level (i.e. the level at a particular time for which there is an estimate). The base level is often only an approximation of the true level and is sometimes only derived as a figure which will ensure that subsequent levels remain positive. These constant price levels are then converted to levels valued in the prices of the previous year;
  2. Sum to the required level of aggregation;
  3. Calculate quarter to quarter indexes which show the volume growth in levels between the present and previous quarter;
  4. Compound these indexes to form a chained index;
  5. Reference the chained index to the June quarter book value level of the reference year to give a chain volume series of levels; and
  6. Difference the resultant values to derive the chain volume estimates of changes in inventories.

For the other public authorities’ inventories component, a price index is constructed in a similar way to that described above for private non-farm inventories.

10.128    The IVA is compiled each quarter from survey information, and annual estimates are derived by aggregating the quarterly estimates. The sources and methods relating to each of the major sectoral categories are discussed below.

Table 10.57 Quarterly changes in inventories Inventory Valuation Adjustment (IVA)
ItemComment
Non-farm inventories

 

The book values of private non-farm inventories are disaggregated into 30 industry groups: mining; 15 groups within manufacturing; eight within wholesale trade; retail trade; accommodation and food services; electricity; gas; water and waste services; construction; transport and storage; and telecommunication services. The inventories held by manufacturing industries are further split into Materials, and work-in-progress or finished goods. An IVA is derived using the assumptions described in above paragraphs.

Farm inventories

 

An IVA is generally not necessary for farm inventories because the values of changes in inventories at average current quarter prices can be estimated directly from detailed quantity and price data. However, the value of changes in inventories for wheat and wool is calculated by subtracting from their respective sales the value of receivals. A production valuation adjustment (PVA) was previously required for the estimates of changes in inventories of wheat (ceased in June quarter 2010) and wool (ceased in March quarter 2011). This was due to the differences in current quarter sale price and the price at which receivals were valued. The PVA adjustment was deducted from the value of the receivals when calculating gross value of farm production (estimated in deriving farm income) on a national account’s basis.

Public authorities’ inventories
 Due to the relatively low level of inventories and the lack of information on the commodity dissection involved, and the fact that source data are already in current prices, no IVA is calculated for other public authorities’ inventories.

Exports and imports

10.129    The exports and imports series shown in the national accounts are identical to those provided in the balance of payments statistics. (In the balance of payments, exports are labelled 'credits' and imports 'debits'.) The ABS publication, Balance of Payments and International Investment Position, Australia: Concepts, Sources and Methods provides an extensive description of the concepts, sources and methods for exports and imports statistics.

10.130    In any given period, some of the output of an economy may be acquired by non-residents. Such transactions are classified as exports of goods and services. Similarly, some of the goods and services acquired by residents in a particular period may have been produced by non-residents, rather than produced domestically. These transactions are classified as imports of goods and services.

10.131    As with other transactions recorded in the national accounts, exports and imports are recorded at the time the change in ownership of real assets occurs, or when a service is delivered. This time of recording may not coincide with when payments are made, in which case entries for pre- or post-payments will be recorded in the financial account. In some cases (i.e. gifts or grants) goods and services may be exported or imported (and recorded as such in the national accounts) without a settlement ever being required. In these cases, either a current or capital transfer will be recorded in lieu of an actual payment.

10.132    Assets, such as large modulated mining infrastructure, which incur lengthy construction periods, are recorded as progressive change of ownership; that is, the item is recorded as the importing unit takes ownership of the assets under construction as the individual components are complete. This differs from machinery and equipment imports where the change in ownership is deemed to have occurred once the importer has taken delivery of the asset as fully complete. Delivery may occur entirely outside the economic territory of the importer.

