Household final consumption expenditure

10.13    In the ASNA, household final consumption expenditure (HFCE) consists of expenditure by resident households on goods and services, whether the expenditure is made within the domestic territory or by Australian residents abroad, and expenditure by NPISHs.

10.14    Specific transactions in household final consumption expenditure include:

• The value of income received in kind by employees which is treated as simultaneously spent by the employees on final consumption expenditure;
• The value of goods produced by households for their own consumption, such as agricultural goods produced and consumed on the same farm, and 'backyard' production;
• The service charge component of households' interest payments and receipts termed financial intermediation services indirectly measured (FISIM). FISIM attributable to unincorporated enterprises owned by households is classified as the intermediate consumption of the unincorporated business;
• The service charge component of premiums paid for insurance and pension fund services; and
• The imputed value of the services of owner-occupied dwellings. The imputation of rent to owner-occupied dwellings enables the services provided by dwellings to their owner-occupiers to be treated consistently with the marketed services provided by rented dwellings to their tenants. This treatment is considered necessary because, if a large number of rented houses were sold to their occupiers and if estimates of imputed rent were not calculated for owner-occupied dwellings, there would be an apparent decrease in gross domestic product without any decrease in the provision of housing services. In effect, owner-occupiers (like other owners of dwellings) are regarded as operating businesses; they receive rents (from themselves as consumers), pay expenses, and make a net contribution to the value of production which accrues to them as owners.

10.15    Any expenditure undertaken for business purposes by unincorporated enterprises (which are part of the household sector) is treated as intermediate consumption expenditure of the unincorporated enterprise, and not part of household final consumption expenditure.

10.16    Expenditures on the purchase of dwellings are explicitly excluded from household final consumption expenditure because dwellings are goods used by owners to produce housing services for those owners. Purchases of dwellings therefore constitute gross fixed capital formation. Similarly, valuables should be excluded from household final consumption expenditure because they are not used up in consumption or production, nor do they deteriorate over time. Valuables are a store of value, and are classified as part of gross capital formation. In the ASNA, however, some expenditure on valuables may be included in HFCE as a separate estimate for valuables is not compiled.

10.17    Expenditures on licences to use or own vehicles, boats and aircraft, and fees for shooting, fishing and hunting permits are also excluded. These are treated as taxes rather than as payments for services. All other kinds of licences, permits, certificates, passports etc. are treated as purchases of services and included in household final consumption expenditure.

10.18    HFCE is therefore a large aggregate covering a wide range of goods and services. The 2008 SNA proposes a functional classification to identify the purposes or objectives for which households engage in certain transactions involving these products. The Classification of Individual Consumption by Purpose (COICOP) is used to classify HFCE by purpose or function. The outlays covered include:

• expenditure on consumer durables such as cars, furniture and high-value, long-lasting household appliances (but excluding dwellings, which are regarded as the fixed assets of an 'industry');
• consumer semi-durables such as clothing and footwear, other appliances, and crockery and cutlery;
• single-use goods such as food, cigarettes and tobacco, and alcoholic drinks; and
• services of all kinds such as hairdressing, dry cleaning and public transport.

10.19    The classification of HFCE is aligned with COICOP in Australia's national accounts. There are some instances where it is not yet possible for Australia to follow COICOP's recommendations. For this reason, HFCE is classified according to a modified version of the COICOP in the ASNA (A-COICOP). 

10.20    The main A-COICOP categories for household spending are:

• Food (01)
• Total alcoholic beverages and tobacco (02)
• Clothing and footwear (03)
• Total rent and other dwelling services (04)
• Furnishings and household equipment (05)
• Health (06)
• Total transport (07)
• Communication (08)
• Total recreation and culture (09)
• Education services (10)
• Total hotels, cafes and restaurants (11)
• Total miscellaneous goods and services (12).

10.21    The subcategories for household spending in the ASNA vary between the quarterly and annual national accounts. The ASNA publishes annual estimates for the following subcategories:

• Cigarettes and tobacco
• Alcoholic beverages
• Actual rent for housing
• Imputed rent for owner-occupiers
• Water and sewerage services
• Electricity, gas and other fuel
• Purchase of vehicles
• Operation of vehicles
• Transport services
• Goods for recreation and culture
• Recreational and cultural services
• Books, papers, stationery and artists goods
• Catering
• Accommodation services
• Insurance and other financial services
• Other goods and services.

10.22   The ASNA departs from the recommendations of 2008 SNA in the following areas of household spending:

• ASNA does not include an estimate of HFCE on narcotics in COICOP Division 02 Alcoholic beverages, tobacco and narcotics because reliable data are unavailable.
• Expenditure on COICOP Group 09.6 (Package holidays) is not specifically identified in Australia's HFCE, but the components of package holidays (airfares, accommodation and food) are included in the corresponding categories of household spending.
• ASNA does not include an explicit estimate of HFCE on prostitution services in COICOP Division 12 Miscellaneous goods and services because reliable data are unavailable.

10.23    The COICOP category for Maintenance and repair of the dwelling (Group 04.3) includes minor maintenance and repair of dwellings (e.g. interior decoration and repair to fittings which are commonly carried out by both tenants and owners). It excludes repairs and maintenance which are typically carried out by owners only (e.g. replastering walls or repairing roofs). Such a distinction is consistent with 2008 SNA.⁴⁴ The ASNA deviates from the 2008 SNA recommendation, and has excluded all repairs and maintenance of dwellings from estimates of household spending. Expenses associated with these activities are treated as the intermediate consumption of the Ownership of dwellings industry. COICOP Group 04.3 is excluded from HFCE in the Australia's national accounts.

10.24    The final consumption expenditure of NPISHs is included with that of households in the ASNA. 2008 SNA recommends that the final consumption of NPISHs should be classified according to the Classification of the Purposes of Non-Profit Institutions Serving Households (COPNI). The major divisions of COPNI are as follows:

• Housing (01)
• Health (02)
• Recreation and culture (03)
• Education (04)
• Social protection (05)
• Religion (06)
• Political parties, labour and professional organisations (07)
• Environmental protection (08)
• Services n.e.c. (09).

10.25    The final consumption expenditure of NPISHs is classified to the corresponding category of HFCE in the ASNA as far as possible. Expenditure by NPISHs on health, recreation and culture and education services are classified to the corresponding categories for household spending, while final consumption expenditure for the other divisions is classified to Other goods and services (A-COICOP Division 12). Indirect means are generally employed to compile these estimates because data sources for estimating the final consumption expenditure of NPISHs are very limited. It is often necessary to assume that the final consumption expenditure for NPISHs can be estimated as the sum of income transferred by households, corporations and general government in a period, less an allowance for net property income payments and capital formation.