Government Finance Statistics, Australia methodology

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Reference period
December 2023

Explanatory notes

This publication contains quarterly 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 conducted 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 on a market basis (public non-financial corporations) or engage in financial intermediation (public financial corporations).

Scope

The system of 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. This quarterly GFS release presents statistics on revenues, expenses, and net acquisition of non-financial assets for the general government sector and public non-financial corporations sector. Quarterly balance sheet outputs for the Commonwealth general government and total state general government sectors were included from 2017/18 following the implementation of AGFS15.

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 2014 (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. Details 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 CSM).

Concepts, sources and methods

Classifications

The main GFS classification is the Economic Type Framework (ETF). The ETF describes stocks and flows and resembles a set of financial statements, with sections for an operating statement, a cash flow statement, and a balance sheet. There are sections to cater for the reconciliation of accounting net operating result measures with cash flows from operating activities and to capture items like assets acquired under finance leases, intra-unit transfers, and revaluations and other changes in the volume of assets.

Data sources

The statistics shown in this release 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 are valued in accordance with requirements specified in accounting standards, which do not require universal or continual application of market values. The divergences between the accounting values and market values however, are generally not materially significant. Exceptions occur for some interest flows and depreciation.

For the general government sector for the Commonwealth Government and all state governments, the primary quarterly data sources are public accounts and budget management systems of state treasuries and the Commonwealth Department of Finance. For the public non-financial corporation sector, GFS are collected from a survey of the largest corporations in several jurisdictions where the relevant treasury does not provide that data as part of its accounting reporting.

Quarterly local government (LG) data is modelled using annually audited financial data and a modelled growth rate. The modelled data replaced quarterly survey data from September 2023. LG data is not available separately, the lowest level of granularity LG data is available through is combined state and local government level.

Consolidation

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) must 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 considerable 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 subsidies from state governments.

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. These differences need to be considered when making interstate comparisons. For example, only the state level of government exists in the Australian Capital Territory (ACT) and certain functions it performs are undertaken by local government authorities in other jurisdictions.

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 annual financial statements. Information on AASB 1049 is available from the Australian Accounting Standards Board website http://www.aasb.gov.au.

A key feature of AASB 1049 is the requirement that where the GFS standards differ from the accounting standards, a qualitative explanation of the differences must be presented. A functional statement of expenses should also be reported. AASB 1049 covers General Government and Whole of Government but does not apply to individual government agencies. Whole of Government for each jurisdiction is referred to as Total public sector in GFS.

Data presented in this publication may differ from data published by Treasuries if:

  • treasuries have not adjusted their data to a GFS basis
  • ABS has a different view on classification treatments applied by jurisdictions
  • ABS employs a different consolidation methodology to those used by jurisdictions
  • 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 System of National Accounts (ASNA)

While GFS and ASNA share the same conceptual framework (2008 SNA), there are methodological differences between GFS and ASNA analytical measures (for example net worth and net lending/borrowing). Descriptions of GFS/ASNA reconciliations are outlined in Section 6 of the ABS publication Information Paper: Accruals-based Government Finance Statistics (formerly used cat. no. 5517.0). Not all public sector ASNA measures are extracted from GFS.

Revisions

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

Quality declaration

Institutional environment

Statistics presented in this publication are based on information provided in or underlying the published accounting statements and reports of governments and their authorities.

For the general government sector for the Commonwealth Government and all state governments, the primary quarterly data sources are public accounts and budget management systems of state treasuries and the Commonwealth Department of Finance.

For the public non-financial corporation sector, GFS are collected from a survey of the largest corporations in several jurisdictions where the relevant treasury does not provide that data as part of its accounting reporting.

For the local government (LG) sector, data is modelled using annually audited financial data and a modelled growth rate. The modelled data replaced quarterly survey data from September 2023. LG data is not available separately, the lowest level of granularity LG data is available through is combined state and local government level.

For information on the institutional environment of the ABS, including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.

Relevance

The term 'Government Finance Statistics' refers to statistics that measure the financial activities of governments and reflect the impact of those activities on other sectors of the economy. The Australian system of GFS 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 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 in the Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2015 (AGFS15) and have been implemented for data reported for periods from 1 July 2017 onwards.

The system of 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.

This release presents GFS on an accrual accounting basis for each jurisdiction for the general government sector and the public non-financial sector. This release presents the operating statement and balance sheet outputs.

