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Australian National Accounts: State Accounts methodology

Reference period
2018 - 2019
Released
15/11/2019
Next release Unknown
First release

Explanatory notes

​​​​​​​Introduction

This publication contains state and territory estimates of gross domestic product (referred to as gross state product (GSP)) and its components, in current price and chain volume terms, for the years 1989-90 to 2018-19. Where ‘state’, is referred to in the text, it also encompasses the two territories. The estimates in this publication are consistent with those published for Australia in the 2018-19 issue of Australian System of National Accounts (cat. no. 5204.0). For further details of the concepts, sources and methods used in compiling the estimates in this publication refer to Australian System of National Accounts: Concepts, Source and Methods (cat. no. 5216.0).

State estimates are essentially a dissection of the Australian estimates contained in Australian System of National Accounts (cat. no. 5204.0). While it is possible in some cases to build up estimates using the same data sources as those used for the Australian estimates, it is quite often necessary to derive dissections using a variety of allocators. These may be directly related to the aggregate being allocated (for example, economic survey data) or only indirectly related (for example, population and household income distributions).

Quarterly state estimates of state final demand (SFD) and its components are released quarterly in the publication Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0). The data are available as chain volume measures and in current prices and are presented in trend, seasonally adjusted and original forms.

Concepts, sources and methods

Australia's national accounts statistics are compiled in accordance with international standards contained in the System of National Accounts. These standards are presented in the System of National Accounts, 2008 (SNA08). Australia's application of these SNA standards is described in Australian System of National Accounts: Concepts, Source and Methods (cat. no. 5216.0). It is available on the ABS website http://www.abs.gov.au. This publication outlines major concepts and definitions, describes sources of data and methods used to derive annual and quarterly estimates for major aggregates at current prices and in chain volume terms, and discusses the accuracy and reliability of the national accounts. In addition, it includes documentation on input-output tables, financial accounts, capital stock, productivity measures and balance sheets.

While national estimates are based on the concepts and conventions embodied in SNA08, no such detailed standard is available for sub-national (regional/state) accounts. In the main, the national concepts are applicable to state accounts, but there are a some conceptual differences between national and state accounts. Most problems arise for the Transport, postal and warehousing, Information media and telecommunications, and Finance and insurance services industries, and in the treatment of central government. In such cases, conventions need to be established which reflect data availability and/or the needs of users. Information on the important conceptual, methodological and data issues relating to annual and quarterly estimates by state is provided in Chapter 21 of edition 6 of the Australian System of National Accounts: Concepts, Sources and Methods (cat. no. 5216.0).

Gross state product

The introduction of GSP(P) estimates in 2006-07 resulted in alternative measures of economic activity being available for each state. There were three possible volume measures of GSP which could have been chosen as the headline measure of economic growth:

• volume estimates of GSP(P)
• volume estimates of GSP using the income/expenditure approach (GSP(I/E))
• a simple average of these volume estimates, i.e. GSP(A).

In considering the merits of the various options the ABS decided the average measure is preferred. This measure maximises the use of information about state economic activity and it will be more stable over time (i.e. subject to smaller revisions) than the two alternatives. This approach is also consistent with the approach used nationally for the latest year estimates and for the quarterly national accounts. The volume estimates of GSP(I/E) and GSP(P) therefore contain statistical discrepancies to reconcile them with GSP(A).

The current price estimates of GSP(A) are produced using a simple average of the current price GSP(I/E) and GSP(P) estimates, which are benchmarked to GDP(A). Current price GSP(P) is produced using the production approach where gross value added is equal to output less total intermediate use (GVA = Output - TIU). The current price estimates for GSP(I) and GSP(P) therefore contain statistical discrepancies to reconcile them with GSP(A).

State income estimates

Estimates of GSP(I) in current prices are produced by summing factor incomes, i.e. compensation of employees (COE), gross operating surplus (GOS) and gross mixed income (GMI), plus taxes less subsidies on production and imports. While wages and salaries can be readily collected by state, this is not always the case for other components of COE or for GOS plus GMI, which often cannot be measured satisfactorily within business accounting systems at the individual location. Most of the ABS economic collections which provide data for the estimates in this publication obtain various financial information from businesses. Many of these businesses operate within a single state and it is straightforward to attribute the GOS and GMI for those businesses to the appropriate state. For complex businesses that operate in more than one state various conventions have been adopted to allocate GOS and GMI to the appropriate state.

For the Transport, postal and warehousing and Information media and telecommunications services industries, estimates of GOS plus GMI by state can be substantially affected by the conceptual basis adopted for allocation. For example, in the case of the modal transport industries (i.e. all transport industries except Services to transport), possible ways of attributing production could include tonne (or person) kilometres travelled in a state; economic activity attributed to the base of operations only; or a mixture of both. As state economic activity for interstate modal transport activities cannot be uniquely defined, it may even be preferable that they should be regarded as extra-territorial and excluded entirely from state production. However, the approach adopted in this publication is to use activity indicators to allocate interstate transport services to states.

