The Australian System of National Accounts
Scope of the Australian System of National Accounts
1.38 The ASNA forms a body of statistics that incorporates a wide range of information about the Australian economy and its components. In addition to the long-standing statistics of national income, expenditure and product, the accounts include the financial accounts, I-O tables, balance sheet statistics (including capital stock statistics), multifactor productivity statistics, state accounts, and satellite accounts. The ultimate scope of the ASNA encompasses the full range of statistics that the 2008 SNA recommends for a complete national accounting system. However, like most other countries, Australia does not yet compile the full range of information recommended in the 2008 SNA. The areas where the ABS is yet to implement the 2008 SNA recommendations are identified at relevant points throughout this manual and are summarised in Appendix 2, Differences between ASNA and 2008 SNA.
1.39 The current scope of the ASNA is best described by the list of statistical bulletins that comprise the ASNA data. These are as follows:
- Australian System of National Accounts (ASNA) – annual;
- Australian National Accounts: National Income, Expenditure and Product (NIEP) – quarterly;
- Australian National Accounts: Input-Output Tables – annual;
- Australian National Accounts: Supply Use Tables – annual;
- Australian National Accounts: State Accounts – annual;
- Australian National Accounts: Finance and Wealth – quarterly;
- Estimates of Industry Multifactor Productivity – annual;
- Estimates of Industry Level KLEMS Multifactor Productivity – annual;
- Australian National Accounts: Tourism Satellite Accounts – annual;
- Australian National Accounts: Non-Profit Institutions Satellite Accounts – irregular; and
- Australian National Accounts: Information and Communication Technology Satellite Accounts – irregular.
1.40 The data on capital stock and balance sheet that were previously available in a separate annual publications are now included in the ASNA.
1.41 In general terms, the information published in the ASNA and NIEP covers the economic transactions related to the economic functions of production, consumption and accumulation of wealth. The functions are recorded in a central set of accounts comprising a gross domestic product account, a national income account, a national capital account, a financial account and a balance sheet. Important economic variables such as gross domestic product, disposable income, final consumption expenditure, gross saving, net lending or borrowing and net worth are recorded in these accounts. Changes to the balance sheet values of financial assets and liabilities arising from events other than transactions (for example, write-offs and revaluations) are recorded in the ASNA. Supporting accounts in these publications provide further breakdowns (for example, by institutional sector and industry) of the variables recorded in the central accounts.
1.42 The information published in the Input-Output Tables and State Accounts can be described as further disaggregations of information included in the ASNA. For example, in the central Supply Use table, the economy's total supply of products is shown according to the industries that produced the products, and the use of products by each industry is recorded, as are the factor incomes generated by each industry. The information published in the State Accounts provides a summary record for each Australian State and Territory of the production account published in the ASNA.
1.43 Finance and Wealth includes disaggregations of information published in the ASNA and NIEP, but also includes disaggregations of balance sheet information for financial assets and liabilities. The financial accounts include flow of funds statistics, which provide sectoral capital accounts with the corresponding sectoral financial account. The financial accounts provide a breakdown (financial instrument cross-classified by counterparty sector) of transactions recorded in the financial account (counterparty sectors are the sectors with which the subject sector has undertaken the subject transactions). The financial accounts also record the value of financial assets and liabilities at the end of each quarter, broken down by instruments cross-classified by counterparty sector.
1.44 The satellite accounts for Tourism, Non-Profit Institutions and Information and Communication Technology present specific details on a particular topic (both in monetary and physical terms) in an account which is separate from, but linked to, the information published in the ASNA. Satellite accounts allow an expansion of the National Accounts for selected areas of interest while maintaining the concepts and structures of the core National Accounts. Implicitly data presented in satellite accounts are included in the National Accounts, but they can go further and include data that is not in the National Accounts at all.
1.45 In summary, the ASNA provides a record of Australia's economic wealth and the changes to that wealth brought about by economic activity. The Australian National Accounts statistics are also disaggregated to provide information about economic assets and activities for sectors, industries, and products, and about different types of assets, liabilities, transactions and other economic events. In terms of economic information, the scope of the statistics is therefore very wide, and the only economic activities omitted from that scope are those that fall outside the defined boundaries of production, consumption, accumulation and economic assets. Nevertheless, the ASNA does not necessarily provide all of the macroeconomic measures that analysts require, and statistical offices, including the ABS, are working to improve and extend the body of macroeconomic statistics.
General nature of ASNA methodology
1.46 The sources and methods used to compile National Accounts are typically many and varied, and the Australian situation is no exception. From the perspective of users of the ASNA, an understanding of the sources of information used and the methods applied to compile the National Accounts is useful because such matters can influence the quality, accuracy and reliability of the statistics. A detailed account of the sources and methods underlying the data compiled for key variables in the central transaction accounts and for specific sets of data, such as appear in the financial accounts and the balance sheets, are outlined in other sections. The next few paragraphs provide a broad description of the processes and infrastructure that underlie compilation of the ASNA.
