Government Finance Statistics, Annual methodology

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Reference period
2021-22 financial year

Explanatory notes

This publication contains annual estimates of Government Finance Statistics (GFS). These statistics measure the financial activities of government and reflect the impact of those activities on other sectors of the economy. The Australian system of Government Finance Statistics (AGFS15), which is used to derive the statistics presented here, is designed to provide statistical information on public sector entities in Australia classified in a uniform and systematic way. GFS enables policy makers and users to analyse the financial operations and financial position of the public sector by the level of government, institutional sector or set of transactions.

The main functions of government are the provision of non-market services, the regulation of economic and social conditions, and the redistribution of income between sections of the community. These activities are primarily financed by taxation and are carried out by entities in the general government sector. In addition to this core activity, governments can also own or control enterprises that sell goods or services to the public and which operate largely on a market basis (public non-financial corporations) or engage in financial intermediation (public financial corporations).


GFS provides details of revenues, expenses, cash flows and assets and liabilities of the Australian public sector and comprises units which are owned and/or controlled by the Commonwealth, state and local governments. The system of GFS is based on international standards set out in the System of National Accounts, 2008 (2008 SNA) and the International Monetary Fund's (IMF) Government Finance Statistics Manual (GFSM).

The IMF published a revised Government Finance Statistics Manual (GFSM 2014) and the ABS GFS Manual was updated to reflect the new international standards. These changes are presented and have been implemented for data reported for periods from 1 July 2017 onwards. Detailed of these changes as well as information on the concepts, sources and methods used in compiling GFS can be found in the Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2015 (AGFS15).

Concepts, classifications, sources and methods

Economic type framework

The Economic Type Framework (ETF) is the main classification of stocks and flows. Stocks refer to the holdings of assets and liabilities at a point in time, ideally valued at current market prices. Flows are economic events and other occurrences, recorded in the period in which they occur, that cause changes in the value of stocks through the creation, transformation, exchange, transfer or extinction of value. Thus, the stock of assets and liabilities recorded at the beginning of a period changes as a result of flows during the period, moving to new levels at the end of the period.

The framework resembles a set of financial statements, with sections for an operating statement, a cash flow statement and a balance sheet. In addition, there are sections to capture items like transactions in non-financial assets, revaluations, other changes in volume and other supplementary information.

Type of asset and liability classification

The Type of Asset and Liability Classification (TALC) is a classification used for the identification of non-financial and financial assets and liabilities for GFS output purposes. TALC is primarily used to distinguish between fixed produced assets (e.g. dwellings and structures) and non-produced assets (e.g. land).

Classification of the functions of Government - Australia

The Classification of the Functions of Government - Australia (COFOG-A) is used to group operating expenses and expenditure by government function or purpose (education, health, etc.) to facilitate the study of the broad function of public sector spending and the effectiveness of this spending in meeting government policy objectives. COFOG-A replaces Government Purpose Classification (GPC) that was used under the previous AGFS05 standards.

Taxes classification

The Taxes Classification (TC) dissects this major form of government revenue according to type of tax collected.

In December 2015, the Commonwealth Government released the 2015-16 Mid-Year Economic and Fiscal Outlook (MYEFO) which included a reclassification of visa application charges (VAC). These charges are now treated as taxation revenue rather than sales of goods and services.  VAC are a type of taxation revenue imposed on some resident and non-resident individuals entering Australia.

The current version of AGS15 does not include an applicable Tax Classification (TC) for either Australian visitor arrivals or migration taxes. To ensure this tax is classified consistently with comparable Tax Classification types, in this release of Government Finance Statistics, Annual, 2019-20, VAC has been classified to "TC 533: Departure Tax". In the next issue of AGSF15, this Tax Classification will be broadened to "TC 533: Departures, arrivals and migration tax" to ensure consistency in standards.

Source/destination classification

The Source/Destination Classification (SDC) identifies the source or destination of selected flows and stocks between units within and outside the public sector. It is used in compiling consolidated statistics.

Data sources

The statistics shown in this publication are based on information provided in, or underlying, the published accounting statements and reports of governments and their authorities. The valuation of stocks and flows in source data is generally in accordance with requirements specified in accounting standards, which do not require universal or continual application of market values. However, for the most part, the divergence between the accounting values and market values are not materially significant. Exceptions occur for some interest flows and depreciation.

For the Commonwealth and state governments the primary data sources are:

  • public accounts and budget management systems of state treasuries and the Commonwealth Department of Finance
  • annual reports of departments and authorities
  • budget papers
  • reports of the Auditors-General.

For local government, the main data sources are annual statements of accounts completed by local authorities. There are no local government bodies in the ACT.

The ABS has developed a model to estimate statistics on Renewable Energy Certificates (RECs) by compiling and adjusting administrative data. RECs volume data are sourced from the REC Registry operated by the Clean Energy Regulator (CER). These data are converted to an accruals basis and classified by industry, sector and state of liable entity. The RECs volume data are also converted into current prices using RECs price data.


