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Known components of expenditure - GSP(E)

Australian System of National Accounts: Concepts, Sources and Methods

Reference period

2020-21 financial year

Released

9/07/2021

Next release Unknown

Overview

21.86 Known components of GSP(E) are derived as the sum of final consumption expenditure, gross fixed capital formation and international exports of goods and services less international imports of goods and services (net international trade).

21.87 Known components of GSP(E) does not provide a complete measure of GSP as components such as interstate trade and change in inventories are missing. Despite this the known components of GSP(E) are used extensively to produce and analyse GSP. The process can be summarised as:

produce the GSP(I/E) deflator;
decompose and analyse the GSP(I/E) measure; and
calculate the balancing item.

21.88 Calculation of GSP(I/E) and the balancing item are described in more detail in following sections.

21.89 Known components of GSP(E) are defined as:

Household final consumption expenditure (HFCE)
	+ Government final consumption expenditure (GFCE)
	+ Gross fixed capital formation (GFCF)
	= State final demand
	+ International exports of goods and services (X)
	– International imports of goods and services (M)

21.90 The known components of GSP(E) can be summarised as State final demand and net international trade.

State final demand

21.91 State final demand is the aggregate level of final consumption expenditure and gross fixed capital formation within a state over a specified period of time. SFD is defined as the final use of goods and services within a given period by households, government and businesses; that is:

Household final consumption expenditure (HFCE)
	+ Government final consumption expenditure (GFCE)
	+ Gross fixed capital formation (GFCF)

21.92 In simple terms, SFD is the sum of private and public consumption and investment within a state.

21.93 SFD is a measure of demand in a state economy. Measures of state final demand make no distinction between demand that is met by goods and services produced within the state in question, or by supplies sourced from another state, or from overseas. State final demand is therefore not a measure of the value of production activity occurring within a state, and, as such, should not be used as proxy for Gross State Product.

21.94 Components of state final demand are compiled quarterly, and published in Australian National Accounts: National Income, Expenditure and Product.

21.95 Annual estimates are published in Australian National Accounts: State Accounts and are consistent with the sum of the four quarters, with slight differences due to timing. A brief summary of how each of these components are allocated to state are listed below.

21.96 Components that make up SFD are included below. The conceptual basis for allocation to state as well as data sources used for this purpose varies across components.

Household final consumption expenditure

21.97 HFCE is allocated by state using the primary residence of the purchaser using indicators from the publications, Retail and Wholesale Industries, Australia: Commodities, 2005-06 and the Household Expenditure Survey, Australia: Summary of Results.

21.98 On a quarterly basis, state components are sourced from the publications, Retail Trade, Australia and Business Indicators, Australia. A range of other administrative data are also used.

Government final consumption expenditure

21.99 GFCE is allocated to the state where the related activity and expenditure occurs. It is split between Commonwealth government and State and local (combined) government.

21.100 Commonwealth government operates across states. Where data is available, consumption items are allocated directly to the location in which consumption takes place, such as university expenditure, or expenditure through the Pharmaceutical Benefits Scheme (PBS). The remainder is allocated based on indicators, including estimated resident population, as well as defence and non-defence Commonwealth government employment.

21.101 It is assumed that state governments only undertake activity in their state. Similarly, local government activity is assumed to be only undertaken within the state to which the local government areas belong.

Gross fixed capital formation

Dwelling and non-dwelling construction

21.102 This includes dwelling and non-dwelling construction, both for the public and private sectors. Fixed physical capital is allocated directly to the state in which it resides.

21.103 Private sector estimates are sourced from the Building Activity Survey (BACS); Engineering Construction Survey (ECS); and the publication. Private New Capital Expenditure and Expected Expenditure, Australia. Public sector capital formation is sourced from Government Finance Statistics.

Machinery and equipment

21.104 Machinery and equipment is allocated to the state in which the equipment is based. This is sourced from the ABS publication, Private New Capital Expenditure and Expected Expenditure, Australia, as well as GFS data.

21.105 Very large items such as weapons systems and commercial aircraft are not allocated to a single state. These are for the protection of all Australian citizens and are allocated to states based on ERP shares. A similar treatment is used for civil aircraft.

