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# Income from Gross State Product – GSP(I)

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

21.41    GSP(I) is derived by summing the income flows from the factors of production (labour and capital). That is the sum of the factor incomes and taxes less subsidies on production and imports:

 GSP(I)                 =      compensation of employees +      gross operating surplus +      gross mixed income +      taxes on production and imports -       subsidies on production and imports

## Compensation of employees

21.43    Compensation of employees (COE) is allocated to the location where employment occurs. COE is estimated at an industry division and sector level. State estimates of COE are compiled from a range of ABS survey data.

## Gross operating surplus and gross mixed income

21.44    Gross operating surplus and gross mixed income (GOS/GMI) are allocated to the location where production activity occurs (rather than based upon any ownership or head office structure).

21.45    National estimates of GOS by sector are apportioned across states and territories by industry, predominantly using ABS survey data.

21.46    Estimates of GMI are apportioned across states and territories by industry using ABS survey data.

## Taxes less subsidies on production and imports

21.47    Taxes less subsidies on production and imports relating to the state and local government sector are allocated directly to the state in which they are collected or paid. It is assumed that all production taxes collected by a particular state government are paid by entities resident in that state. Similarly, it is assumed that any subsidies paid by a state government are paid to resident entities of that state.

21.48    Commonwealth taxes and subsidies are allocated to state using a range of activity indicators such as household final consumption expenditure.

## Compensation of employees

21.49    State by sector estimates of COE are produced annually for the state accounts, and quarterly for Australian National Accounts: National Income, Expenditure and Product. State by industry splits of COE are produced annually for the state accounts.

### Annual sector compensation of employees

21.50    Annual state totals for COE are compiled by aggregating sector-based subcomponents which include private and public sector estimates of cash wages and salaries, payments in kind, and employer social contributions (ESC). All components are estimated using a top-down approach; that is, national benchmarks are apportioned across states and territories using source data indicators based on the location of the employer.

21.51    The following table outlines the data sources used to estimate annual compensation of employees.

Table 21.1 Annual compensation of employees data sources – By component
ItemComment
Method

National estimates of sectoral COE are apportioned across states and territories using relevant output indicators:

$$\large{ \text {state sectoral COE} = \text{national sectoral COE} \times \left(\frac{\text{state employee expenses indicator}}{\text{national employee expenses indicator}}\right)}$$

Wages and salaries indicators
Private sector
Non-farm

For the current year, wages and salaries data from the Quarterly Business Indicators Survey (QBIS) is used to extrapolate forward wages and salaries data from EAS. Those extrapolated values are used to apportion national private non-farm wages and salaries across states and territories.

From 2006-07 to the reference year, wages and salaries data from the Economic Activity Survey (EAS) (excluding the Agriculture subdivision) is used to apportion national private non-farm wages and salaries across states and territories.

For values prior to 2006-07, output indicators were estimated consistent with the source data and methods outlined in the 2015 version of this Concepts, Source and Methods publication. Those output indicators are used to backcast EAS data from 2006-07. The backcasted values are used to apportion national private non-farm wages and salaries across states and territories.

Farm

For the current year, total hours worked estimates from the Labour Force Survey are used to extrapolate EAS wages and salaries data forward. Those extrapolated values are used to apportion national private farm wages and salaries across states and territories.

From 2006-07 to the reference year, Agriculture subdivision wages and salaries data from the Economic Activity Survey (EAS) is used to apportion national private farm wages and salaries across states and territories.

For values prior to 2006-07, output indicators were estimated consistent with the source data and methods outlined in the 2015 version of this Concepts, Source and Methods publication. Those output indicators are used to backcast EAS data from 2006-07. Those backcasted values are used to apportion national private farm wages and salaries across states and territories.

Public sector
Defence

Wages and salaries for defence employees are collected at a national level in Government Finance Statistics (GFS). The national estimates are apportioned across states and territories using the proportion of permanent military personnel in each state and territory.

