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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

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.