Cultivated biological resources

21.106 Cultivated biological resources are allocated to state based on location of livestock and orchards. This is sourced from ABS' agricultural surveys and Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) data.

Intellectual property products

21.107 Intellectual property products include computer software, research and development, and mineral exploration as well as entertainment, literary and artistic originals. These are allocated to the states as follows:

mineral exploration – is allocated to the state in which the exploration occurs and is sourced from the ABS publication, Mineral and Petroleum Exploration, Australia;
research and development – is allocated to the location of the primary research institution using data from the publication, Research and Experimental Development, Businesses, Australia;
computer software – is allocated based on primary location of purchase or production, largely based upon historic weights; and
entertainment, literary and artistic originals – are allocated to state using estimated resident population.

International trade

21.108 International trade relates to imports and exports of goods and services of a state with a destination or source outside Australia. This is divided into merchandise goods trade, and services trade. In the state accounts, merchandise goods trade is produced annually and quarterly, and services trade is produced annually.

Trade in merchandise goods

21.109 Trade in merchandise goods measures goods that cross the Australian customs barrier. These are allocated to state based on the location of where the customs barrier is crossed. If the goods are transported to another state this is treated as an interstate re-export, which is included in the balancing item. In the national accounts, trade in goods is produced on a Balance of payments (BOP) basis which adjusts for goods which are not captured sufficiently in customs data.

International trade in services

21.110 International trade in services is collected as part of the ABS publication, International Trade in Services by Country, by State and by Detailed Services Category. State allocation is based on the state location of units sampled as part of this survey.

Household final consumption expenditure – sources and methods

21.111 Quarterly household final consumption is largely allocated to states using the top-down approach by using indicators and price deflators. It is compiled according to the COICOP classification. Dwelling rent is the main exception to this and is compiled using the bottom-up approach using data from Census of Population and Housing every five years. Adjustments for interstate and international household consumption are also made.

21.112 Annual estimates for all COICOP categories are produced as the sum of four quarters, with differences in annual and quarterly estimates due mostly to timing differences.

Dwelling rent

21.113 Imputed and actual rent of owner-occupiers are obtained by multiplying the stock of dwellings by the average rent paid by state. Splits between owner-occupied and imputed rent are estimated using data from the Census of Population and Housing. The stocks of dwellings and the rents paid for dwellings by state are obtained from the Population Census. Imputed rent paid for owner-occupied dwellings is calculated by matching average rents reported in the Population Census for detailed level of region and housing type and multiplying this by numbers of owner-occupied dwellings.

21.114 For inter-censal and post-Census periods, the dwelling stock is moved forward using the number of dwelling unit completions by state from Building Activity, Australia. This is then modified by a factor to take account of other changes to the stock of dwellings. Values for average rent paid is updated using data from the Consumer Price Index (CPI) for privately-owned dwelling rents modified by a factor for undercoverage. This methodology is undertaken quarterly with annual estimates produced by summing quarterly estimates.

Changes made to average rent paid

From 04/03/2024 values for average rent paid is updated using the Consumer Price Index (CPI) only. Previously this was updated using data from Housing Occupancy and Costs: industry reports from Australian Property Monitors, the Real Estate Institute of Australia and the CPI. Paragraph 21.114.

Paragraph 21.114 prior to 04/03/2024 update

21.114 For inter-censal and post-Census periods, the dwelling stock is moved forward using the number of dwelling unit completions by state from Building Activity, Australia. This is then modified by a factor to take account of other changes to the stock of dwellings. Values for average rent paid is updated using data from Housing Occupancy and Costs; industry reports from Australian Property Monitors and the Real Estate Institute of Australia; and the Consumer Price Index (CPI) for privately-owned dwelling rents. This methodology is undertaken quarterly with annual estimates produced by summing quarterly estimates.

Adjustments for interstate and international household consumption

21.115 Household consumption undertaken overseas or interstate by state residents is added to total HFCE. Consumption by non-state residents (international and interstate) are removed from total state HFCE. This is to ensure that HFCE is representative of state resident household consumption. This is estimated in two parts, using net visitor numbers for interstate as well as international trade in services estimates:

International net expenditure is split to states using data from the ABS publication, International Trade in Goods and Services, Australia; and
Interstate net expenditure is based on net interstate visitor day and night estimates which are produced by Tourism Research Australia (TRA). This is combined with average day and night rates of expenditure to produce a value.