Non-defence

Wages and salaries for non-defence public sector (across all jurisdictions) employees are collected in GFS.

Wages and salaries of domestic Commonwealth public sector employees are apportioned across states and territories based on the share of earnings of employees in each jurisdiction. Estimates from the Survey of Employment and Earnings (SEE) are used to determine the state shares.

Payments to staff of Australian embassies and consulates overseas, are allocated to the Australian Capital Territory.

Non-cash wages – payments in kind

Data for state and territory estimates of the value of fringe benefits payable to public sector employees are collected in the survey of Major Labour Costs (MLC). This survey is run intermittently.

Estimates for the latest years, and for years between surveys, are interpolated in line with underlying wage growth for each jurisdiction by sector.

Employer social contributions
Private sector

Data for state and territory estimates of employer social contributions are sourced from the intermittent MLC survey.

Estimates for the latest years, and for years between surveys, are interpolated in line with underlying wage growth for each jurisdiction by sector.

Public sector

Superannuation paid to public sector employees is collected in GFS. All other components of employer social contributions are sourced from the intermittent MLC survey.

Estimates for the latest years, and for years between surveys, are interpolated in line with underlying wage growth for each jurisdiction by sector.

## State by industry compensation of employees

21.52    Annual state by industry splits of COE are produced using a top-down approach. National industry estimates of COE are apportioned across states and territories using state by industry indicators of wages and salaries.

21.53    The state by industry division indicators of wages and salaries are created by summing data from the Economic Activity Survey (EAS) (for corporations) with data from the Survey of Employment and Earnings (for the general government sector).

21.54    In the current year, where EAS data is not available, wages and salaries data from the Quarterly Business Indicators Survey and estimates of hours worked from the Labour Force Survey are used as indicators

21.55    The state by industry COE estimates are constrained to two sets of benchmarks:

1. state by sector estimates of COE
2. national industry division estimates of COE.

21.56    Any residual imbalance is allocated across the state by industry estimates to ensure additivity to both benchmarks.

21.57    The following tables provide additional detail on the method and data sources used to estimate state COE by industry:

Table 21.2 Compensation of employees – All industry divisions, excluding Agriculture, forestry and fishing, Financial and insurance services, and Public administration and safety
ItemComment
Method

For the ANZSIC divisions above, estimates of state industry COE are allocated using relevant wages and salaries indicators:

$$\large{ \text {state COE} = \text{national COE} \times \left(\frac{\text{state wages and salaries indicator}}{\text{national wages and and salaries indicator}}\right)}$$

Wages and salaries indicator
Current year
Wages and salaries data from the Quarterly Business Indicators Survey is used to extrapolate forward EAS wages and salaries data. Those extrapolated values are added to SEE estimates and then are used to apportion national COE across states and territories.
2006-07 to reference year
Wages and salaries data from the Economic Activity Survey (EAS) and the Survey of Employment and Earnings (SEE) are used to apportion national COE across states and territories.
Prior to 2006-07
For values prior to 2006-07, output indicators were estimated consistent with the source data and methods outlined in the 2015 version of this Concepts, Source and Methods publication. Those output indicators are used to backcast EAS data from 2006-07. Those backcasted values are added to SEE estimates and then used to apportion national COE across states and territories.
Table 21.3 Compensation of employees by industry for Agriculture, forestry and fishing (Division a)
ItemComment
Method

Estimates of state industry COE are apportioned across states and territories using relevant output indicators:

$$\large{ \text {state COE} = \text{national COE} \times \left(\frac{\text{state wages and salaries indicator}}{\text{national wages and and salaries indicator}}\right)}$$

Wages and salaries indicator
Current year
Total hours worked from the Labour Force Survey are used to extrapolate forward EAS wages and salaries. Those extrapolated values are added to SEE estimates to derive a state indicator which is used to apportion national COE across states and territories.
2006-07 to reference year
Wages and salaries data from the Economic Activity Survey (EAS) and the Survey of Employment and Earnings (SEE) are used to apportion national COE across states and territories.
Prior to 2006-07

For values prior to 2006-07, output indicators were estimated consistent with the source data and methods outlined in the 2015 version of this Concepts, Source and Methods publication. Those output indicators are used to backcast EAS data from 2006-07. Those values are added to SEE estimates and then used to apportion national COE across states and territories.

