Latest release

Government Finance Statistics, Education, Australia methodology

Reference period
2018-19

Explanatory notes

Introduction

1 This release contains statistics on expenditure on education by the general government sector. They are presented on an accrual accounting basis and are taken from the system of Government Finance Statistics (GFS), which is designed to provide statistical information on public sector entities classified in a uniform and systematic way.

2 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.

3 GFS education statistics include information on operating expenses, net acquisition of non–financial assets, gross fixed capital formation, and sales of goods and services relating to education (i.e. student fees and charges made by governments and educational institutions in exchange for the provision of educational services).

4 Summary information relating to private expenditure on education is also included and has been sourced from the Australian National Accounts. Paragraphs 14–19 of these explanatory notes provide an explanation of the private expenditure items included in this release.

Coverage

5 General government education operating expenses include some expenses intended to facilitate education but which are not spent on educational services and facilities. Examples of such expenses are payments termed current monetary transfers to households and living allowances paid to students which are used to finance expenditure on food, clothing, transport, rent, etc.

​​​​​​​Classifications

6 The main GFS classifications used to produce these data are:

  • Economic Type Framework for GFS (ETF)
    This 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 Economic Type 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 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, revaluations and other changes in the volume of assets.
     
  • Classification of the Functions of Government - Australia (COFOG-A)
    This classification is used to group operating expenses and expenditure by purpose (education, health, etc.) with similar functions to facilitate the study of the broad function of public sector spending and the effectiveness of this spending in meeting government policy objectives.
     

7 General government transactions included in the calculation of data presented in this release relate to those transactions which have been classified to 'COFOG-A 09 – Education'. There are some issues, however, relating to the structure and application of the COFOG-A that should be considered when interpreting the data. Nurse education carried out in hospitals is included in 'COFOG-A 07 – Health' because of the difficulty in separately identifying these expenditures in the accounts of hospitals.

8 In addition, differences in institutional structure and accounting practices make it difficult to implement the COFOG-A in a way which leads to fully comparable statistics between the states. For example, in some states expenditure on the education of disabled children (which should be classified to special education) is included under primary and secondary education because data are not separately available. These differences need to be taken into account when comparing the statistics between states and over time.

9 Detailed information on the concepts, sources and methods used in compiling GFS can be found in Australian System of Government Finance Statistics: Concepts, Sources and Methods (cat. no. 5514.0).

Private expenditure on education

14 Expenditure on education by the private sector (as recorded in the National Accounts) consists of household final consumption expenditure on education services and gross fixed capital formation mainly by private educational institutions.

15 Household final consumption expenditure on education services is estimated as:

  • fees (other than boarding fees) paid by persons to government schools (including technical and agricultural colleges), independent schools, business colleges, universities etc
  • gifts paid to independent schools, business colleges, universities etc
  • payments to tertiary institutions made under the Higher Education Loan Program (HELP) introduced on 1 July 2005, and under the previous Higher Education Contribution Scheme (HECS) as they are classified as charges for the provision of services by the tertiary institution
  • current expenditure of non–profit educational institutions, net of fees and other current receipts. Current expenditure excludes interest and consumption of fixed capital and is financed by fees paid by households and current grants from general government.
     

16 Expenditure on such items as school books, uniforms, etc. and expenditure by parents’ associations on school equipment are not included in household final consumption expenditure on education, but are treated in the Australian System of National Accounts (ASNA) as household final consumption expenditure on other goods and services (such as clothing, books, etc.). Fares paid by students travelling to and from educational institutions are not counted as part of household final consumption expenditure on education, but are included in transport services in ASNA.

17 Private gross fixed capital formation in the field of education is estimated in ASNA from statistics of the value of work done on new building and major additions to buildings of private educational institutions.

18 It is important to note that estimates of government expenditure on education and of private expenditure on education cannot simply be aggregated to derive an estimate of total expenditure on education. This would result in double counting of some expenditures as transfers between governments and private education institutions would not be eliminated.

19 The current price estimate of GDP is used in Table 19. Current price GDP is obtained by reflating the average chain volume estimate, derived from the three independent approaches, by the implicit price deflator derived from the expenditure–based estimates. GDP is as published in Table 36, Expenditure on GDP, Current Prices in the December quarter 2019 issue of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0).

​​​​​​​Revisions

20 GFS data are revised on an annual basis. For this reason differences can occur between equivalent aggregates published in earlier years.

​​​​​​​Related publications

21 Users may refer to the following publications which contain related information:

Glossary

Show all

​​​​​​​Capital grant expenses

Unrequited payments by government to finance the acquisition of non-financial capital assets by the recipient, or compensate the recipient for damage or destruction of capital assets, or increase the financial capital of the recipient.

Capital transfer expenses

Transactions in which the ownership of an asset (other than cash and inventories) is transferred from one institutional unit to another, in which cash is transferred to enable the recipient to acquire another asset or in which the funds realised by the disposal of another asset are transferred. Includes capital grant expenses.

Change in inventories

The change in the value of inventories arising from transactions over the accounting period.