To compile statistics about the financial activities of a particular level of government, or any other grouping of public sector units, transactions and debtor/creditor relationships between units within the chosen grouping (sector or subsector) have to be matched and eliminated to avoid double counting. The process of matching and eliminating these items within the chosen group is known as 'consolidation'.

Consolidation is particularly important at the state government level where a significant proportion of total expenses/payments are financed by Commonwealth Government grants. Similarly, an appreciable part of the expenditure undertaken by state public non-financial corporations is financed by grants from state governments.


Statistical revisions are carried out regularly in Government Finance Statistics to reflect the most current information and data available.

Victorian Capital Asset Charge historical revision

The ABS has reclassified payments and receipts related to the Victorian Capital Asset Charge (CAC) across impacted sectors in the 2021-22 annual GFS publication.

The ABS recognise:

  • CAC as an other tax on production revenue, with an equal and offsetting non-payable tax credit.
  • Total CAC tax revenue will therefore have a value of zero and not be visible in Government Finance Statistics and Macroeconomic accounts.

Under the previous classification, CAC was classified as an equal and offsetting Sales of goods and services revenue received from the PNFC sector and a Subsidy on products expense paid to the PNFC sector.

The Victorian Department of Treasury & Finance and VicTrack have removed CAC transactions in all budgetary and fiscal reporting from 1 July 2021.

The National Accounts will implement this change in the upcoming 2022-23 release.

AUSTRAC Industry Contribution Levy historical revision

The ABS has reclassified revenue related to the Australian Transaction Reports and Analysis Centre (AUSTRAC) Industry Contribution Levy (ICL) in the 2021-22 annual GFS publication.

AUSTRAC undertakes intelligence activities to monitor financial transactions in Australia for government purposes and imposes an ICL on large reporting entities (banks, insurance companies, stockbrokers, and casinos).

The ABS recognise:

  • From 2012-13 to 2013-14, the ICL is classified as sales of goods and services (administrative fees) revenue to Commonwealth General Government from private financial corporations. During this period the ICL was designed to recover the cost of AUSTRAC's regulatory functions.
  • From 2014-15 onwards, the ICL is classified as taxes on income. During this period the ICL is charged based on earnings of large reporting entities, is compulsory, and payers of the ICL do not receive regulatory services or a licence in return for paying the ICL.

Under the previous classification, the ICL was classified as other revenue for all time periods.

The National Accounts will implement this change in the upcoming 2022-23 release.

Non-government schools education historical revision

The ABS reclassified payments to non-government schools in the 2020-21 annual GFS publication. This resulted in a reclassification to benefits to households in goods and services in the GFS timeseries back to 1998-99.

Revisions to the prior two years for the 2021-22 GFS release reflect the most current information and data available on funding to non-governments schools from the Commonwealth Department of Education.

The ABS recognise:

  • Non-government schools as market producers (market, non-profit institutions).
  • Government payments to non-government schools as the purchase of a service on behalf of households.

Under the previous classification:

  • Non-government schools were classified as non-market Non-Profit Institutions Serving Households (NPISH).
  • Government payments to non-government schools were classified as a transfer to households.

Commonwealth and state government financial reporting will continue to separately recognise their funding contributions to non-government schools.

The National Accounts implemented this change to their 2021-22 release. The Quarterly series for GFS and National Accounts was implemented from September quarter 2022.

Understanding the statements

The GFS conceptual framework is divided into a number of separate statements, each of which is designed to draw out analytical aggregates or balances of particular economic significance and which, taken together, provide for a thorough understanding of the financial positions of jurisdictions individually and collectively. These published statements are the operating statement, the cash flow statement, and the balance sheet.

Operating statement

The operating statement presents details of transactions in GFS revenues, GFS expenses and the net acquisition of non-financial assets for an accounting period. GFS revenues are broadly defined as transactions that increase net worth and GFS expenses as transactions that decrease net worth. Net acquisition of non-financial assets equals gross fixed capital formation, less depreciation, plus changes in inventories plus other transactions in non-financial assets. Two key GFS analytical balances in the operating statement are GFS net operating balance (NOB) and GFS net lending(+)/borrowing(-).

GFS NOB is the difference between GFS revenues and GFS expenses. It reflects the sustainability of government operations. GFS net lending(+)/borrowing(-) is equal to NOB minus the net acquisition of non-financial assets. A positive result reflects a net lending position while a negative result reflects a net borrowing position.

Cash flow statement

The cash flow statement identifies how cash is generated and applied in a single accounting period. 'Cash' means cash on hand (notes and coins held and deposits held at call with a bank or other financial institution) and cash equivalents (highly liquid investments which are readily convertible to cash on hand at the investor's option and overdrafts considered integral to the cash management function).

