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Own-account capital formation (ETF 76)

Australian System of Government Finance Statistics: Concepts, Sources and Methods
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Sometimes, public sector units decide to produce goods or services for their own use rather than purchase them from other units. Often this involves the construction of non-financial produced assets (such as a building or computer software) using the unit's own materials, labour, and expertise. This activity is called own-account capital formation and although it is collected as part of the ABS GFS, the splits classified in own-account capital formation (ETF 76) are collected for national accounting purposes.


Own-account production is different from the goods and services generated by producer units. This is because the goods and services produced by producer units are intended to be sold at market or below market prices, whereas own-account production involves the construction of a non-financial asset for the unit's own use. Assets constructed by own-account production are intended to be held and used in-house and do not generate receipts from sales. Paragraph 7.37 of the IMF GFSM 2014 states that assets being constructed on own account are treated as the acquisition of non-financial produced assets by the public sector unit rather than as inventories of work in progress. The costs associated with own-account production must be separately identified from expenses because the own-account capital costs make up the cost base of the asset being constructed.


Own-account capital formation (ETF 76) includes all of the costs associated with constructing an asset in-house. Typical costs include wages and salaries, other employee entitlements, materials and capitalised depreciation relating to work conducted by public sector employees in the construction of non-financial produced assets.

The value of assets produced through own-account capital formation


Assets created through own-account capital formation should be valued at their estimated market price before adding any taxes less subsidies, transport, or distribution margins. It may be difficult to establish the market value of assets produced on own account. This is because the type of asset constructed through own-account capital formation may be specialised and only useful for the exclusive purpose that the public sector unit constructed it (such as computer software or databases). Paragraphs 8.41 and A7.27 of the IMF GFSM 2014 state that in the absence of adequate information to enable an estimation of a market value for assets produced through own-account capital formation, it may be necessary to value the assets by the sum of their cost of production.


When production is carried out on own account, there is no formal transfer of ownership. Paragraph 8.15 of the IMF GFSM 2014 states that the producing unit effectively takes possession progressively as production proceeds, so that the asset is acquired as each transaction involved in its production is recorded. For example, if a public sector unit constructs a building using its own workforce, then each use of goods and services and work performed by employees is classified as an acquisition of the non-financial produced asset as work takes place.


Since the costs associated with own-account capital formation form part of the cost base of the asset being created, these costs are further classified by the type of asset being created using an appropriate TALC code, and by purpose using an appropriate COFOG-A code. In the ABS GFS, own-account capital formation (ETF 76) are further classified as:

  • Own-account superannuation payments (ETF 761);
  • Own-account employee payments other than superannuation (ETF 762); and
  • Own-account non-employee payments (ETF 763)