Known components of expenditure - GSP(E)

21.85    Known components of GSP(E) are derived as the sum of final consumption expenditure, gross fixed capital formation and international exports of goods and services less international imports of goods and services (net international trade).

21.86    Known components of GSP(E) do not provide a complete measure of GSP because components such as interstate trade and change in inventories are missing.  Despite this, they are used extensively to produce and analyse GSP. The process can be summarised as:

• produce the GSP(I/E) deflator
• decompose and analyse the GSP(I/E) measure
• calculate the balancing item. 

21.87    Calculation of GSP(I/E) and the balancing item are described in more detail in following sections.

21.88    Known components of GSP(E) are defined as:  

21.89    The known components of GSP(E) can be summarised as state final demand and net international trade.

21.90    State final demand is the aggregate level of final consumption expenditure and gross fixed capital formation within a state over a specified period of time. SFD is defined as the final use of goods and services within a given period by households, government and businesses; that is:

21.91    In simple terms, SFD is the sum of private and public consumption and investment within a state.

21.92    SFD is a measure of demand in a state economy. Measures of state final demand make no distinction between demand that is met by goods and services produced within the state in question, or by supplies sourced from another state, or from overseas. State final demand is therefore not a measure of the value of production activity occurring within a state, and, as such, should not be used as proxy for gross state product.

21.93    Components of state final demand are compiled quarterly, and published in Australian National Accounts: National Income, Expenditure and Product.

21.94    Annual estimates are published in Australian National Accounts: State Accounts, and are consistent with the sum of the four quarters, with slight differences due to timing. A brief summary of how each of these components are allocated to state are listed below.

21.95    Components that make up SFD are included below. The conceptual basis for allocation to state, as well as data sources used for this purpose, varies across components. 

21.96    Household final consumption expenditure (HFCE) is allocated by state according to the primary residence of the purchaser.

21.97    Quarterly household final consumption expenditure is largely allocated to states using the top-down approach based on indicators and price deflators. It is compiled according to the A-COICOP classification. Dwelling rent is the main exception. It is compiled using the bottom-up approach based on data from the Census of Population and Housing conducted every five years. Adjustments are also made for interstate and international household consumption.

21.98    Annual estimates for all A-COICOP categories are produced as the sum of four quarters, with differences in annual and quarterly estimates due mostly to timing differences.

21.99    The quarterly and annual sources and methods used in the compilation of HFCE can be found in Chapter 10 under the subsection "Household final consumption expenditure".

21.100    Estimates of government final consumption expenditure (GFCE) are disaggregated into Commonwealth government and State and local government.

21.101    National government final consumption includes government agencies and jointly administrated universities. National GFCE is disaggregated into defence and non-defence.  Where data is available, consumption items are allocated directly to the location in which consumption takes place. The remainder is allocated based on indicators.

21.102    Jurisdictional reporting matches regional boundaries for State and local governments. Therefore, State and local GFCE estimates are compiled using the bottom-up approach.

21.103    Annual estimates are produced as the sum of quarters with differences due to timing. 

21.104    The quarterly and annual sources and methods used in the compilation of GFCE can be found in Chapter 10, under the subsection "Government final consumption expenditure".

International trade in goods and services

21.105    International trade relates to imports and exports of goods and services of a state with a destination or source outside Australia.  This is divided into merchandise goods trade, and services trade. In the state accounts, merchandise goods trade is produced annually and quarterly, and services trade is produced annually.

21.106    International trade in merchandise goods are allocated to state based on the location at which the customs barrier is crossed.

21.107    Published state level merchandise goods trade is not consistent with trade estimates for the national accounts which is produced on a balance of payments (BoP) basis. The difference for each state is reconciled on a BoP basis, with the difference between state merchandise trade and state allocations on a BoP basis included as part of the balancing item.

Trade in merchandise goods

21.108    Trade in merchandise goods measures goods that cross the Australian customs barrier. These are allocated to state based on the location of where the customs barrier is crossed. If the goods are transported to another state this is treated as an interstate re-export, which is included in the balancing item.  In the national accounts, trade in goods is produced on a balance of payments basis which adjusts for goods which are not captured sufficiently in customs data.

