Appendix 2 - Summary of changes from the Australian system of Government Finance Statistics Concepts, Sources and Methods, 2015

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Australian System of Government Finance Statistics: Concepts, Sources and Methods
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In AGFS15, the guidelines in the Australian System of Government Finance Statistics Concepts, Sources and Methods, 2005 have been revised to align (where possible) with the updates to the IMF GFSM 2014 and with the System of National Accounts 2008. This provides more coherence across these related standards.


IMF GFSM 2014 improves the information available to governments and their investors to make better informed decisions about economic management. The new IMF standard is also designed to enable uniform statistics across all IMF member countries and is widely recognised in the international community.


The changes entailed in IMF GFSM 2014, and hence in AGFS15, address important developments in macroeconomic statistics and take into account improved recording and methodological treatments of various events. These new editions provide greater information on emerging economic issues such as more comprehensive disclosure of debt and contingent liabilities, the environment and the ageing population and address some specific conceptual concerns such the treatment of subsoil assets, land improvements and grants. The revised AGFS15 classifications and frameworks are more comprehensive, particularly the ETF which now has more integrity as an analytical framework and ensures double entry of all flows.


The changes in this edition of the Australian GFS manual, compared with the 2005 edition, can broadly be summarised as methodological changes, presentational changes, and editorial changes. This chapter describes the main methodological changes, summarising key changes to GFS concepts, classifications and frameworks. However, this is not an exhaustive list of all changes.

Types of changes


The methodological changes in AGFS15 arise from:

  • presenting information in the manual in a form which supports understanding of specific issues without requiring an overall knowledge the system of GFS or the need to refer to other sections, therefore there is some duplication of information across the manual;
  • the realignment of the input classification system to make it more consistent with the GFS analytical framework;
  • changes in the structure of the classification system to provide greater flexibility in extracting data at a finer level due to the enhanced cross-classification data;
  • refinement of some key conceptual issues;
  • the need for additional input data in some areas; and
  • benefits from the production of additional or different outputs.

Changes to statements and outputs


The names of some statements have changed;

  • Operating Statement is renamed the Statement of Operations
  • Cash Flow Statement is renamed the Statement of Sources and Uses of Cash.
  • Statement of Stocks and Flows is renamed the Statement of Total Changes in Net Worth.


New statements and outputs have been added. These contain data items that were not previously collected from providers or if collected not analysed and reported in this form. This additional data is required to align with international reporting under the IMF. The new statements and outputs are:

  • A Statement of Contingent Liabilities
  • A Statement of Stocks and Flows of Financial Assets and Liabilities by Source
  • Gross public sector debt and other liabilities at market value by level of government subsector
  • Net public sector debt and other liabilities at market value by level of government subsector
  • Debt instruments by market value by maturity

Changes to classification codes, descriptors and/or categories


AGFS15 contains changes to some specific input classification/framework codes where there is no conceptual change to the economic treatment of the particular item/class, but a different code value is used due to other changes in the classification. For example, the Economic Type Framework (ETF) codes were changed to reflect the new structure.


There are changes to some input classification/framework descriptors/category names where there is no conceptual change to the economic treatment of that particular item, but the name or descriptor has been changed. This has been done to align with the IMF GFSM 2014 terminology and/or to more accurately describe the specific item/category. For example, the names of the statements have been changed.


The Type of Asset (TAC) classification has been renamed the Type of Assets and Liabilities (TALC) classification. TALC contains more details to record a wider range of non-financial assets and financial assets and liabilities in line with international standards.


The Government Purpose Classification (GPC) has been renamed the Classification of Functions of Government Australia (COFOG-A) to align more closely with the corresponding international classification (COFOG). COFOG-A is more detailed than GPC and differs from COFOG in some areas to align with functions of governments in Australia.

Additional detail on wages and salaries


AGFS15 collects more detail on employee expenses than in the former edition of the AGFS manual.