10.133    In the various ASNA publications, exports and imports of goods and services are generally shown as a single aggregate. (The main exception is the detailed input and output tables, where exports and imports are broken down by industry of origin or by product group.) In the balance of payments, however, exports and imports are broken down into a number of components. The following shows the main components:

Goods and services — Main components shown in the balance of payments
Exports
GoodsRural goods
 Non-rural goods
 Net exports of goods under merchanting
 Non-monetary gold
ServicesManufacturing services on physical inputs owned by others
 Maintenance and repair services n.i.e.
 Transportation services
 Travel services
 Other services
Imports
GoodsConsumption goods
 Capital goods
 Intermediate and other merchandise goods
 Non-monetary gold
ServicesManufacturing services on physical inputs owned by others
 Maintenance and repair services n.i.e.
 Transportation services
 Travel services
 Other services

10.134    The item 'goods' covers transactions involving most movable goods. However, transactions between residents and non-residents in some movable goods are classified as services. The most notable example is goods acquired by travellers, which are classified as travel services.

10.135    Exports and imports of goods are both valued free on board (f.o.b.) at the customs frontier of the exporting country. The f.o.b. price includes the value of distributive services involved in transporting the goods to the customs frontier and in loading the goods onto the carrier. The f.o.b. price does not include distributive services provided in transferring the goods from the customs frontier of the exporting country to the recipient of the goods. If such services are provided on Australia's imports by non-residents they will be recorded as imports of transportation services. If such services are provided by Australian residents on Australia's exports they will be recorded as exports of transportation services.

10.136    The values of exports and imports denominated in foreign currencies are converted into Australian dollars using market rates of exchange. If exporters and importers use derivative instruments to hedge against foreign exchange rate movements, then the cash flows associated with these instruments will be recorded as transactions in derivatives, which are shown in the financial account.

Sources and methods - Annual

10.137    All of the sources required to compile exports and imports of goods data are available on a quarterly basis. Therefore, the annual estimates are obtained by summing the quarterly estimates.

Sources and methods - Quarterly

10.138    The sources and methods for the export and import of goods and services for both current price estimates and volume estimates are discussed in the tables that follow:

Table 10.58 Quarterly exports and imports — Goods
ItemComment
Current price estimates

 

 

The primary source for exports and imports general merchandise data is the ABS International Merchandise Trade Statistics (IMTS) which is compiled using administrative by-product information from the Australian Customs and Border Protection Service.

The coverage, timing and valuation of these statistics are adjusted, as required, to place them on a balance of payments basis. These adjustments are made using data from the Survey of International Transport Enterprises (SITE) and other sources including the Reserve Bank of Australia and the Survey of International Trade in Services (SITS).

The following adjustments are made:

  • Timing adjustments - to ensure transactions are recorded in the period in which ownership changed, rather than in the period in which the transaction was recorded in IMTS. For example:
    • exports and imports of ships and aircraft adjusted to the date on which the business in Australia sells (exports) or takes delivery (imports) where this differs from the date they crossed the customs frontier.
  • Coverage adjustments - goods that do not cross the customs frontier but do change ownership. Examples include:
    • large value items of capital equipment such as aircraft, ships and oil rigs subject to finance lease that change ownership between an Australian resident and non-resident but do not cross the customs frontier;
    • goods included in IMTS that are not in-scope of Balance of Payments goods (e.g. goods exported or imported for processing which do not change ownership);
    • goods not captured in IMTS because they are below the low value threshold specified for customs documentation (full import declarations, postal packages and self-assessed clearances);
    • goods exported directly from off-shore installations without crossing Australia's custom's frontier;
    • goods under merchanting; and
    • goods procured in ports.
Volume estimates
 Exports

 

 

The chain volume measures for export commodities are obtained by deflating current price values using export price indexes. The processes of chain volume compilation can be read in detail in the ABS publication, Spotlight on National Accounts Australia:  Measuring Chain Volumes for Exports of Goods & Services, July 2011.

The ASNA uses the price indexes underlying those published in  International Trade Price Indexes, Australia.

The chain volume measures of coverage and timing adjustments, that are made to bring exports as recorded in the IMTS onto the required national accounts/balance of payments basis, are also derived using relevant implicit price deflators from  International Trade Price Indexes, Australia.

