The production of meaningful statistics about the economically active population requires that the economic territory to which the population relates is accurately defined.
The concept of economic territory in the 2008 SNA is not identical to the concept of country. The most commonly used definition is a territory under the effective economic control of a single government, and as such usually approximates the geographic borders of a country.
In principal, the economic territory of Australia as defined in the ASNA includes the geographic territory under the effective control of the Australian government, including:
- any islands belonging to Australia which are subject to the same fiscal and monetary authorities as the mainland;
- the land area, airspace, territorial waters, and continental shelf lying in international waters over which Australia enjoys exclusive rights or over which it has, or claims to have, jurisdiction in respect of the right to fish or to exploit fuels or minerals below the sea bed; and
- territorial enclaves in the rest of the world (that is, geographic territories situated in the rest of the world and used, under international treaties or agreements, by general government agencies of the country). Territorial enclaves include embassies or consulates, military bases, scientific stations, etc. It follows that the economic territory of Australia does not include the territorial enclaves used by foreign governments which are physically located within Australia’s geographical boundaries.
Specifically, the economic territory of Australia consists of geographic Australia including Cocos (Keeling) Islands, Christmas Island, Norfolk Island, Jarvis Bay, Australian Antarctic Territory, Heard Island and McDonald Islands, Territory of Ashmore Reef and Cartier Island, and the Coral Sea Islands.
Within the Australian labour household surveys context, a distinction must be made between: the territories which determine the estimated resident population of Australia; those which are covered by household survey collection procedures; and those used to benchmark or ‘weight’ household survey estimates (i.e., the population benchmarks). See Information Paper: Improved Methods for Estimating Net Overseas Migration, 2006.
- The “other territories” of Australia, namely Jervis Bay, Christmas Island, Cocos (Keeling) Island, and Norfolk Island after the 2016 Census, are included in the estimated resident population of Australia, but excluded from household survey collection procedures and population benchmarks.
- The “external territories” of Australia, namely Territory of Ashmore and Cartier Islands, Coral Sea Islands Territory, Australian Antarctic Territory, and Territory of Heard and McDonald Islands, are not included in the estimated resident population, household survey collection procedures or the population benchmarks.
Within the Australian labour business surveys context, no further geographical restrictions are imposed. Samples for business surveys are typically selected from the ABS Business Register, and therefore all businesses within the economic territory of Australia may be included, providing they meet other relevant scope restrictions.
Within the 2008 SNA, residency is defined as the economic territory with which an institutional unit or individual has the strongest connection - in other words, its centre of predominant economic interest. Each institutional unit or individual is a resident of one and only one economic territory.
Actual or intended residence for one year or more is used as an operational definition in many countries (including Australia) to facilitate international comparability.
Residence of individuals and households
Persons are considered to have the strongest connection with the economic territory in which they physically reside. In the broadest sense, the total population consists of either all usual residents of the country (the usually resident or de jure population) or all persons present in the country (the de facto population) at a particular time.
Household surveys use the first population category, the usually resident population. All persons who are usually resident in Australia are considered part of the usually resident population, regardless of nationality, citizenship or legal status.
To determine whether a person is usually resident, Australia has adopted a 12 in 16 month rule. This rule specifies that, to be considered a usual resident, a person must have been (or expect to be) residing in Australia for 12 months or more in a 16 month period. This 12 month period does not need to be consecutive.
The application of the 12 in 16 month rule in the labour household survey context cannot be so precise. A screening question asks if the respondent is a short term resident and, if so, they are excluded from the survey. Labour household surveys also include residents who are temporarily overseas for less than six weeks. However, the 12 in 16 month rule is explicitly applied in the estimated resident population, and the population benchmarks used to weight the LFS. For more information regarding the 12 in 16 month rule, refer to Information Paper: Improved Methods for Estimating Net Overseas Migration, 2006 (cat. no. 3107.0.55.003).
Residence of students
In the 2008 SNA, the residence of students is described as:
"…people who go abroad for full-time study generally continue to be resident in the territory in which they were resident prior to studying abroad. This treatment is adopted even though their course of study may exceed a year. However, students become residents of the territory in which they are studying when they develop an intention to continue their presence in the territory of study after the completion of the studies."
Within the Australian labour household survey context, there is no special treatment for students and they are treated using the same 12 in 16 month rule. Within the Australian business survey context, there is no distinction made between students and other persons, such that they are included if they are an employee, irrespective of their length of stay in the country.
Residence of enterprises
Within the labour business survey context, the de facto population is used, that is, all employees are included irrespective of their length of stay in the country. This is consistent with the SNA production boundary.
As a general principle, an enterprise is resident in an economic territory when it is engaged in a significant amount of production of goods or services from a location in the territory.
An enterprise is resident in an economic territory when there exists, within the economic territory, some location, dwelling, place of production, or other premises on which or from which the unit engages and intends to continue engaging, either indefinitely or over a finite but long period of time, in economic activities and transactions on a significant scale. The location need not be fixed, so long as it remains within the economic territory.
Corporations and non-profit institutions normally may be expected to have a centre of economic interest in the economy in which they are legally constituted and registered. Corporations may be resident in economies different from their shareholders, and subsidiaries may be resident in different economies from their parent corporations. When a corporation, or unincorporated enterprise, maintains a branch, office, or production site in another territory to engage in a significant amount of production over a long period of time (usually one year or more) but without creating a corporation for the purpose, the branch, office, or site is considered to be a quasi-corporation (i.e., a separate institutional unit) resident in the territory in which it is located.
Within the Australian business survey context, residency is determined by deriving the sample selection of business frames from the Australian Business Register, which is an administrative data source maintained by the Australian Taxation Office (ATO). The registration of a business by the ATO is deemed to be a demonstration that the business has a centre of economic interest within Australia.
Residency in the Australian Context
Applying residency concepts to survey collections:
- include non-residents living in Australia employed by Australian companies, such as short-term foreign students studying in Australia for periods of less than 12 months.
- include estimates of non-resident persons engaged by Australian businesses operating overseas that have no intention to stay in the non-resident country for more than 12 months.
- include Australian residents living in Australia employed by non-resident enterprises, for example Australians engaged by foreign embassies and consulates and by overseas companies that have no intention of staying in Australia for more than 12 months.
- do not include estimates of non-resident persons engaged by Australian businesses operating overseas, that have no intention to stay in the non-resident country for more than 12 months.
Applying residency concepts in practice, the Australian Labour Account makes the following scope adjustments to household survey estimates:
- add: non-residents living in Australia employed by Australian companies. Non-residents such as short-term foreign students studying in Australia for periods of less than 12 months, short-term migrants and working tourists are included because they contribute to Australia’s economic production and are included in the Compensation of Employees component of Gross Domestic Product (GDP).
- less: Australian residents living in Australia employed by non-resident enterprises, for example Australians engaged by foreign embassies and consulates and by overseas companies that have no intention of staying in Australia for more than 12 months.
The Australian Labour Account does not include estimated numbers of non-resident persons engaged by Australian businesses operating overseas, but with no intention to stay in the non-resident country for more than 12 months. While conceptually included in the scope of the Australian Labour Account, due to lack of data no estimate has been included for the foreign workers they may employ.
The economic territory used in the Australian Labour Account is summarised below.