Sources and methods - Annual

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

Benchmark years

10.79    Annual estimates of GFCE are disaggregated by level of government. The level of government disaggregation is National (which is further split between defence and non-defence) and State and local, which are combined. The National level of government is defined to include Commonwealth plus government bodies that are considered to be jointly administered by the Commonwealth and State and local governments. Public universities are the only government bodies that are currently considered to be jointly administered.

10.80    The table below outlines the data sources and methods used in the estimation of benchmark years estimates for GFCE. It includes both the current price estimates and volume estimates.

Table 10.27 Benchmark years annual government final consumption expenditure
ItemComment
Current price estimates

 

The data source is annual Government Finance Statistics (GFS). It is obtained from the Department of Finance, State and Territory treasuries, local government and universities.

The following adjustments are made to the GFS data:

  • payroll taxes paid by government agencies to their State/Territory revenue office – a consolidation adjustment;
  • FISIM;
  • current expenditure on developing intellectual property products which is treated as gross fixed capital formation. The products include:
    • computer software development;
    • research and development; and
    • film and television production.
  • consumption of fixed capital on intellectual property products – replace depreciation of these products from GFS.

GFS data are classified according to the General Purpose Classification (GPC). The GPC level data is mapped to the Input-Output Product Classification (IOPC) level. The IOPC level is then aggregated to the Supply-Use Product Classification (SUPC) level.

Supply and Use balancing process

The GFCE estimates at the SUPC level are inserted into the Use table which is balanced with the Supply table at the product level using the product flow method. Therefore, adjustments are likely to be applied to the initial GFCE estimate to obtain a balance between supply and use. The adjustments are determined by confronting the supply and use data with industry association data, annual reports of significant units within the industry, as well as other relevant ABS survey results.

For more information on the product flow method refer to Chapter 7.

The Supply and Use benchmark is disaggregated to National defence, National non-defence and State and local level. GFCE for each sector is derived using the quarterly data and the proportion of each sector to the total is applied to the supply and use benchmark.

Volume estimates

 

GFCE current price estimates are price deflated to obtain volume estimates and are summed to derive a total GFCE estimate. GFCE estimates are deflated by component using a range of prices indexes and government input cost deflators. A government input cost deflator is a weighted price index that measures input costs incurred by the government to provide the good/service. Given most government services are non-market and have no output price, prices are measured using input costs. The input cost deflator can include several underlying indexes from the Producer Price Index (PPI), Wage Price Index (WPI) and Consumer Price Index (CPI).

Latest year

10.81    GFCE data for the latest financial year (or latest two years for the June quarter in Australian National Accounts: National Income, Expenditure and Product is the sum of data reported for the four quarters for both current price estimates and chain volume measures.

10.80    The tables below outline the data sources and methods used in the estimation of latest year estimates for GFCE by level of government. They include both the current price estimates and volume estimates.

Table 10.28 Latest year annual government final consumption expenditure — National defence
ItemComment
Current price estimates

 

Government Finance Statistics is the data source which provides data relating to defence. It is sourced from the Department of Finance.

The data obtained are for the expenditures on defence employees (i.e. wages and salaries and employer social contributions) and on other defence inputs (i.e. operating expenses such as rent, electricity, stationery, etc.) plus details of the value of sales of goods and services. The estimate for government expenditure on Financial Intermediation Services Indirectly Measured (FISIM) is included as part of the costs (i.e. intermediate consumption) of general government.

Consumption of fixed capital is used in place of the depreciation recorded in government accounts. Consumption of fixed capital is the preferred conceptual treatment as it is compiled on a current replacement basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM).

Current expenditures paid for in-house development of intellectual property are not included as intermediate consumption. They are capitalised and included in gross fixed capital formation.

National Defence expenditure state split ratios are updated on an annual basis from the Defence Force Annual Report. State ratios are compiled using the number of permanent personnel and reserves by location (excluding overseas members).

Volume estimates

 

Quarterly defence current price estimates are price deflated by each component to obtain volume estimates and are summed to derive a total defence estimate. Annual volume estimates are the sum of four quarters.

