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Social contributions and social benefits

Australian System of National Accounts: Concepts, Sources and Methods
Reference period
2020-21 financial year

Introduction

13.60    Social benefits are current transfers receivable by households to provide for needs that arise from certain events or circumstances such as sickness, unemployment, retirement, housing, education or family circumstances. There are two kinds of social benefits included in ASNA; namely:

  1. social insurance benefits (in the ASNA, only workers' compensation is recorded here); and
  2. social assistance benefits.

13.61    The former are provided by social insurance schemes operated by financial institutions or by employers on behalf of their employees. Social insurance schemes pay benefits from accumulated social contributions, which are paid into the schemes by employers on behalf of employees, or directly by the employees. Social assistance benefits are paid by governments from general revenue and are not paid from social contributions. Social insurance benefits and social assistance benefits are part of the gross secondary income of households.

Social insurance benefits - workers' compensation

13.62    The only relevant social insurance scheme in the Australian context relates to workers' compensation. Households make social contributions for workers' compensation and receive social benefits from claiming for workers’ compensation. Households are regarded as receiving workers' compensation premiums as part of the employer social contributions component of compensation of employees, making social contributions for workers' compensation and consequently receiving social benefits from workers' compensation. All of these flows related to workers' compensation are recorded in the household income account. The workers' compensation premiums which are included in employers' social contributions include direct workers' compensation premiums payable and the direct cost of workers' compensation to employers who are permitted to self-insure.

Social assistance benefits

13.63    Social assistance benefits are paid by general government from general revenue and are not financed from social contributions. Social assistance benefits (in cash to residents) include age pensions, family and child benefits, sickness and unemployment benefits, benefits to ex-service persons and their dependants, and government scholarships.

Sources and methods - Annual

13.64    The tables below outline the data sources and methods used in the estimation of annual social contributions and social assistance in current prices.

Table 13.13 Annual secondary income - Social contributions and social benefits
ItemComment
Social insurance contributions – workers’ compensation

 

Social insurance contributions for workers compensation net premiums is calculated as:

     Workers' compensation premiums
     plus Workers' compensation premium supplements
     less Workers' compensation insurance service charge (ISC)

where ISC = premiums +premium supplements - expected claims.

It follows that Social contributions for workers' compensation net premiums equals Workers' compensation expected claims.

(See Table 13.15 Annual secondary income- Net non-life insurance premiums and non-life insurance claims for methodology and data sources.)

Social benefits receivable – workers’ compensation

 

Social benefits receivable – workers' compensation is equal to actual claims.

The compilation methodology for sectoral ISC requires sectoral actual claims estimates.

(See Table 13.15 Annual secondary income- Net non-life insurance premiums and non-life insurance claims for methodology and data sources.)

Social assistance benefits
 Annual estimates of social assistance benefits are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance and State government financial statements.

Sources and methods - Quarterly

13.65    The table below outlines the data sources and methods used in the estimation of quarterly social contributions and social assistance in current prices.

Table 13.14 Quarterly secondary income - Social contributions and social benefits
ItemComment
Social contributions and social benefits – Workers' compensation
 Quarterly estimates of social contributions for workers' compensation and social benefits from workers' compensation are compiled by applying a linear trend formula to the annual estimates.
Social contributions and social benefits – social assistance benefits
 

Quarterly estimates of social assistance benefits are sourced from Government Finance Statistics. Data are derived from administrative sources such as the Commonwealth Department of Finance and State government financial statements.

These quarterly estimates are used as indicators to produce social assistance benefits paid by general government to households by applying a benchmarking process to the corresponding annual series.

There is no quarterly imbalance as quarterly social contributions and social benefits are calculated on a "from-whom-to-whom" basis.