In the AGFS15 Statement of Operations new classes were added to separately identify expenses relating to wages salaries and supplements in cash, wages and salaries in kind, FBT expenses and workers compensation expenses.


In the AGFS15 Statement of Sources and Uses of Cash new classes were added to separately identify salary sacrifice expenses.

Additional detail on superannuation stocks and flows


There is increasing information needed in relation to superannuation data as the population ages. GFS is the main source of information for public sector superannuation. The following items were collected on superannuation under the former edition of the AGFS manual:

  • Funded superannuation expenses
  • Unfunded superannuation expenses
  • Nominal interest on unfunded superannuation expenses
  • Provisions for future unfunded superannuation entitlements


AGFS15 contains more detail on flows and stocks to assist data users’ understanding of how superannuation schemes are changing. Data is collected on:

  • Provisions for defined benefit superannuation and provisions for calls under standardised guarantee schemes
  • Claims of superannuation funds on superannuation managers
  • Accrued superannuation expenses
  • Imputed employer contributions
  • Cash payments and salary sacrifice
  • Defined benefit schemes (benefits based on formula) vs defined contribution schemes (benefits based on previous contributions)
  • Autonomous funds (market operators) vs non-autonomous funds (in the general government)

Additional data on contingent liabilities


Contingent liabilities were not recorded under AGFS05. The market value of publicly guaranteed debt and if significant, other one-off guarantees are added as a memorandum item to the Balance Sheet in AGFS15.


This addition aligns AGFS15 with the revised IMF GFSM 2014, SNA 2008 and ASNA 2012. This has no impact on core GFS data and key GFS aggregates.

Treatment of environmental liabilities


Environmental liabilities include provisioning for make-good and decommissioning, and include funds set aside to pay for costs incurred at the end of any asset's life such as those required to render the structure safe or to restore the environment in which it is situated. Liabilities due to make-good/decommissioning were not recognised on the Balance Sheet under AGFS05 as no counter party asset was recorded.


Under SNA 2008 make-good/decommissioning costs are considered part of the cost of ownership transfer, and deducted from the value of the asset on the Balance Sheet. AGFS15 treatment of environmental liabilities now aligns GFS with SNA 2008 treatment.

Additional data on subsoil assets


Data on subsoil assets were added to the Balance Sheet in AGFS15, specifically estimates of economically demonstrated reserves (EDRs) of subsoil. EDRs are proved and probable reserves. This data was not previously collected or imputed for GFS. A type of asset code and balance sheet item for Mineral and Energy resources were created to capture this data.


This addition aligns with IMF GFSM 2014 reporting requirements and ensures GFS and National Accounts (GG) balance sheets are aligned.

Removing finance leases from cash surplus/deficit


Finance leases were removed from the GFS cash surplus / deficit derivation. These were included as a transitional measure during the GFS transition from cash to accrual accounting so as not to distort the time series. This change aligns with IMF GFSM 2014.

Change to classification of some permits and licences


Under AGFS05, revenue from issuing permits and licences could be classified to ETF 1120 Sales of Goods and Services. AGFS15 clarifies that where revenue from issuing permits is much greater than administration and regulatory costs, it is to be classified as ETF 1110 Taxation revenue not ETF 1120 Sales of Goods and Services.


This aligns with international standards and could affect, for example, taxi, casino, mining, hunting, shooting and fishing licences.

Change to treatment of membership dues and subscription fees to international organisations


Membership dues and subscription fees payable to international organisations were classified in two ways under AGFS05, depending on whether they resulted in a claim on the organisation (so were treated as equity) or were effectively giving money as aid (so were treated as an expense).


To align with IMF GFSM 2001 and the IMF SNA 2008 definition of equity, these are all treated as the acquisition of equity under AGFS15.

Change to treatment of land improvements


Land improvements are defined as improvements that substantially improve the quality, quantity or productivity of land. Examples of improvements are contouring, land clearing and the creation of wells and watering holes. Under AGFS05 land improvements were classified as land.