The deflator for employee expenses is weighted using wages and salaries data on army, airforce, navy, reserves and APS staff. The underlying indexes weighted include WPI Public administration and safety and WPI All industries.

Both sales of goods and services and use of goods and services are price deflated using a Commonwealth defence input cost deflator.

 

Table 10.29 Latest year annual government final consumption expenditure — National non-defence
ItemComment
Current price estimates

 

Government Finance Statistics is the data source. It is obtained from the Department of Finance. Public universities data are sourced from a survey of a sample of universities. Intellectual property products estimates are recorded as gross fixed capital formation in the ASNA.

The data obtained are for the expenditures by Commonwealth agencies (other than those classified to Defence) and by public universities on employees (i.e. wages and salaries and employer social contributions) and on other inputs (i.e. operating expenses such as rent, electricity, stationery, etc.) plus details of the value of sales of goods and services. The estimate for government expenditure on Financial Intermediation Services Indirectly Measured (FISIM) is included as part of the costs (i.e. intermediate consumption) of general government.

Consumption of fixed capital is used in place of the depreciation recorded in government accounts. Consumption of fixed capital is the preferred conceptual treatment as it is compiled on a current replacement basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM).

Current expenditures paid for in-house development of intellectual property are not included as intermediate consumption. They are capitalised and included in gross fixed capital formation.

Commonwealth non-defence expenditure (excluding social benefits to households in kind) state split ratios are updated on an annual basis using Commonwealth public sector cash, wages and salaries from the Survey of Employment and Earnings (SEE).

Commonwealth non-defence social benefits to households in kind are split to state using estimated resident population.

Volume estimates
 

Quarterly national non-defence current price estimates are price deflated by each component to obtain volume estimates and are summed to derive a total national non-defence estimate. Annual volume estimates are the sum of quarters.

Commonwealth non-defence employee expenses are price deflated using WPI All industries (Commonwealth). Social benefits to households are deflated by a weighted index comprised of a Medicare, PBS, Child care and Commonwealth government input cost deflator. Other non-employee expenses are price deflated using a Commonwealth government input cost deflator.

Multi-jurisdictional employee expenses are price deflated using WPI Education and training (public). Sales of goods and services are deflated using CPI Higher education fees, while other non-employee expenses is price deflated using a Commonwealth (Multi-jurisdictional) input cost deflator.

Table 10.30 latest year annual government final consumption expenditure—state and local
ItemComment
Current price estimates

 

The State and Territory treasuries provide the State and Territory level data. Local government data are sourced from annual Government Finance Statistics.

The data obtained are for the expenditures by State and local government agencies on employees (i.e. wages and salaries and employer social contributions) and on other inputs (i.e. operating expenses such as rent, electricity, stationery, etc.) plus details of the value of sales of goods and services. The estimate for government expenditure on Financial Intermediation Services Indirectly Measured (FISIM) is included as part of the costs (i.e. intermediate consumption) of general government.

Consumption of fixed capital is used in place of the depreciation recorded in government accounts. Consumption of fixed capital is the preferred conceptual treatment as it is compiled on a current replacement basis rather than the historical cost basis used to compute depreciation allowances. It is obtained from the Perpetual Inventory Method (PIM).

Current expenditures paid for in-house development of intellectual property are not included as intermediate consumption. They are capitalised and included in gross fixed capital formation.

Volume estimates

 

Quarterly state and local current price estimates are price deflated by each component to obtain volume estimates and are summed to derive a total state and local estimate. Annual volume estimates are the sum of quarters.

State and local employee expenses are price deflated using WPI All industries (State and local government). Sales of goods and services are price deflated by a weighted index including a state and local government input cost deflator, state and local health input cost deflator and CPI Vocational Education and Training (VET) fees. Social benefits to households are price deflated using a state and local government input cost deflator. Other non-employee expenses are price deflated by a weighted price index comprised of a state and local government input cost deflator, state and local health input cost deflator and state and local education input cost deflator.

Back to top of the page