Introduction of new base years and re-referencing chain volume estimates

6.29    As described above, the ABS derives its annual and quarterly chain volume estimates using the Laspeyres formula with annual base years. With the exception of the latest quarters, quarterly chain volume estimates are derived by linking together estimates derived in the average prices of the previous year. However, the latest five to eight quarters are derived in the average prices of the latest base year, which is the year before the previous year. The reason for this exception is the delay in deriving the annual current price estimates of gross value added by industry, which are needed to form the base year weights for the volume estimates of GDP(P) and its components (See Chapter 9 for more information on Gross Value Added). Even though estimates of final expenditures could be derived in the average prices of the previous year for all years, the ABS has decided to apply the same approach and timing for all its volume estimates.

6.30    It is ABS practice to introduce a new base year with the release of the September quarter accounts. At the same time, the reference year is advanced one year to coincide with the latest base year, thereby ensuring additivity for the latest quarters. The process is best explained with some examples. 

6.31    In the June quarter release in year y, the quarterly chain volume estimates are derived by linking:

• the eight quarters from September quarter year \(y-2\) to June quarter year \(y\) in the average prices of financial year \(\frac{y-3}{y-2}\);
• the four quarters from September quarter year \(y-3\) to June quarter year \(y-2\) in the average prices of financial year \(\frac{y-4}{y-3}\); and
• all earlier quarters in the average prices of the previous financial year.

Financial year \(\frac{y-3}{y-2}\) is the reference year.

6.32    In the September quarter release in year y, the quarterly chain volume estimates are derived by linking:

• the five quarters from September quarter year \(y-1\) to September quarter year \(y\) in the average prices of financial year \(\frac{y-2}{y-1}\);
• the four quarters from September quarter year \(y-2\) to June quarter year \(y-1\) in the average prices of financial year \(\frac{y-3}{y-2}\); and
• all earlier quarters in the average prices of the previous financial year.

Financial year \(\frac{y-2}{y-1}\) is the reference year.

6.33    Re-referencing results in revisions to the levels of the chain volume measures, but it does not in itself result in revisions to growth rates, although growth rates can be revised for other reasons. One reason is that the introduction of a new reference year coincides with the introduction of a new base year for the latest four quarters. Another reason is the introduction of revised annual estimates, to which the quarterly estimates are benchmarked.