International trade

21.109    International trade in services is collected as part of the ABS publication, International Trade in Services by Country, by State and by Detailed Services Category. State allocation is based on the location of units sampled as part of this survey.

21.110    The following tables outline the data sources and methods used to estimate international trade in goods and services:

Dwellings

21.111    Gross fixed capital formation for dwellings consists of the value of acquisitions of new and existing (used) dwellings less the value of disposals of existing dwellings. State estimates are derived using the top-down approach.

21.112    The following table outlines the quarterly data sources used to estimate gross fixed capital formation for dwelling construction. Annual estimates are compiled as the sum of quarterly estimates, with differences between quarterly and annual estimates due to timing.

Non-dwelling construction

21.113    Non-dwelling construction at the state level comprises of three components:

• new building
• new engineering construction
• net purchases of second-hand assets.

21.114    State estimates are derived using a top-down approach using data from BACS, ECS and GFS for second-hand assets.

21.115    Annual estimates are compiled as the sum of quarterly estimates, with differences between quarterly and annual estimates due to timing.

21.116    The following table outlines the quarterly data sources used to estimate gross fixed capital formation for private non-dwelling construction.

Machinery and equipment

21.117    Gross fixed capital formation for machinery and equipment is recorded as the value of the acquisitions of new and existing machinery and equipment less the value of the disposals of existing machinery and equipment.

21.118    At state level, private gross fixed capital formation of machinery and equipment is published with two sub-components:

• new machinery and equipment
• net purchases of second-hand assets.

21.119    The following table outlines the quarterly data sources used to estimate gross fixed capital formation for machinery and equipment. Annual estimates are produced as the sum of four quarters, with differences in annual and quarterly estimates due mostly to timing differences.

Intellectual property products

21.120    Gross fixed capital formation of research and development (R&D) is allocated to the state in which the research work occurs.

21.121    Mineral and petroleum exploration is the value of expenditure on exploration for mineral and petroleum undertaken in each state. Exploration expenditure covers all exploration activity undertaken on land and in state territorial waters, with offshore exploration in Commonwealth waters allocated to closest state of proximity.

21.122    The following table outlines the quarterly data sources used to estimate gross fixed capital formation for intellectual property products. All items with the exception of mineral and petroleum exploration are compiled annually with interpolation used to create quarterly estimates.

21.123    The following table outlines the annual data sources used to estimate gross fixed capital formation for intellectual property products.

Ownership transfer costs

21.124    Ownership transfer costs at state level consist of the following components:

• fees paid to lawyers associated with the transfer of ownership
• fees and commissions paid to real estate agents, auctioneers, architects, surveyors, engineers and valuers
• stamp duty
• titles office charges
• local government charges.

21.125    The following table outlines the quarterly data sources used to estimate gross fixed capital formation for ownership transfer costs. Annual estimates are produced as the sum of four quarters, with differences in annual and quarterly estimates due mostly to timing differences.

Cultivated biological resources

21.126    Cultivated biological resources data are compiled by state for animal resources (livestock), as well as crop and plant resources yielding repeat products (orchard growth).

21.127    The following table outlines the quarterly data sources used to estimate gross fixed capital formation for cultivated biological resources. Annual estimates are produced as the sum of four quarters, with differences in annual and quarterly estimates due mostly to timing differences.

Public corporations

21.128    Public corporations capital formation is split into Commonwealth, state and local.

21.129    The following table outlines the quarterly data sources used to estimate gross fixed capital formation for public corporations. Annual estimates are produced as the sum of quarters with differences due to timing. These timing differences can be significant due to inclusion of audited GFS data. They feed into the state accounts and the quarterly ABS publication. Australian National Accounts: National Income, Expenditure and Product.

General government

21.130    General government capital formation is allocated to Commonwealth and State and local government using data from GFS. Commonwealth is further separated into defence and non-defence.

21.131    The following table outlines the quarterly data sources used to estimate gross fixed capital formation for general government. Annual estimates are produced as the sum of quarters with differences due to timing. These timing differences can be significant due to inclusion of audited GFS data. They feed into the state accounts and the quarterly ABS publication. Australian National Accounts: National Income, Expenditure and Product.