 Imports

 

 

All volume measures are derived by deflating current price values using detailed price indexes.

All but two of the components are deflated using price indexes derived from those underlying the price indexes published in  International Trade Price Indexes, Australia.

The exceptions are:

  • computer equipment - the above-mentioned computer equipment price index from the U.S. Bureau of Economic Analysis; and
  • sea transport equipment – a Japanese overseas price index for sea transport equipment adjusted for exchange rate changes.
Table 10.59 Quarterly exports and imports — services
ItemComment
Current price estimates
 Transport services

 

 

The principal sources of information on exports and imports of transportation services are the International Merchandise Trade Statistics (IMTS); the Cost, Insurance and Freight/Free on Board model (CIF/FOB); and the Survey of International Trade in Services (SITS).

The CIF/FOB model is used to compile estimates of imports of freight services with a minor adjustment made for resident freight operators from the SITS.

The SITS is used to compile all other components of transportation services. However, this does experience a lag of one quarter, so projections and other sources are used in the interim.

 Travel services

 

 

The standard component breakdown of travel services is between business and personal travel. Services acquired by persons undertaking study or medical care while outside their territory of residence are also encompassed in travel services.

Personal travel is separated into two major subcomponents:

  • Education related travel – estimates are compiled using the Education travel credits model in regards to exports, using student visa data supplied by Home Affairs, net expenditure supplied by Tourism Research Australia and fee estimates supplied by the Department of Education, and the Travel debits model in regards to imports; and
  • all other personal travel (which includes health related travel) – exports are compiled from the Travel credits model while imports are compiled from the Travel debits model, both using the ABS overseas arrivals and departures information and net expenditure supplied by Tourism Research Australia.

Business Travel – exports and imports are sourced directly from the Travel credits and Travel debits model respectively.  Both use the ABS overseas arrivals and departures information for number of short-term travellers by reason and net expenditure supplied by Tourism Research Australia.

Each of these models provides monthly and quarterly estimates, however data sources are lagged so current month estimates are a projection (nowcast) and data can be projections for up to seven months for credits and ten months for debits. 

 Other services

 

 

The principal source for estimates of exports and imports of other services is the SITS, which covers the following services:

  • Construction services;
  • Charges for the use of intellectual property;
  • Telecommunication, computer and information services;
  • Other business services; and
  • Personal, cultural and recreation services.

The following outlines the main components of other services:

  • Manufacturing services on physical inputs owned by others – uses IMTS data captured through customs records;
  • Maintenance and repair – uses IMTS data captured through customs records;
  • Insurance services – based on a data model (Non-life Insurance Model), of which the main input is the Australian Prudential Regulatory Authority’s (APRA) Quarterly General Insurance Statistics;
  • Pension services – based on data from APRA, the Tax office and the ABS’s Financial account data;
  • Financial services directly measured – the majority are measured using the SITS;
  • Financial services not directly measured – are derived primarily from two data models, FISIM and the Survey of International Investment (SII). FISIM is used to estimate financial intermediation services indirectly charged on loans and deposits by financial corporations. SII collects information on international investment activity into and out of Australia; and
  • Government services – the Department of Defence provides data on services utilised by foreign bases in Australia; periodic data about foreign embassies is collected from the Department of Foreign Affairs and Trade and used to estimate embassies' imports of services and Home Affairs provide data on visa application charges for credits. Data inputs are lagged by up to twelve months.
Volume estimates
 Exports

 

 

Volume measures are obtained mainly by deflation of the current price values, using relevant ABS price indexes underlying those published in:

 Imports

 

 

In most cases, volume measures are derived by deflating current price values using consumer price indexes from overseas countries, adjusted for exchange rate changes.

In other cases, special purpose price indexes, implicit price deflators and ABS price indexes from Consumer Price Index, Australia and International Trade Price Indexes, Australia are used.