The cash flow statement reflects a cash basis of recording (the other statements are on an accrual accounting basis) where the information has been derived indirectly from underlying accrued transactions and movements in balances. In effect, the transactions are captured when cash is received or when cash payments are made. Cash transactions are specifically identified because they allow the compilation of the cash-based surplus(+)/deficit(-) measure and because the management of cash is considered an integral function of accrual accounting.

The surplus(+)/deficit(-) is a broad indicator of a sector's cash flow requirements. When it is positive (i.e. in surplus), it reflects the extent to which cash is available to government to either increase its financial assets or decrease its liabilities (assuming that no revaluations or other volume changes occur). When it is negative (i.e. in deficit), it is a measure of the extent to which government requires cash, either by running down its financial assets or by drawing on the cash reserves of the domestic economy, or from overseas.

Balance sheet

The balance sheet is the statement of financial position at a specific point in time. It shows the stock of assets and liabilities and the GFS net worth. GFS net worth is an economic measure of 'wealth' calculated as assets less liabilities for the general government sector and as assets less liabilities less shares and other contributed capital for the PNFCs and PFCs sectors.

Net financial worth is included as a memorandum item in the balance sheet presentation, which is the difference between total financial assets and total liabilities.

Interstate comparisons

The statistics in this publication have been compiled using standard definitions, classifications and treatment of government financial transactions to facilitate comparisons between levels of government and between states within a level of government.

However, the statistics also reflect real differences between the administrative and accounting arrangements of the various governments and these differences need to be taken into account when making interstate comparisons. For example, only a state level of government exists in the Australian Capital Territory and a number of functions performed by it are undertaken by local government authorities in other jurisdictions.

Interstate comparisons of data may also be significantly affected by differences in the mix of operations undertaken by state governments and local governments. For example:

  • Water and sewerage undertakings may be operated by state government, local government or a combination of both.
  • Government transport undertakings are operated exclusively by state authorities in all states except Queensland where bus transport is operated by the local government sector.

Relationship to other information

Uniform presentation framework

Following the May 1991 Premiers' Conference, the Commonwealth Government and the state governments resolved to implement a uniform presentation framework in their budget documents. The purpose of the uniform presentation framework was to introduce uniformity into the presentation of GFS so that users of the information could make valid comparisons between jurisdictions.

Since budget year 1992-93 the Commonwealth and state governments have presented information in their budget documents on the ABS GFS basis. The information presented in the budget documents of each jurisdiction generally conforms with the standards applied by the ABS. Jurisdictions may present the information based on their interpretation of the GFS classifications, but must provide a reconciliation of this information with information reflecting the ABS treatment on these issues. In 1999, the uniform presentation framework was revised from a cash to an accruals basis and the accrual uniform presentation framework was implemented beginning with most jurisdictions' Budgets for 2000-01.

Public Sector debt

Public sector debt is defined as the level of debt liabilities owed by a government to its creditors. Public sector debt statistics can be used as a performance measure on the level of solvency and the liquidity of the public sector. They can also be used to assess the budget sustainability of governments.

The International Monetary Fund (IMF) released a staff discussion note titled What Lies Beneath: The Statistical Definition of Public Sector Debt in 2012. This note introduced the debt matrix - a grid presentation of public sector debt on both a gross and net basis, which enables the recording of debt based on type of debt instrument and level of government subsector.

With the implementation of AGFS15, the ABS has introduced the debt matrix presentation for public sector debt statistics, modified for the Australian situation. The ABS has broadened the financial assets and liabilities reported in the matrix beyond just debt instruments to also include other liabilities, namely equity.

The ABS has recognised that using a matrix-style presentation enables analysts and policy makers to analyse different measures of debt and other liabilities depending on their specific focus or interest. For example, if one is analysing a government’s liquidity, then the focus would be at the L1 to L3 level. However, if one is analysing a government’s longer term budget sustainability, then the focus would be at the L4 to L6 level.

Accounting standards

From 2008–09 onwards, Australian Accounting Standard Board 1049 Whole of Government and General Government Sector Financial Reporting (AASB 1049) replaced Australian Accounting Standard 31 Financial Reporting by Government (AAS 31) as the standard Governments should follow in the preparation of their financial statements. Information on AASB 1049 is available from the Australian Accounting Standards Board website

  • ABS applies reconciliation adjustments when it consolidates data for all jurisdictions and compares annual data with quarterly data used in compiling the national accounts.
  • ABS includes data which were not available when a jurisdiction's GFS presentations were published (e.g. major asset sales).

Australian equivalents to International Financial Reporting Standards

The Australian equivalents to International Financial Reporting Standards (AIFRS) began to be progressively implemented in Australia from 1 January 2005. All Australian governments adopted AIFRS for financial reporting for the financial year 2005-06. As GFS data is sourced primarily from the same underlying accounting and budgetary systems that each jurisdiction uses for financial reporting, some impacts have been observed mainly in the accrual-based GFS statements. Details of the changes and the impacts on GFS are further discussed in the Technical Note - Impact of AIFRS in Government Finance Statistics, Australia, 2005-06.


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