21.116 Both these adjustments are undertaken quarterly with annual estimates produced by summing quarterly estimates.

Quarterly Indicator series, intermittent benchmarks, and volume deflators.

21.117 The table below lists the three elements required to produce state indicators for HFCE.

Table 21.28 HFCE Data sources– By COICOP category
COICOP category		Quarterly indicator series	Intermittent benchmark	Deflator
Food and non-alcoholic beverages
		Retail Trade, Australia	Retail and Wholesale Industries, Australia: Commodities, 2005-06	Weighted average of components from the CPI Food and non-alcoholic Beverages group.
Alcoholic beverages
	Liquor retailers
		Retail Trade, Australia	Retail and Wholesale Industries, Australia: Commodities, 2005-06	Weighted average of components from the CPI Alcoholic beverages sub-group.
	Other liquor
		Business Indicators, Australia	Retail and Wholesale Industries, Australia: Commodities, 2005-06	Weighted average of components from the CPI Alcoholic beverages sub-group.
Cigarettes and Tobacco
		Business Indicators, Australia and imports from International Trade in Goods and Services, Australia	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI for Tobacco.
Clothing and footwear
		Retail Trade, Australia	Retail and Wholesale Industries, Australia: Commodities, 2005-06 (cat. no. 8624.0)	Weighted average of components from the CPI Clothing and footwear group.
Electricity, gas and other fuels
		Electricity and gas from revenue information from major retail suppliers in each state.	Household Expenditure Survey, Australia: Summary of Results, 2009-10	Electricity, gas and other fuels revalued using relevant components of the CPI Utilities sub-group.
Furnishings and household equipment
		Retail Trade, Australia	Retail and Wholesale Industries, Australia: Commodities, 2005-06	Weighted CPI for Furniture and household equipment
Health
	Medicines, medical aids and therapeutic appliances
		Retail Trade, Australia - Medical aids and therapeutic appliances GFS for Pharmaceutical Benefits Scheme	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI for Pharmaceutical products.
	Hospital, ambulance services and nursing home care
		Department of Health (DoH) and Private Health Insurance Administration Council (PHIAC)	n.a.	CPI Health group
Housing, water, electricity, gas and other fuels
	Imputed and actual rentals for housing
		See paragraph 21.93	See details above	Quantity revaluation
	Other services related to the dwelling
		Estimated resident population	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI for Water and sewerage
Purchase of vehicles
		Federal Chamber of Automotive Industries' VFACTS	n.a.	CPI for Motor vehicles.
Operation of Vehicles
	Fuel
		Australian Petroleum Statistics, published by the Bureau of Resource and Energy Economics (BREE)	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI on Automotive fuel.
	All other motoring goods
		Australian Petroleum Statistics, published by the Bureau of Resource and Energy Economics (BREE)	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI Private motoring sub-group.
Transport
	Public road and rail and water transport
		GFS data from public transport authorities	n.a.	Weighted CPI for Rail, water and road transport
	Air transport
		Revenue data provided by the major airlines.	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI for Air transport
Communication
	Postal Services
		Data from Australia Post	Household Expenditure Survey, Australia: Summary of Results, 2009-10	Quantity revalued using Australia Post data
	Telecommunication services
		Revenue data obtained from the major service providers	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI for Telecommunication equipment and services.
Recreation and Culture
	Audio visual, photographic and data processing equipment and accessories
		Retail Trade, Australia	Retail and Wholesale Industries, Australia: Commodities, 2005-06	CPI Audio, visual and computing equipment and services sub-group
	Recreational items and equipment
		Retail Trade, Australia	Retail and Wholesale Industries, Australia: Commodities, 2005-06	Weighted components for CPI
	Sporting and recreational services
		Estimated resident population	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI for Sports participation
	Cultural and entertainment services
		Retail Trade, Australia	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI Recreation and culture group
Gambling
		GFS taxes on gambling	Household Expenditure Survey, Australia: Summary of Results, 2009-10	All groups CPI (excluding medical and hospital services)
Education
	Tertiary education
		Receipts from the Higher Education Contribution Scheme (HECS)	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI for Education
	Post-secondary education
		Estimated resident population	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI for Education<
	Primary, secondary education and preschool
		Estimated resident population	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI for Education
Hotels, catering and restaurants
	Catering
		Retail Trade, Australia and Business Indicators, Australia	Retail and Wholesale Industries, Australia: Commodities, 2005-06	Components from the CPI
	Accommodation
		Tourist Accommodation, Australia	n.a.	CPI for Domestic holiday travel and accommodation.
Miscellaneous goods and services
	Personal care
		Retail Trade, Australia and Business Indicators, Australia	Household Expenditure Survey, Australia: Summary of Results, 2009-10	CPI Furnishings, household equipment and services group
	Personal effects
		Retail Trade, Australia	Retail and Wholesale Industries, Australia: Commodities, 2005-06	Relevant components from the CPI
Finance and Insurance
	Insurance
		Estimated resident population	Household Expenditure Survey, Australia: Summary of Results, 2009-10	Motor vehicle insurance CPI, Wage Price Index (LPI) for workers compensation and CPI all groups for all other.
	Finance
		Estimated resident population	Household Expenditure Survey, Australia: Summary of Results, 2009-10	All groups CPI
Other Services
	Personal outlays on miscellaneous services
		Estimated resident population	Household Expenditure Survey, Australia: Summary of Results, 2009-10	Relevant components of the CPI and Wage Price Index (LPI)
	NPISH
		Estimated resident population	Household Expenditure Survey, Australia: Summary of Results, 2009-10	Relevant components of the CPI and Wage Price Index (LPI)

