- SNA, 2008, paras. 5.12-5.17.
5.5 The System of National Accounts 2008 (SNA 2008) discusses three types of units into which enterprises can be partitioned for the purpose of industry statistics:
- Kind-of-activity unit - defined as an enterprise, or a part of an enterprise, which engages in only one kind of (non-ancillary) productive activity, or in which the principal productive activity accounts for the most of the value added.
- Local unit - an enterprise or a part of an enterprise that engages in productive activity at or from one location.
- Establishment - a combination of kind-of-activity and local units. This is defined as an enterprise, or a part of an enterprise, that is situated in a single location and in which only a single productive activity is carried out or in which the principal productive activity accounts for most of the value added. Although establishments can engage in secondary activities, 2008 SNA recommends that, if the secondary activity is significant, it should be treated as part of another establishment. Examples of establishments are individual farms, mines, quarries, factories, shops, construction sites and airports³².
5.6 If an enterprise comprises of only a single establishment, the two units coincide and the production account for the establishment is the same as for the enterprise. However, establishments are conceptually distinct from enterprises, in that an establishment does not engage in transactions on its own account, or incur liabilities, enter contracts and so on. The enterprise which owns the establishment is the unit which engages in these types of activities, and makes the decisions concerning the productive activities of the establishment. It follows therefore that only the production account and generation of income account can be compiled by industry as well as by sector. Consequently, it is feasible to calculate output and intermediate use (and therefore value added), compensation of employees, taxes (and subsidies) on production and imports, and operating surplus/mixed income for an establishment.
5.7 The establishment is designed to facilitate industry analysis, which is concerned with the outputs and inputs to the production processes of enterprises. Information about establishments is used to:
- value commodities produced and goods and services used in production;
- measure industry employment, compensation of employees, operating surplus, changes in inventories and gross fixed capital formation; and
- derive estimates of productivity. The enterprise provides information on the broader functions of an institutional unit engaged in production, enabling production to be classified to institutional sectors.
5.8 The following outlines instances where application of these principles is not straightforward:
- A horizontally integrated enterprise is one in which several different kinds of activities that produce different kinds of goods or services for sale on the market are carried out simultaneously using the same factors of production. Within the SNA, a separate establishment should be identified for each different kind of activity wherever possible.
- A vertically integrated enterprise is one in which different stages of production, which are usually carried out by different enterprises, are carried out in succession by different parts of the same enterprise. The output of one stage becomes an input into the next stage, with only the output from the final stage being actually sold on the market. Despite the practical difficulties involved in partitioning vertically integrated enterprises into establishments, it is recommended in the SNA that, when a vertically integrated enterprise spans two or more sections of the ISIC, at least one establishment must be distinguished within each section.
- Government units, especially central governments, may be particularly large and complex in terms of the kinds of activities in which they engage.
- If an unincorporated enterprise of government is a market producer and there is sufficient information available to treat it as a quasi-corporation, it should be treated as a publicly controlled unit in the non-financial or financial corporations sectors as appropriate.
- If an unincorporated enterprise of government is a market producer and there is insufficient information to treat it as a quasi-corporation, or if the unincorporated enterprise is a non-market producer, then it remains within the general government sector but it should be treated as an establishment in its own right and allocated to the appropriate industry.
- Non-market producers such as public administration, defence, health and education providing final goods or services should be partitioned into establishments using activity classification of the ISIC.
If the activity of a unit undertaking purely ancillary activities is statistically observable, in that separate accounts for the production it undertakes are readily available, or if it is located in a geographically different location from the establishments it serves, it should be recognised as a separate establishment and classified to its own principal activity. This is a change to the treatment in 1993 SNA where ancillary activities related to an individual establishment were treated as an integral part of the costs of the establishment's principal or secondary activities and no separate unit was created. An enterprise may include central ancillary units that carry out ancillary activities for all establishments of the same enterprise.
The ASNA equivalent of producing units
5.9 The producing unit in the ASNA's units model is the TAU. The TAU is a producing unit comprising of one or more business entities, sub-entities or branches of a business entity that can report production and employment activities via a minimum set of data items. The activity of the unit should be as homogeneous as possible. If accounts sufficient to approximate value added are available at the ANZSIC Subdivision level, a TAU will be formed. Where a business cannot supply adequate data to form a TAU for an individual ANZSIC Subdivision, a TAU will be formed which contains activity in two or more ANZSIC subdivisions.
5.10 In its simplest form, the TAU relates to the ABN of the business. In the case of complex and varied business structures, it may be inappropriate for the TAU to be created to refer to the ABN.
5.11 Ideally, all TAUs are constructed so that two-digit ANZSIC homogeneity is observed. This ensures that good quality industry estimates can be calculated by the ABS at that level. Not all businesses are able to supply a complete set of accounts for every ANZSIC Subdivision in which they have activity.
5.12 Only a small number of data items are required to be available on a quarterly basis. The data items are: total capital expenditure; income from the sale of goods and services; wages and salaries; total inventories; total purchases; and selected expenses. When all these data items are not available from business accounts, a TAU can still be formed if careful estimates can be provided.
5.13 Where businesses cannot provide the necessary data for separate activities, and if separate activities are being carried out at a significant level (in relation to the known/estimated activity of those industries), the TAU may be a candidate for unit splitting. If it is decided to split the TAU for statistical purposes, two or more new TAUs are formed as the statistical units and the former TAU becomes the reporting unit. Data will be reported by the former TAU for its multiple activities and the ABS will apportion it to the new split TAUs for statistical outputs. The estimates for the split units will be produced using benchmarks determined at the time of splitting.
5.14 TAUs are not created based on any geographic criteria. However, it is necessary to create special State and Territory units for some TAUs to accommodate state estimates. This unit is referred to as the TAU State. The TAU State is not stored as a specific unit on the ABS Business Register. Rather, information which allows the TAU State unit to be formed is stored.
5.15 A business unit's productive activity is described as ancillary when its sole function is to provide common types of services for intermediate consumption within the same enterprise group. These are typically services likely to be needed in most enterprise groups, whatever their principal activities; for example, transportation, purchasing, sales and marketing, various financial or business services, personnel, computing and communications, security, maintenance and cleaning.
5.16 The 2008 SNA treatment of ancillary units is that an establishment should be created where the activity of the unit is statistically observable. The ABS does not currently apply the recommended 2008 SNA treatment to ancillary TAUs, as the treatment cannot be applied to all units on the ABS Business Register.