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Government final consumption expenditure– sources and methods

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

21.118    Estimates of GFCE are disaggregated into Commonwealth government and State and local government.

21.119    National government final consumption includes government agencies and jointly administrated universities. National GFCE is disaggregated into defence and non-defence.

21.120    Jurisdictional reporting matches regional boundaries for State and local governments. Therefore, State and local GFCE estimates are compiled using the bottom-up approach. Estimates in the quarterly and annual state accounts are consistent with data published in the GFS, with the exception of timing and some conceptual differences.

21.121    The table below outlines the data sources and methods used in the estimation of quarterly GFCE by level of government. They include both the current price estimates and volume estimates.

21.122    Annual estimates are produced as the sum of quarters with differences due to timing. For GFS estimates this can be significant due to inclusion of audited GFS data from Government Finance Statistics, Australia. This occurs for the state accounts, and also for Australian National Accounts: National Income, Expenditure and Product.

Table 21.29 Government final consumption expenditure – By level of government (quarterly)
ItemComment
National defence
 Current price estimates

 

  

Government Finance Statistics is the primary data source, which in turn is based on data from the Department of Finance.

The data obtained are for the expenditures on defence employees (i.e. wages and salaries and employer social contributions) and on other defence inputs (i.e. operating expenses such as rent, electricity, stationery, etc.) plus details of the value of sales of goods and services. The estimate for government expenditure on Financial Intermediation Services Indirectly Measured (FISIM) is included as part of the costs (i.e. intermediate consumption) of general government.

Consumption of fixed capital is used in place of the depreciation recorded in government accounts. Consumption of fixed capital is the preferred conceptual measure as it is compiled on a current replacement cost basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM).

There are no state splits of data from GFS, with data split to states using posting location of defence employees. This is sourced from the Department of Defence. 

 Volume estimates

 

  

Defence employee costs are deflated using the Wage Price Index and defence materials are deflated using the Producer Price Indexes.

National non-defence
 Universities
  Current price estimates

 

  

Data for universities are collected from a sample of approximately 22 public universities or just over 50 per cent of the population. This provides enough detail to allow state estimates to be produced.

  Volume estimates

 

  

Estimates for universities are derived by quantity revaluation using the estimated growth in the number of students in each state. For quarterly estimates this is based on trend as there is no quarterly data.

 Pharmaceuticals
  Current price estimates

 

  

Pharmaceutical benefit scheme expenditure by state is produced by the Commonwealth Department of Health.  This is based upon pharmacy location of subsidised medicines.

  Volume estimates

 

  

Volume estimates for pharmaceuticals are price deflated using the CPI data for expenditure on pharmaceuticals.

 Medicare
  Current price estimates

 

  

Medicare data is allocated to state using Commonwealth employment detail from Employment and Earnings, Public Sector.

  Volume estimates

 

  

Medicare estimates are quantity revalued at state level using the estimated growth in medical services (from Medicare and hospital services data).

 Other
  Current price estimates

 

  

Government Finance Statistics is the primary data source, which in turn is based on data from the Department of Finance.

The data obtained are for the expenditures by Commonwealth agencies other than those in the Defence portfolio and by public universities on employees (i.e. wages and salaries and employer social contributions) and on other inputs (i.e. operating expenses such as rent, electricity, stationery, etc.) plus details of the value of sales of goods and services. The estimate for government expenditure on Financial Intermediation Services Indirectly Measured (FISIM) is included as part of the costs (i.e. intermediate consumption) of general government.

Consumption of fixed capital is used in place of the depreciation recorded in government accounts. Consumption of fixed capital is the preferred conceptual measure as it is compiled on a current replacement cost basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM).

  Volume estimates

 

  

All other national non-defence estimates are price deflated using an index compiled using components of the Consumer Price Index, Wage Price Index and Producer Price Indexes.

State and local
 Current price estimates

 

  

Current price estimates are sourced from GFS data.

Data are provided according to the following components:

  • health;
  • education;
  • redundancies; and
  • superannuation.
 Volume estimates
  Health

         

  

Health estimates are quantity revalued using the estimated growth in medical services. Quarterly estimates are trended as data is only available annually.

  Education

         

  

Education estimates are quantity revalued using the estimated growth in the number of students by state.

  Redundancies

         

  

Redundancy payments for health are quantity revalued using the estimated growth in medical services. Quarterly estimates are trended as data is only available annually.

Redundancy payments for education are quantity revalued using the estimated growth in the number of students by state.

The remainder is price deflated as below using components of the Consumer Price Index, Wage Price Index and Producer Price Indexes.

  Superannuation

         

  

Superannuation estimates are price deflated using indexes compiled from the Wage Price Index.

  All other

         

  

All other State and local government estimates are price deflated using an index compiled using components of the Consumer Price Index, Wage Price Index and Producer Price Indexes.