Government final consumption expenditure– sources and methods

21.118 Estimates of GFCE are disaggregated into Commonwealth government and State and local government.

21.119 National government final consumption includes government agencies and jointly administrated universities. National GFCE is disaggregated into defence and non-defence.

21.120 Jurisdictional reporting matches regional boundaries for State and local governments. Therefore, State and local GFCE estimates are compiled using the bottom-up approach. Estimates in the quarterly and annual state accounts are consistent with data published in the GFS, with the exception of timing and some conceptual differences.

21.121 The table below outlines 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.

21.122 Annual estimates are produced as the sum of quarters with differences due to timing. For GFS estimates this can be significant due to inclusion of audited GFS data from Government Finance Statistics, Australia. This occurs for the state accounts, and also for Australian National Accounts: National Income, Expenditure and Product.

Table 21.29 Government final consumption expenditure – By level of government (quarterly)
Item			Comment
National defence
	Current price estimates
			Government Finance Statistics is the primary data source, which in turn is based on data 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 measure as it is compiled on a current replacement cost basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM). There are no state splits of data from GFS, with data split to states using posting location of defence employees. This is sourced from the Department of Defence.
	Volume estimates
			Defence employee costs are deflated using the Wage Price Index and defence materials are deflated using the Producer Price Indexes.
National non-defence
	Universities
		Current price estimates
			Data for universities are collected from a sample of approximately 22 public universities or just over 50 per cent of the population. This provides enough detail to allow state estimates to be produced.
		Volume estimates
			Estimates for universities are derived by quantity revaluation using the estimated growth in the number of students in each state. For quarterly estimates this is based on trend as there is no quarterly data.
	Pharmaceuticals
		Current price estimates
			Pharmaceutical benefit scheme expenditure by state is produced by the Commonwealth Department of Health. This is based upon pharmacy location of subsidised medicines.
		Volume estimates
			Volume estimates for pharmaceuticals are price deflated using the CPI data for expenditure on pharmaceuticals.
	Medicare
		Current price estimates
			Medicare data is allocated to state using Commonwealth employment detail from Employment and Earnings, Public Sector.
		Volume estimates
			Medicare estimates are quantity revalued at state level using the estimated growth in medical services (from Medicare and hospital services data).
	Other
		Current price estimates
			Government Finance Statistics is the primary data source, which in turn is based on data from the Department of Finance. The data obtained are for the expenditures by Commonwealth agencies other than those in the Defence portfolio 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 measure as it is compiled on a current replacement cost basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM).
		Volume estimates
			All other national non-defence estimates are price deflated using an index compiled using components of the Consumer Price Index, Wage Price Index and Producer Price Indexes.
State and local
	Current price estimates
			Current price estimates are sourced from GFS data. Data are provided according to the following components: health; education; redundancies; and superannuation.
	Volume estimates
		Health
			Health estimates are quantity revalued using the estimated growth in medical services. Quarterly estimates are trended as data is only available annually.
		Education
			Education estimates are quantity revalued using the estimated growth in the number of students by state.
		Redundancies
			Redundancy payments for health are quantity revalued using the estimated growth in medical services. Quarterly estimates are trended as data is only available annually. Redundancy payments for education are quantity revalued using the estimated growth in the number of students by state. The remainder is price deflated as below using components of the Consumer Price Index, Wage Price Index and Producer Price Indexes.
		Superannuation
			Superannuation estimates are price deflated using indexes compiled from the Wage Price Index.
		All other
			All other State and local government estimates are price deflated using an index compiled using components of the Consumer Price Index, Wage Price Index and Producer Price Indexes.