Timeliness

Quarterly GFS are released about nine weeks after the end of the quarter.

Accuracy

The main influence on the accuracy of GFS data is non-sampling error. Non-sampling error arises from inaccuracies in collecting, recording, and processing the data. The most significant of these errors are the non-final nature of the quarterly data, misreporting, and processing errors. Every effort is made to minimise error by working closely with data providers, training of processing staff and efficient data processing procedures.

Where the economic activity of some units is insignificant, under coverage can arise. These few units are either omitted or some of their activities are not covered by the collection methodology.

Quarterly GFS data is sourced from Commonwealth and state accounts that are not finalised and which are subject to revision. For this reason, summing the four quarters of a financial year will not equal the final annual data published in Government Finance Statistics, Australia (formerly used cat. no. 5512.0).

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

Coherence

In 1998-99, the ABS adopted an accrual basis of recording for its GFS. Prior to this the ABS GFS was cash based. In addition to the information published, some annual basis GFS data are available back to 1961-62.

Due to the different compilation and data sources, data from 1998-99 onwards are not directly comparable with earlier cash data. The ABS has not established a quantitative measure of this break in series because the existing data sources do not permit this. Data on a pure accrual basis are only available from 1998-99.

In 1992-93 the Commonwealth and state governments implemented the uniform presentation framework (UPF) in their budget documents to introduce uniformity into the presentation of GFS.

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.

Data presented in this publication may differ from data published by Treasuries in their reconciliation statements for the key aggregates where:

  • treasuries have not adjusted their data to a GFS basis
  • where ABS have a different view on classification treatments
  • where ABS employ a different consolidation methodology
  • where data have been included that were not available when the jurisdiction's GFS presentations were published.

The statistics in this release 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. The statistics also reflect real differences between the administrative and accounting arrangements of the various jurisdictions and these differences need to be considered when making interstate comparisons. For example, only a state level of government exists in the ACT. The ACT government performs several functions which are undertaken by local government authorities in other jurisdictions.

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) must be matched and eliminated to avoid double counting. The process of matching and eliminating these items within the chosen group is known as 'consolidation'.

While GFS and Australian System of National Accounts (ASNA) substantively share the same conceptual framework (2008 SNA), there are methodological differences between GFS and ASNA analytical measures (for example net worth and net lending/borrowing). Descriptions of GFS/ASNA reconciliations are outlined in Section 6 of the ABS publication Information Paper: Accruals-based Government Finance Statistics (cat. no. 5517.0).

Interpretability

The methodology provided with this publication provides information on the data sources, terminology, classifications, and other technical aspects associated with these statistics. Detailed information on the concepts, sources and methods used in compiling Government Finance Statistics can be found in Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2015 (formerly used cat. no. 5514.0).

Accessibility

If the information you require is not available from the published data, the ABS may have other relevant data available on request. Inquiries should be made to the Customer Assistance Service on:

The ABS Privacy Policy outlines how the ABS will handle any personal information that you provide to us.

Glossary

Glossary

AASB 1049

Australian Accounting Standard Board 1049 Whole of Government and General Government Sector Financial Reporting is the principal accounting standard applicable to the Commonwealth and State governments in the preparation of their financial reports. From 2008-09 onwards, Australian Accounting Standard Board 1049 has replaced Australian Accounting Standard 31 Financial Reporting by Government.

Accrual recording

A recording method in which revenues, expenses, lending, and borrowing are recorded as they are earned, accrued, or incurred regardless of when payment is made or received.

Chain volume measure

These measures are annually reweighted chain Laspeyres indexes referenced to the current price values in a chosen reference year.

Contribution to growth in GDP

The contributions to growth for a given aggregate 'A' is calculated as:

100 x ( \((PY^A _t – PP^A_t) \over PP^A_t)\) ) x (\(PP^A _t \over PP^{GDP}_t\) ) 

Where:

  • \(PY^A_t \) is the quantity of an aggregate in the current period, in previous period prices
  • \(PP^A_t\) is the quantity of an aggregate in the previous period, in previous period prices
  • \(PP^{GDP}_t\) is the current price value of GDP in the previous period.

Additivity for contributions to growth exists for the years where the statistical discrepancy is zero, effectively 1995-96 onwards, by using GDP expressed in the prices of the previous year.

For the period 1986-87 to 1994-95, where the statistical discrepancy is not zero, the result is close to additive but not exact because the statistical discrepancy cannot be expressed in prices of the previous year.