Current grant expenses

Voluntary transfers intended to finance the current activities of the recipient. Includes grants for current purposes to private non-profit organisations serving households, grants made to foreign governments and organisations including grants made for aid projects, and current grants from one level of government to another (eg. Commonwealth to State) and between units in different jurisdictions within the same level of government.

Current transfer expenses

Refers to payments that are current in nature for which no economic benefits are received in return for payment. Includes current grant expenses, subsidies and current monetary transfers to households.

Depreciation

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

Employee expenses

Employee expenses relate to compensation of employees and reflect those expenses accrued as a result of services provided by employees in the current period. They include wages and salaries, annual leave, long service leave and superannuation.

Gross domestic product (GDP)

Total market value of goods and services produced in Australia within a given period after deducting the cost of the goods and services used up in the process of production, but before allowance for the consumption of fixed capital (depreciation).

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.

Higher Education Contribution Scheme (HECS)

Replaced by HELP in 2005, HECS required students to pay a contribution towards the cost of their higher education. Payments could be made direct to the institution attended at the time the education course was undertaken, or students could enter a loan agreement with the Commonwealth Government to discharge their obligation on their behalf. Students then progressively repaid the loan at a later date through the taxation system.

Higher Education Loan Programme (HELP)

The Higher Education Loan Programme (HELP) was introduced on 1 January 2005 and replaced the Higher Education Contribution Scheme (HECS). HELP comprises a number of schemes which enable eligible students to obtain a loan for either all or part of their tuition fees.

 In GFS, the HELP and HECS loans are recorded as advances from the Commonwealth Government to the students while the payment of contributions on behalf of the students are treated as payments for a service by students to higher education institutions.

Household final consumption expenditure

Net expenditure on goods and services by persons and expenditure of a current nature by private non-profit institutions serving households on the consumption of educational services. These include expenditure on salaries paid to non-government school teachers and HECS and HELP payments (both up front and deferred) by students.

Intra-sector transfers

Transactions or transfers between levels of government that are eliminated during the GFS consolidation process. Includes grants from one level of government to another.

Non-employee expenses

Those operating expenses other than compensation of employees (employee expenses), depreciation, or current or capital transfer expenses.

Sales of goods and services

Revenue from the direct provision of goods and services.

Quality declaration - summary

Institutional environment

Statistics presented in Government Finance Statistics, Education, Australia (cat. no. 5518.0.55.001) are based on information provided in, or underlying the published accounting statements and reports of governments and their authorities. For the Commonwealth Government and all state governments the primary data sources are:

  • public accounts and budget management systems of state treasuries and the Australian Department of Finance;
  • annual reports of government departments and authorities;
  • budget papers; and
  • reports of the Auditors–General.
     

For local government, the main data sources are annual local government consolidated data collections conducted on behalf of a range of stakeholders by departments of local government in each of the jurisdictions, as well as published financial statements.

For information on the institutional environment of the Australian Bureau of Statistics (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 Government Finance Statistics (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 1993 (1993 SNA) and the International Monetary Fund's (IMF) Government Finance Statistics Manual (GFSM). The System of National Accounts has been updated and the System of National Accounts 2008 (2008 SNA) was endorsed by the United Nations Statistical Commission in February 2009. The ABS compilation of GFS adopts the updated 2008 SNA treatment in two cases. The first is that Defence Weapons Platforms are treated as gross fixed capital formation. The second is in the treatment of Special Drawing Rights. These changes have been updated in the Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2005 (cat. no. 5514.0), but do not apply to education statistics. The ABS GFS Manual has also been updated to include the treatment of emissions schemes in ABS GFS data.

The IMF has published a revised Government Finance Statistics Manual (GFSM 2014), and the Australian system has been updated to reflect the new international standards. These changes are presented in the Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2015 (cat. no. 5514.0), and will be 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 operating expenses on education on an accrual accounting basis for each jurisdiction for the general government sector.

Timeliness

Annual expenditure on education statistics are released within 11 months of the end of the financial year.

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 misreporting of data, 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.

 Revisions are made to the annual expenditure on education data as required as a result of new and updated information available from providers.

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 GFS data are available back to 1961–62. However, 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 accruals 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) has replaced Australian Accounting Standard 31 Financial Reporting by Government (AAS 31) as the standard Governments should follow in the preparation of their financial statements. A key feature of AASB 1049 is that where the Australian System of Government Finance Statistics: Concepts, Sources and Methods (cat. no. 5514.0) differs from the accounting standards, a reconciliation to the key GFS aggregates and an explanation for these must be presented in a reconciliation statement. 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, or where data have been included that were not available when a 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. However, the statistics also reflect real differences between the administrative and accounting arrangements of the various jurisdictions 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 (ACT). The ACT government performs a number of 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) 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'.

Interpretability

The publication Government Finance Statistics, Education, Australia (cat. no. 5518.0.55.001) contains an Explanatory Note and Glossary that provide 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 GFS can be found in Australian System of Government Finance Statistics: Concepts, Sources and Methods (cat. no. 5514.0).

Accessibility

If the information you require is not available from the published data then the ABS may have other relevant data available on request. Inquiries should be made to the National Information and Referral Service on 1300 135 070, email client.services@abs.gov.au or public.finance@abs.gov.au. The ABS Privacy Policy outlines how the ABS will handle any personal information that you provide to us.