Gross fixed capital formation – Sources and methods

Dwellings

21.123 Gross fixed capital formation (GFCF) for dwellings consists of the value of acquisitions of new and existing (used) dwellings less the value of disposals of existing dwellings. State estimates are derived using the top-down approach.

21.124 The following table outlines the quarterly data sources used to estimate gross fixed capital formation for dwelling construction. Annual estimates are compiled as the sum of quarterly estimates, with differences between quarterly and annual estimates due to timing.

Table 21.30 Gross fixed capital formation – Dwellings
Item			Comment
New and used dwellings
	Current price estimates
		Private
			State splits for new and used dwellings are constructed using new residential building data from the Building Activity Survey.
		Public
			State level estimates are constructed by allocating GFS data for each state to the relevant state. Estimates for the Commonwealth jurisdiction are allocated using a proportion based on public employment from the Survey of Employment and Earnings (SEE).
	Volume estimates
			Total public and private sector new and used dwellings are deflated using Residential Property Price Indexes, Eight Capital Cities. State indexes are derived as a weighted average of a price index for contract-built houses and non-contract-built houses.
Alterations and Additions
	Current price estimates
			Alterations and additions to existing dwellings are estimated using data from the regular Building Activity Survey and from the periodic Household Expenditure Survey (HES). State estimates are constructed using Alterations and additions to residential buildings from BACS, this excludes estimates under $10,000. These are modelled based on data from the HES. Between HES years the under $10,000 component is assumed to move in the same proportion as items from the BACS survey.
	Volume estimates
			Current price estimates are deflated by applying a two quarter ending moving average of the project home price index from Residential Property Price Indexes, Eight Capital Cities.

Private non-dwelling construction

21.125 Non-dwelling construction at the state level comprises of three components: new building, new engineering construction and net purchases of second-hand assets. State estimates are derived using the top-down approach using data from BACS, ECS and GFS for second-hand assets.

21.126 The following table outlines the quarterly data sources used to estimate gross fixed capital formation for private non-dwelling construction. Annual estimates are compiled as the sum of quarterly estimates, with differences between quarterly and annual estimates due to timing.

Table 21.31 Gross fixed capital formation – Non-dwelling construction
Item		Comment
New non-dwelling buildings
	Current price estimates
		The main source is the quarterly Building Activity Survey. This survey covers work done on private sector owned non-residential building valued at $50,000 or more. The following adjustments are made at the state level: 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 architectural fees.
	Volume estimates
		State-specific price indexes are derived as a three-quarter ending moving average of new building price indexes.
New engineering construction
	Current price estimates
		The main source is the Engineering Construction Survey. As farm non-dwelling construction is not included in the ECS, adjustments are made to capital formation to estimate expenditure of farm non-dwelling construction.
	Volume estimates
		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 the Producer Price Indexes, Australia, Wage Price Index, Australia and the Consumer Price Index, Australia.
Net purchases of second-hand assets
	Current price estimates
		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.
	Volume estimates
		Current price estimates are deflated for each state using the state-specific implicit price deflator for the aggregate of private new non-dwelling building and new engineering construction.

Machinery and equipment

21.127 Gross fixed capital formation (GFCF) 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.

21.128 At state level private gross fixed capital formation of machinery and equipment is published with two sub-components: new machinery and equipment and net purchases of second-hand assets.