IMF SNA 2008 recommends that land improvements be treated as Gross Fixed Capital Formation. Therefore, land improvements are classified as a separate class of produced assets in AGFS15. Land improvements are subject to depreciation, which is consistent with the treatment of other produced assets.

Change to treatment of government payments to non-profit institutions


For government payments to NPIs, new criteria were added to distinguish government grants (unrequited transfer) from government purchases of goods and services. Further, government transfers to NPISH move from Current grant expenses to other current transfer expenses. This change aligns with IMF GFSM 14.


The impact on GFS of reclassifying some government payments from grants / subsidies to purchases is at the line item level only. There is no change to any key GFS aggregates, but in National Accounts GFCE as a percentage of GDP is expected to increase compared with the AGFS05 treatment.


Further, some units may be reclassified from a public corporation to a general government unit, or vice versa, as their classification as a market or non-market producer may change if their expenses are reclassified from grants to purchases of goods and services.

Change to treatment of tax related revenues and expenses


Tax credits are granted by governments to assist low income earners or promote specific behaviours. In AGFS05 taxation revenue was recorded on a net basis, with tax credits subtracted from gross tax receipts. This has changed to tax revenue being recorded on a gross basis, and tax credits are now recorded as transfer expenses.


Under AGFS05 fines and penalties assessed for infringing regulations related to a particular tax were recorded together with that tax. Under AGFS15 fines and penalties charged on infringing regulations related to tax law are recorded as ETF 1142 Fines penalties and forfeits.


These changes align with the IMF GFSM 2014 treatment. While this has no impact on the net operating balance, aggregates that involve taxation revenue (e.g. tax as a proportion of GDP) increase.

Change to treatment of increases in value of investment fund shares and retained earnings of foreign direct investment funds


Increases in the value of investment fund shares were treated as holding gains in AGFS05. These were excluded from revenue in the Operating Statement but included as a revaluation. AGFS15 recognises increases in the value of investment fund shares (other than from holding gains and after reinvested earnings are deducted) and the retained earnings of foreign direct investment funds as property income.


This change aligns with SNA 2008. Net Operating Balance and Net lending/Net borrowing increases as a result.

Changes to reporting of debt and other liabilities: valuation


In AGFS15 all debt and other liabilities are published at market value (i.e. using market interest rates) to align with the macroeconomic principle of market valuation. This differs from the IMF GFSM 2014 for the valuation of loans and not negotiable financial assets, which are valued on a nominal basis (contractual interest rate) in the international standards. This has a number of implications:

  1. Interest expenses are recorded on a creditor basis (using prevailing market interest rates). International standards recommend interest should be calculated on a debtor basis (using the contractual interest rate). 
  2. Interest that accrues but is not paid by the debtor is added to the value of the underlying debt instrument.
  3. Additional payments required due to debt in arrears are recorded as an interest expense rather than as another type of expense such as penalty, fine or tax.

Changes to reporting of debt and other liabilities: definition and presentation of debt statistics


The definition of net debt in GFS in AGFS05 was equal to [deposits held plus proceeds from advances plus borrowing] minus [cash and deposits plus investments plus advances outstanding]. This is a historical definition which does not have a strong conceptual basis in macroeconomic statistics.


AGFS15 does not present a single measure of debt, instead taking a broader view to provide information on overall government exposure to debt and other liabilities / equities. Statistics on all liabilities of government are presented using a 'matrix' approach covering debt instruments, derivatives and equities by level of government.


At the time this AGFS15 manual was published, the international definition of debt in IMF GFS 2014 excluded derivatives as these are not classed as debt instruments. However the IMF was investigating different methods of reporting debt. Also, in its discussion of debt reporting the IMF has not considered reporting of other liabilities / equities.


Further, in AGFS15 a range of additional memorandum items are recorded to allow a better understanding of the financial position of government. These include total arrears, face value of non-performing loans and concessional debt.

In AGFS15 supplementary information is collected on debt by maturity. This aligns more closely with the IMF GFS framework. Debt maturity was not collected in the previous edition of the AGFS manual.

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