Table 21.4 Compensation of employees by industry for Financial and insurance services (Division k)
ItemComment
Method

Estimates of state industry COE are apportioned across states and territories using relevant output indicators:

$$\large{ \text {state COE} = \text{national COE} \times \left(\frac{\text{state wages and salaries indicator}}{\text{national wages and and salaries indicator}}\right)}$$

Wages and salaries indicator
2006-07 to current year
Wages and salaries data from the Quarterly Business Indicators Survey (QBIS) and the Survey of Employment and Earnings (SEE) are used to apportion national COE across states and territories.
Prior to 2006-07
For values prior to 2006-07, output indicators were estimated consistent with the source data and methods outlined in the 2015 version of this Concepts, Source and Methods publication. Those output indicators are used to backcast QBIS data from 2006-07. Those backcasted values are added to SEE estimates and then used to apportion national COE across states and territories.
Table 21.5 Compensation of employees by industry for Public administration and safety (Division o)
ItemComment
Method

Estimates of state industry COE for are apportioned across states and territories using relevant output indicators:

$$\large{ \text {state COE} = \text{national COE} \times \left(\frac{\text{state wages and salaries indicator}}{\text{national wages and and salaries indicator}}\right)}$$

Wages and salaries indicator
Current year
Total state private sector COE is used to extrapolate forward EAS wages and salaries data. Those extrapolated values are added to SEE estimates to derive a state indicator which used to apportion national COE across states and territories.
2006-07 to reference year
Wages and salaries data from the Economic Activity Survey (EAS) and the Survey of Employment and Earnings (SEE) are used to apportion national COE across states and territories.
Prior to 2006-07
For values prior to 2006-07, output indicators were estimated consistent with the source data and methods outlined in the 2015 version of this Concepts, Source and Methods publication. Those output indicators are used to backcast EAS data backwards from 2006-07. Those backcasted values are added to SEE estimates and then used to apportion national COE across states and territories.

## Quarterly compensation of employees

21.58    Quarterly state totals for COE are compiled in a manner similar to the annual state by sector COE estimates. Quarterly state COE estimates are aggregated from values of sector-based subcomponents that are calculated by apportioning national estimates across states and territories. Quarterly estimates are benchmarked to annual state totals to ensure consistency between quarterly and annual estimates.

21.59    The following table outlines the method and data sources used to estimate quarterly state compensation of employees.

Table 21.6 Quarterly compensation of employees data sources by component
ItemComment
Wages and salaries
Private sector
Non-farm

Wages and salaries for private sector non-farm employees are based on estimates from the Quarterly Business Indicators Survey (QBIS).

Quarterly farm wages and salaries are apportioned across states and territories using estimates of employment from the Labour Force Survey (LFS).
Public Sector
Defence

Wages and salaries for defence employees are collected at a national level in Government Finance Statistics (GFS). The national estimates are apportioned across states and territories using the proportion of permanent military personnel in each state and territory.
Non-defence

Wages and salaries for non-defence public sector employees are collected in GFS.

Wages and salaries of domestic Commonwealth public sector employees are apportioned across states and territories based on the earnings of employees in each jurisdiction (collected in the Survey of Employment and Earnings).

Payments to staff of Australian embassies and consulates overseas, are allocated to the Australian Capital Territory.

Non-cash wages – payments in kind
Estimates for quarterly payments in kind are moved in line with underlying wage growth for states.
Employer social contributions
Estimates for quarterly employer social contributions are moved in line with underlying wage growth for states.