21.129 The following table outlines the quarterly data sources used to estimate gross fixed capital formation for machinery and equipment. Annual estimates are produced as the sum of four quarters, with differences in annual and quarterly estimates due mostly to timing differences.

Table 21.32 Gross fixed capital formation – Machinery and equipment
Item		Comment
New machinery and equipment
	Current price estimates
		State splits are sourced from Survey of New Capital Expenditure (Private New Capital Expenditure and Expected Expenditure, Australia). This survey excludes a number of industries for which adjustment are made including: Agriculture, forestry and fishing industry - import statistics from International Merchandise Imports, Australia. Public administration and safety, Education and training and Health care and social assistance industries are produced annually from GFS data, with estimates modelled quarterly.
	Volume estimates
		Current price estimates of GFCF for new machinery and equipment are deflated using state-specific chain price indexes derived from the Consumer Price Index, Australia; Producer Price Indexes, Australia; International Trade Price Indexes, Australia; and several price indexes from overseas, including the US Bureau of Economic Analysis (BEA) hedonic computer price index.
Net purchases of second-hand equipment
	Current price estimates
		Net purchase of second-hand assets includes: net purchases of second hand assets from the public sector from GFS data; used motor vehicle sales from businesses to households is allocated to states from national ABS Survey of Motor Vehicle Use and motor vehicle sales data available through the VFACTS service; and used equipment sold overseas (which is deducted from private GFCF). Estimates of merchandised goods are used to value used equipment sold overseas.
	Volume estimates
		Current price estimates of GFCF for net purchases of second-hand machinery and equipment are deflated using state-specific chain price indexes derived from the Consumer Price Index, Australia; Producer Price Indexes, Australia; International Trade Price Indexes, Australia; and several price indexes from overseas, including the BEA hedonic computer price index.

Intellectual property products

21.130 Gross fixed capital formation (GFCF) of research and development (R&D) is allocated to the state in which the research work occurs.

21.131 Mineral and petroleum exploration is the value of expenditure on exploration for mineral and petroleum undertaken in each state. Exploration expenditure covers all exploration activity undertaken on land and in state territorial waters, with offshore exploration in Commonwealth waters allocated to closest state of proximity.

21.132 The following table outlines the quarterly data sources used to estimate gross fixed capital formation for intellectual property products. All items with the exception of mineral and petroleum exploration are compiled annually with interpolation used to create quarterly estimates.

Table 21.33 Gross fixed capital formation – Intellectual property products (quarterly)
Item		Comment
Research and development
	Current price estimates
		Interpolation of annual estimates.
	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. This is undertaken at state level. Quarterly estimates for state, like national, are calculated using trend.
Mineral and petroleum exploration
	Current price estimates
		Quarterly estimates are obtained from Mineral and Petroleum Exploration, Australia.
	Volume estimates
		Current price estimates are deflated using a composite index of the Wage Price Index for ANZSIC Division B Mining Division and a producer price index 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
	Current price estimates
		Interpolation of annual estimates.
	Volume estimates
		Volume estimates are produced by deflating current prices estimates with the Manufacturing Industry (APMI) price index.
Entertainment, literary and artistic originals
	Current price estimates
		Interpolation of annual estimates.
	Volume estimates
		Volume estimates are produced by deflating current prices estimates using a combination of data from Producer Price Indexes, Australia; Consumer Price Index, Australia and the historic publication, Price Indexes of Articles Produced by Manufacturing Industry, Australia (this publication has been ceased but data from it still underpins estimates).

21.133 The following table outlines the annual data sources used to estimate gross fixed capital formation for intellectual property products.

