Latest release

Coherence

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

24.90    Coherence of statistical data includes coherence between different data items pertaining to the same point in time; coherence between the same data item for different points in time; and international coherence.

24.91    Judgements can be made as to the extent of error associated with an estimate, by being aware of the factors which influence coherence. These judgements can be enhanced by comparing estimates that should be conceptually identical, or by comparing estimates where a particular relationship between the estimates could be expected. In other words, the extent to which a set of statistics are coherent can provide a guide to the accuracy of the statistics. However, it should be noted that a coherent set of statistics is not necessarily an accurate set, as the statistics that are being compared may suffer from similar magnitudes of error with the errors being in the same direction.

24.92    Users sometimes need to draw on different sets of statistical information derived from different sources and at different times. Appropriate use is facilitated if information can be validly compared with other related data sets. This is achieved using common, or at least comparable, concepts and methodologies across products.

Standard frameworks, concepts, variables and classifications

24.93    Frameworks, concepts, and classifications exist to ensure that the target of measurement is consistent across statistical programs, that consistent terminology is used across programs and that the qualities being estimated bear known relationships to each other. The realisation of this element is normally through the adoption and use of frameworks such as the SNA and ASNA. The issue of international comparability is addressed by considering the adherence of the standards adopted to the international standards as contained in the SNA.

24.94    Although there are a wide range of uses for economic data, national accounts data requirements are a key guiding principle behind most of the Bureau's economic collections. Coherence has been aided by the harmonisation of the various international standards for economic statistics with the SNA. Where administrative data are used, special care is taken to ensure the correct application of standards, and the identification of possible data gaps and overlaps. Appropriate adjustments are made to align the data in cases where administrative data are known to differ from national accounts standards.

Common frames, methodologies and systems

24.95    Data coherence is improved through the development and use of common frames, methodologies and systems for data collection and processing. For example, the use of a common business register across all business surveys ensures that differences in frame coverage do not introduce inconsistencies in data. Differences due to response error are minimised using commonly formulated questions when the same variables are being collected in different surveys. Another strategy is to use common methodology and systems for the various processing steps of a survey, to ensure that these operations do not introduce discrepancies in data.

Data comparison and integration

24.96    A key aspect of the national accounts process is the confrontation of data from different sources, and the subsequent reconciliation. At its most formal, this process occurs within the annual balancing of the Supply and Use tables, which are used to benchmark the national accounts. It also includes the coherence between the national accounts estimates and the various partial indicators of economic activity published by the ABS and other agencies.

24.97    The confrontation of data in the annual Supply and Use framework provides a systematic, if somewhat complex, means of checking the coherence of much of the source data used in the national accounts. In the process, the source data are subject to examination and adjustment in order to achieve coherence in the annual national accounts’ statistics. While coherence is achieved, it cannot be claimed that the results are necessarily accurate. S-U tables are data intensive, and some product information has to be synthesised. More suitable source data may become available later, leading the national accounts compiler to take different decisions to balance the supply and use of products. The balancing process itself also has some limitations because it is not possible to thoroughly assess every imbalance. It can be expected that any significant inconsistencies in major data items will become apparent in the balancing process. Despite some limitations, the Supply and Use methodology is recognised internationally as the best means of checking the coherence of data and assuring the accuracy of the national accounts.

24.98    Considerable attention is given to confronting the consistency of the data used to compile the quarterly accounts, although no attempt is made to completely balance quarterly data. The ABS has developed a quarterly Supply and Use model to help identify internal inconsistencies, and to help focus investigations by the national accounts’ compilers. Timing and other inconsistencies in the data remain after this process and are reflected in the statistical discrepancies that are shown explicitly in the Australian national accounts. As previously mentioned, the statistical discrepancies are only a partial measure of coherence in the data – they represent an aggregation of all the positive and negative discrepancies implicit in the large amount of source data which are used to compile quarterly GDP.

24.99    Another aspect of coherence relates to the consistency of the national accounts with other economic data published by the ABS and other organisations. The ABS publishes a large amount of data on various aspects of the economy. To the extent that many of these are also inputs to the national accounts, it could be expected that they would be coherent with the national accounts. Processes have been implemented to achieve as much consistency as possible. Representatives of the economic collections and economic accounts areas meet formally and regularly to discuss and come to agreement on the statistical treatment and dimensions of recent economic events, such as privatisations, major construction and resource projects, asset purchases and other issues surrounding the reconciliation of economic data more generally.

24.100    A formal process has also been established to involve national accounts staff in the clearance of some quarterly economic indicator surveys that are published before the national accounts. This gives the national accountants an opportunity to ask questions and input any additional information gained from the wider perspective of other data available for the wider economy prior to finalisation of the results. As a result of this formal process, the national accounts and the partial indicators data for recent quarters should be consistent, although some scope, concepts and other differences may mean that they are not exactly equal. Over time, benchmarking procedures may lead to divergence between the national accounts and the sub-annual partial indicator statistics.

24.101    There have been a few occasions where officials and economic commentators have questioned the consistency between the national accounts and other economic data. An example is the complex relationship between employment growth and output growth as measured by GDP, and the data series can occasionally move in directions that appear counterintuitive. The ABS has undertaken an investigation into the relationship between GDP and employment; see the June 2005 release of Australian National Accounts: National Income, Expenditure and Product for more detail. The relationship between GDP growth and growth in tax revenues has also been questioned. On this latter point, it should be noted that there are many differences between operating surplus from the national accounts and taxable income. For example, taxable income includes realised capital gains but deducts net interest payments. Operating surplus excludes capital gains and losses and does not deduct net interest payments. The treatment of these elements can result in different year-to-year movements, and also in longer term growth patterns.