Quarterly contribution to growth estimates will not add to GDP growth due to the existence of a statistical discrepancy between the three quarterly measures of GDP.

Consolidation

The process of elimination of all within-sector asset-liability positions, and all transactions between two units of the same sector. Consolidation can be applied to the statistics of any group of units of analytical interest.

Control not further defined (n.f.d.)

The control not further defined (n.f.d.) sector contains units where jurisdiction is shared between two or more governments, or classification of a unit to a jurisdiction is otherwise unclear. The main type of units currently falling into this category is public universities.

Current grant expenses

Voluntary transfers intended to finance the current activities of the recipient. Includes grants for current purposes to foreign governments for aid projects and from one level of government to another (e.g., Commonwealth to State).

Current prices

Estimates are valued at the prices of the period to which the observation relates. For example, estimates for this financial year are valued using this financial year’s prices.

Depreciation

The accounting process of systematically allocating the cost less estimated residual value of an asset over its expected life.

General government sector

Institutional sector comprising all government units and non-profit institutions controlled and mainly financed by government.

GFS net lending/borrowing (NLB)

The financing requirement of government, calculated as the GFS net operating balance less the net acquisition of non-financial assets. A positive result reflects a net lending position, and a negative result reflects a net borrowing position.

GFS net operating balance (NOB)

This is calculated as GFS revenue minus GFS expenses. It is equivalent to the change in net worth arising from transactions and this measure reflects the sustainability of government operations.

GFS net worth

The total stock of assets less liabilities and shares / contributed capital. For the general government sector, net worth is assets less liabilities since shares / contributed capital is zero. This measure reflects the contribution of governments to the wealth of Australia.

Government final consumption expenditure

The SNA concept that refers to government use of goods and services for the satisfaction of individual or collective human needs or wants.

Grants and subsidies received

Cash and other benefits received from voluntary transfers by government and other entities.

Gross Domestic Product (GDP)

Is the total market value of goods and services produced in Australia within a given period after deducting the cost of goods and services used up in the process of production but before deducting allowances for the consumption of fixed capital. Gross domestic product, as here defined, is 'at market prices'. It is equivalent to gross national expenditure plus exports of goods and services less imports of goods and services.

Gross fixed capital formation

The value of acquisitions of new and existing produced assets, other than inventories, less the value of disposals of new or existing produced assets, other than inventories.

Financial Intermediation Services Indirectly Measured (FISIM)

Measures the service implicitly provided by financial intermediaries, such as banks, on deposit and loan facilities. It is measured 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.

Intangibles

Patents, copyrights, mineral concessions, and similar non-physical non-financial assets. In the ASNA, expenditures on these assets are capitalised and therefore not recorded as consumption expenditure.

Interest expense

Nominal interest on unfunded superannuation and other interest payable. Nominal interest on unfunded superannuation is the imputed interest accrued during the period on unfunded superannuation liabilities.

Interest income

Income accrued by owners of financial assets such as deposits, securities other than shares, loans, and accounts receivable in return for providing funds to other entities.

Jurisdiction

The public sector units over which the Commonwealth Government or an individual state or territory government has direct control or, in the case of local government authorities, the government which administers the legislation under which the authority was established.

Levels of Government

The public sector comprises all organisations owned or controlled by any of the three levels of government within the Australian political system; national (which includes Commonwealth and multi-jurisdictional), state and local. In this release, statistics including all three levels are called 'All Levels of Government'. The multi-jurisdictional sector is not shown separately but is included in the calculation of All Levels of Government tables.

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 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 (-).

Public non-financial corporations

Resident government-controlled corporations and quasi-corporations engaged in the production of market goods and/or non-financial services.

Sales of goods and services

Revenue from the direct provision of goods and services by general government and public corporations.

Seasonal adjustment

Seasonal adjustment is used to remove the effects of seasonal factors.

Seasonal adjustment - chain volume measures

Seasonally adjusted chain volume estimates are calculated from seasonally adjusted estimates expressed in the prices of the previous year. These estimates are benchmarked to annual original estimates so that they sum to the corresponding annual original figures.

Taxation revenue

In GFS, some Commonwealth Government taxation revenue is recorded using the tax liability method, under which revenue is measured when a liability to pay tax arises from an assessment process. Within the national accounts, tax revenue is recorded when the taxpayer performs the underlying economic activity that gives rise to a tax liability.