Table 21.34 Gross fixed capital formation – Intellectual property products (annual)
Item		Comment
Research and Development
	Current price estimates
		State estimates for both own account R&D expenditure and R&D undertaken on contract by other institutions are derived from the Survey of Research and Experimental Development published in Research and Experimental Development, Businesses, Australia; Research and Experimental Development, Government and Private Non-Profit Organisations, Australia; and Research and Experimental Development, Higher Education Organisations, Australia.
	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. This is undertaken at state level. Quarterly estimates for state, like national, are calculated using trend.
Mineral and petroleum exploration
	Current price estimates
		The sum of quarterly estimates are obtained from Mineral and Petroleum Exploration, Australia.
	Volume estimates
		Current price estimates are deflated using a composite index of the Wage Price Index for ANZSIC Division B Mining and a producer price index 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
	Current price estimates
		State estimates are derived by allocating national estimates using fixed weight splits produced largely from historic surveys for in house software, as well as packaged software imports for the off-the-shelf component.
	Volume estimates
		Volume estimates are produced by deflating current prices estimates with the Manufacturing Industry (APMI) price index.
Entertainment, literary and artistic originals
	Current price estimates
		State estimates of GFCF of entertainment, library and artistic originals are allocated from the national estimates using Estimated Resident Population.
	Volume estimates
		Volume estimates are produced by deflating current prices estimates using a combination of data from the publications, Producer Price Indexes, Australia; Consumer Price Index, Australia; and the historic publication, Price Indexes of Articles Produced by Manufacturing Industry, Australia (this publication has been ceased but data from it still underpins estimates).

Ownership transfer costs

21.134 Ownership transfer costs at state level consist of the following components:

fees paid to lawyers associated with the transfer of ownership;
fees and commissions paid to real estate agents, auctioneers, architects, surveyors, engineers and valuers;
stamp duty;
titles Office charges; and
local government charges.

21.135 The following table outlines the quarterly data sources used to estimate gross fixed capital formation for ownership transfer costs. Annual estimates are produced as the sum of four quarters, with differences in annual and quarterly estimates due mostly to timing differences.

Table 21.35 Gross fixed capital formation – Ownership transfer costs
Item		Comment
Ownership transfer costs
	Current price estimates
		Stamp duty estimates are based on quarterly data from each State Titles Offices. These estimates are based on the number of Land Title Transfer transactions occurring in each state for the quarter, and local government charges are estimated from the number of transactions occurring in each quarter. Real estate agents' commissions and lawyers' fees are derived from movements in a composite indicator based on state data for the number and value of real estate transactions. Data on the number of transactions and average sale prices are obtained from State Titles Offices (land title transfers) and Valuers-General departments (average sale prices).
	Volume estimates
		Volume estimates for ownership transfer costs are derived by quantity revaluation at the state level, by multiplying the number of transactions by the average price in the previous year.

Cultivated biological resources

21.136 Cultivated biological resources data are compiled by state for animal resources (livestock), as well as crop and plant resources yielding repeat products (orchard growth).

21.137 The following table outlines the quarterly data sources used to estimate gross fixed capital formation for cultivated biological resources. Annual estimates are produced as the sum of four quarters, with differences in annual and quarterly estimates due mostly to timing differences.

Table 21.36 Gross fixed capital formation – Cultivated biological resources (quarterly)
Item		Comment
Livestock
	Current price estimates
		Livestock uses sheep and cattle numbers adjusted slaughtering and exports from Livestock Products, Australia at state level. Data on acquisition and disposal prices of other animals are calculated using the ABARES publication, Agriculture Commodities. Values for sheep and cattle are estimated by multiplying the number of animals by an average price per head.
	Volume estimates
		Quantity revalued using ABARES data on herd size.
Orchard growth
	Current price estimates
		Orchard growth is estimated using number of trees and hectares of vines. These data 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
		Quantity revalued using number of trees and hectares of vines data outlined above.

Public corporations

21.138 Public corporations capital formation is split into Commonwealth, and State and local.

21.139 The following table outlines the quarterly data sources used to estimate gross fixed capital formation for public corporations. Annual estimates are produced as the sum of quarters with differences due to timing. For GFS estimates these timing differences can be significant due to inclusion of audited GFS data from Government Finance Statistics, Australia. These timing differences arise in the state accounts, and also in Australian National Accounts: National Income, Expenditure and Product.