1.47 Because of the wide range of information included in the ASNA, capture of the data by means of a single survey, or even a few surveys, would not be feasible. Since many parts of the accounts record transactions in which two parties are involved, there are at least two possible sources of information about such transactions, and compilers can economise by targeting the least costly sources of information without compromising the quality of the data significantly. Quality of the data source is of paramount importance. Furthermore, surveys are not the only sources of information, and advantage must be taken of administrative and other records that contain relevant information obtainable at less cost than surveys.
1.48 However, before using information from surveys or administrative records, National Accounts compilers must be sure that the information is consistent with national accounting standards and that there are no gaps or overlaps between the various sources. A high proportion of information used in compiling the Australian National Accounts comes from surveys that use the ABS register of businesses and other organisations (referred to as the 'business register') to provide the target population. The business register is a list of economic units that are defined according to national accounting standards. The units are also defined so as not to overlap, and every effort is made to include all economically significant units so that there are no gaps in the coverage of the relevant fields of economic activity. Although most of the ABS surveys that provide data for the ASNA are used primarily to compile other economic statistics, the survey questions are generally designed to comply with national accounting concepts so that the survey results are consistent with National Accounts statistics. Where administrative data are used, the National Accounts compiler has less control over the application of standards and the possible existence of gaps and overlaps. Some potential sources of this type may be rejected because they cannot be reconciled with survey results or deviate too much from National Accounts standards.
1.49 Once reliable and consistent sources of data have been established, the major task of the National Accounts compilers is to bring together the data in the national accounting framework. In some cases, there may be two sets of data relating to the same variables, in which case discrepancies must be investigated and a choice made as to which data are more reliable. Furthermore, the ASNA includes balances that are equal in concept but are derived from different data sources. For example, net lending or borrowing in the capital account is equal in concept to net change in financial position in the financial account but is derived entirely from non-financial transactions, whereas net change in financial position is derived entirely from financial transactions. Such balances provide a measure of the consistency of the two sets of data and can be used to monitor the accuracy and quality of the statistics. When differences are unavoidable or unresolved, rather than force a balance, compilers may record the differences in the accounts as 'statistical discrepancies' or 'net errors and omissions'.
1.50 Business and administrative records do not always provide information that reflects economic reality. For example, interest charges generally include a service charge as well as a return on capital invested. In such cases, the 2008 SNA prescribes imputation of the required information. In other cases, transaction flows have to be rerouted, as with employers' contributions to superannuation funds on behalf of their employees, which are paid to superannuation funds but are recorded in the ASNA as payable directly to employees as a component of employee remuneration. Therefore, National Accounts compilers must put in place systems to derive such imputed information. Thus, data obtained from surveys or administrative records may be adjusted or rearranged to meet the 2008 SNA requirements.
1.51 Two significant processes are applied by compilers to derive additional data of considerable interest: time series analysis and production of chain volume measures. Time series analysis includes seasonal adjustment and estimation of trend values. Seasonal adjustment involves estimation of seasonal factors in the data and adjustment of the data to remove the seasonal effect. Trend values are estimated by removing irregular movements from seasonally adjusted data. Chain volume estimation involves removing the effects of price changes from source data, which are recorded at current prices.
1.52 Once all adjustments and derivations have been made, compilers should have a complete dataset that can be checked for consistency with data for previous periods and data from other systems. Known as output editing, this form of checking aims to detect errors that may have slipped through at earlier stages of compilation, and which may require inquiry back to the supplier of the source data. Data may be queried because the resulting movement from the previous period (or the same period in the previous year) appears implausible or is inconsistent with the movement of other related variables. After all checks have been completed and errors or inconsistencies explained or removed, the statistics are cleared by a senior statistician for publication.
1.53 Australian National Accounts statistics include major economic indicators that are in strong demand and can influence financial markets. Therefore, care is taken to ensure that no user receives the statistics before the designated release time, with a small number of exceptions. These exceptions relate to designated officers in certain government departments, such as the Treasury and the Department of the Prime Minister and Cabinet, who are required to prepare briefing material on the statistics for their Ministers; they are subject to a strict embargo until the official release of the National Accounts.
1.54 Because Australian National Accounts statistics are often compiled from source data that are preliminary or incomplete, the statistics are often revised when final or more complete information comes to hand. Such revisions to the data are therefore relatively common. Furthermore, seasonally adjusted and trend data are subject to revision because the adjustment factors for seasonal and irregular influences change over time as more data are added to the time series. Similarly, chain volume measures are subject to revision whenever the reference period is changed and when a new base year is introduced.
Uses of Australian National Accounts statistics
1.55 The uses of the statistics included in the ASNA mainly arise from the role of the National Accounts as a framework for evaluating economic performance. However, given the wide range of information included in the ASNA, economic performance can be evaluated at a number of different levels, including the economy as a whole, the various sectors and subsectors of the economy, individual States and Territories, individual industries and individual products. Furthermore, information is available for different time frames, including quarterly data for measuring short-term changes in economic conditions and more detailed annual information for measuring longer-term changes. Seasonally adjusted and trend series facilitate analysis of short-term movements in quarterly data, and chain volume measures help to isolate volume movements in the economic indicators.