Table 21.37 Gross fixed capital formation – Public corporations
Item		Comment
Commonwealth
	Current price estimates
		Government Finance Statistics is the main source for Commonwealth Public Corporations GFCF. Intellectual property products estimates are constructed using external and internal data sources including Research and Experimental Development, Businesses, Australia. Commonwealth Public Corporations GFCF is allocated to states using estimated resident population data. Allowances are made to allocate significant identifiable projects to the states where they occur.
	Volume estimates
		Volume estimates are compiled from current price estimates using price deflation. Deflation is performed using composite deflators of various price indexes constructed using annual current price asset composition as weights.
State and local
	Current price estimates
		Government Finance Statistics is the main source for State and local Public Corporations GFCF. Intellectual property products estimates are constructed using external and internal data sources including Research and Experimental Development, Businesses, Australia.
	Volume estimates
		The volume estimates are compiled from current price estimates using price deflation. Deflation is performed using composite deflators of various price indexes constructed using annual current price asset composition as weights

General government

21.140 General government capital formation is allocated to Commonwealth and State and local government using data from GFS. Commonwealth is further separated into defence and non-defence.

21.141 The following table outlines the quarterly data sources used to estimate gross fixed capital formation for general government. Annual estimates are produced as the sum of quarters with differences due to timing. For GFS estimates these timing differences can be significant due to inclusion of audited GFS data from Government Finance Statistics, Australia. These timing differences arise in the state accounts, and also in Australian National Accounts: National Income, Expenditure and Product.

Table 21.38 Gross fixed capital formation – General government
Item		Comment
National defence
	Current price estimates
		Government Finance Statistics is the main source for Commonwealth Defence GFCF. Intellectual property products estimates are constructed using external and internal data sources including Research and Experimental Development, Government and Private Non-Profit Organisations. Commonwealth Defence GFCF for fixed assets and computer software are allocated to states using Commonwealth employment from the ABS publication, Employment and Earnings, Public Sector, Australia. Allowances are made to allocate significant identifiable projects to the states where they occur. Defence weapons systems, and Research and development are allocated using estimated resident population data.
	Volume estimates
		The volume estimates are compiled from current price estimates using price deflation. Deflation is performed using composite deflators of various price indexes constructed using annual current price asset composition as weights.
National non-defence
	Current price estimates
		Government Finance Statistics is the main source for National Non-defence GFCF. Intellectual property products estimates are constructed using external and internal data sources including Research and Experimental Development, Government and Private Non-Profit Organisations. National non-defence GFCF is allocated to states using Commonwealth employment from the ABS publication, Employment and Earnings, Public Sector, Australia. Allowances are made to allocate significant identifiable projects to the states where they occur.
	Volume estimates
		The volume estimates are compiled from current price estimates using price deflation. Deflation is performed using composite deflators of various price indexes constructed using annual current price asset composition as the weights.
State and local
	Current price estimates
		Government Finance Statistics is the main source for State and local GFCF. Intellectual property products estimates are constructed using external and internal data sources including Research and Experimental Development, Government and Private Non-Profit Organisations.
	Volume estimates
		The volume estimates are compiled from current price estimates using price deflation. Deflation is performed using composite deflators of various price indexes constructed using annual current price asset composition as weights.

International trade in goods and services – sources and methods

21.142 International trade in merchandise goods are allocated to state based on the location at which the customs barrier is crossed.

21.143 Published state level merchandise goods trade is not consistent with trade estimates for the national accounts which is produced on a balance of payments (BOP) basis. The difference for each state is reconciled on a BOP basis, with the difference between state merchandise trade and state allocations on a BOP basis included as part of the balancing item.

Merchandise goods basis splits

21.144 The following tables outline the data sources and methods used to estimate international trade in goods and services:

Table 21.39 International trade – Goods
Item	Comment
Annual current price estimates
	Merchandise goods is consistent with ABS publication, International Trade, with BOP basis reconciliation values consistent with ABS publication Balance of Payments and International Investment Position, Australia.
Annual volume estimates
	Annual state merchandise goods exports and imports for volume are consistent with ABS publication, International Trade, with related BOP basis reconciliation values consistent with ABS publication Balance of Payments and International Investment Position, Australia.

Table 21.40 International trade – Services
Item	Comment
Current price estimates
	Current price international trade in services data is allocated to state using data from International Trade in Services by Country, by State and by Detailed Services Category. These estimates are benchmarked to national estimates of international trade in services.
Volume estimates
	Volume measures are obtained by deflation of the current price values, using relevant ABS price indexes underlying those published in: Consumer Price Index, Australia; Price Indexes of Articles Produced by Manufacturing Industries, Australia; and Wage Price Index, Australia.