1.56 The estimates of national income, expenditure and product are well established as a framework for monitoring the current performance of the Australian economy, and are closely followed and analysed by government and private sector economists, the media, financial markets, credit rating agencies and others with an interest in current economic trends. General interest centres on trend and seasonally adjusted chain volume measures of key variables such as gross domestic product as an indicator of growth, measures of income such as compensation of employees (COE) and gross operating surplus (GOS) of corporations, the expenditure items of final consumption expenditure (government and households) and gross fixed capital formation (GFCF), the ratio of net household saving to net household disposable income, and production classified by industry groupings. Such information is used in short-term economic forecasting, in analyses underlying forecasts and economic policy settings in Commonwealth and State/Territory government budgets, in models of economic activity that simulate the effects of economic policy and behaviour, and in international comparisons of Australia's economic performance with the performance of other countries.
1.57 As well as Australia's National Accounts, the ABS produces annual accounts for each of Australia's States and Territories published in the State Accounts. These provide estimates of GSP and state final demand. An important use of the state accounts is to compare each State and Territory in terms of levels of economic activity and rates of economic growth.
1.58 The financial accounts data (published in Finance and Wealth) have more specialised uses, relating to financial markets and the financial sector. They are used by government and private sector economists as short-term indicators of the demand for credit, which reflects overall economic conditions and expectations. The sectoral and instrument breakdowns in the financial accounts enable detailed analysis of stocks and flows related to borrowing and lending. Depending on economic conditions, user interest may focus, for example, on the borrowing and debt of governments, or on the ratio of debt to equity financing of private corporations. The financial accounts provide an alternative view (to that shown in the real accounts) of national and sectoral saving, and indicate the composition of saving in terms of financial instruments. For example, these accounts can show trends in household saving toward superannuation and the extent of accumulation of household debt. Financial market analysts and participants use the financial accounts to assess growth in the markets for various forms of finance (e.g. deposits, loans, shares, debt securities) and sources of finance (e.g. banks, non-bank depository institutions, life offices and pension funds, non-residents) used by borrowers.
1.59 The national balance sheet data on the level and composition of Australia's assets and liabilities indicate the economic resources of, and claims on, the nation and each sector, and support assessments of the external debtor or creditor position of a country. The monetary estimates of natural resources contained in the balance sheet are underpinned by a dataset of physical estimates detailing levels of particular natural resources. Due to the experimental nature of the monetary estimates, it is considered that monetary estimates on natural resources should be considered in conjunction with the physical estimates, especially for mineral and energy resources. The estimates provide information for monitoring the availability and exploitation of these resources and for assisting in the formulation of environmental policies and resource pricing.
1.60 Sectoral balance sheets provide information necessary for analysing a number of topics. Examples include:
- the computation of widely used ratios, such as debt-to-equity, non-financial to financial assets, and debt-to-income; and
- the provision of additional information on the relationship between consumption and saving behaviour.
1.61 Companies can compare the return on their own assets with returns achieved nationwide. Prospective investors may examine the unit values and returns on; for example, the various mineral and energy resources to guide investments in particular industries.
1.62 The ASNA I-O tables provide a much more detailed disaggregation of gross domestic product than is available in the national income, expenditure and production GDP accounts. I-O tables are used to facilitate economic analysis in a number of ways, for example:
- they provide a means of undertaking comparative analysis of industries within an economy as well as across economies;
- they provide the basis for a detailed understanding of the linkages and dependencies that exist within an economy;
- given the set of assumptions implicit in the I-O framework, they provide a means of forecasting the economic effects of a change in demand on economic variables such as value added, prices and employment;
- they constitute a core component of many modern general equilibrium models which may be used for a number of purposes including forecasting; and
- they provide a framework whereby the confrontation of data from various sources can be undertaken, thereby providing a means of improving the accuracy of the National Accounts and economic statistics in general.
1.63 Satellite accounts are used to expand the analytical capacity of the National Accounts for selected areas of social concern in a flexible manner, without overburdening or disrupting the National Accounts. They involve the rearrangement of classifications used in the National Accounts and the possible introduction of complementary elements but do not change the underlying concepts of the National Accounts.
1.64 The National Accounts are used as a framework for other economic statistics. Given the comprehensive nature of the National Accounts coverage of economic activity, most economic statistics relate in some way to elements of the National Accounts. Conversely, National Accounts compilers draw upon a wide range of economic statistics to provide information for inclusion in the National Accounts. For these reasons, national statistical offices usually design economic statistics systems that are based on the concepts employed in the National Accounts. Such a strategy ensures that users of economic statistics can relate the statistics to the National Accounts, and that National Accounts compilers have sources of information that are conceptually compatible with the National Accounts. As noted previously, such an integrated approach to the production of economic statistics is followed in the ABS. It is administered through use of a single business register as the source of survey populations for most ABS economic statistics, and the strict application of national accounting concepts in the design of the business register and the surveys, including the units model, data item definitions and classifications.