Numerous data sources are used to apportion Australia level GOS plus GMI to states. Where available, economic survey data are used to apportion GOS for corporations. Those industries for which economic survey data are not available, a variety of allocators are used to extrapolate or estimate state dissections of GOS. Indicators include state details of wages and salaries, employment, household final consumption expenditure, movements in unincorporated enterprises’ GMI, freight shipped from Australian ports, and airport passenger embarkations/disembarkations (the latter two indicators are specific to the transport industry). Taxation statistics are used to apportion GMI for non-agricultural unincorporated enterprises in some industries, and economic survey data are used for other industries. Production-based estimates of agricultural GOS plus GMI are derived using the same data sources and methodology as are used for the Australian estimates. Although the GOS of state and local government non-financial corporations is directly available from the ABS public finance system, GOS for Commonwealth government non-financial corporations is allocated mainly using indirect indicators.

State estimates of COE for total of all industries are produced consistently with national estimates, compiled for wages and salaries, employers’ superannuation contributions and workers compensation premiums. State estimates of COE are split to industry using AWE and LFS as indicators, as such there are no individual state by industry COE components of wages and salaries, employers superannuation contributions and workers compensation premiums. It should be noted that there is a minor difference between COE as published in the total factor income tables and as published in the household income accounts for both the Australian and state estimates. The difference arises in situations where a household supplies labour to a production establishment that is in a different domestic territory (state/country) from the household.

Estimates of taxes less subsidies on production and imports are derived by adding values for taxes received and subsidies paid by state and local governments and the Commonwealth government. Data are available from the ABS Government Finance Statistics (GFS), although Commonwealth government values are not generally available by state. Indicators are used to allocate the goods and services tax, excise tax, customs duties and major subsidies to the state where the economic activity took place.

State expenditure estimates

This publication contains state estimates for a number of expenditure components and international exports and imports of goods and services in both current prices and chain volume terms. The difference between the sum of these components and GSP(E) is known as the balancing item. The balancing item reflects: changes in inventories; interstate trade in goods and services; and the balancing item discrepancy.

Numerous data sources are used to compile the expenditure components both in current price and chain volume terms. For some components state data is available but for others various approaches are taken to allocate the Australia-level estimate to the states. Chapter 21 of the Australian System of National Accounts: Concepts, Source and Methods (cat. no. 5216.0) details the data sources used for the expenditure components of GSP(E).

The chain volume measures of GSP(E) presented in this publication are derived by revaluing current price, income-based estimates of GSP, using deflators which are compiled using the available data on the composition of expenditures on state production and movements in associated prices. For a more complete description of why this approach has been adopted, and details of the data sources and the methods used, see Chapter 21, Australian System of National Accounts: Concepts, Sources and Methods (cat. no. 5216.0).

A lack of data means that it is not possible to derive estimates at the state level equivalent to the aggregate Australian expenditure-based estimates of gross domestic product. While the components of SFD and estimates of international merchandise trade and international trade in services by state are available, there are no complete data on interstate trade in goods and services; or changes in inventories. Hence, an expenditure-based GSP volume measure cannot be derived by a similar methodology to that adopted at the Australian level.

In order to make maximum use of the incomplete expenditure data and limited price data available at the state level, an approach is adopted which essentially involves deriving the best possible current price and chain volume estimates of expenditure that encompass as much as possible of GSP. For each state, current price estimates of identified components of international and interstate trade and changes in inventories are combined with the current price estimates of SFD and, similarly, the chain volume measures of those components are combined with the chain volume measures of SFD. The quotient derived by dividing the aggregate chain volume measure into the aggregate current price estimates is a Paasche (current-weighted) price index. It is this price index which is used to revalue the current price estimates of GSP.

It is crucial to identify separately those components for which the deflators deviate significantly from the average, since the method adopted effectively attributes the weighted average deflator to the unidentified components. There is an assumption underlying the approach adopted in deriving the aggregate state deflators that, because of price competition, the available national price indicators are reasonably indicative at the state level. This is a less distorting assumption if the price indicators are weighted together at a reasonable level of commodity disaggregation, and implies deriving the current price and chain volume estimates at as fine a level as possible.

Despite the fact that as broad a range of information as possible is used in this estimation procedure, the aggregate current price and chain volume estimates of expenditures used in the derivation of the state deflator are not considered to be complete measures. They merely serve to produce the best deflators and therefore the most reliable chain volume measures of GSP(E) that the available data and resources allow.

State production estimates

The same methods currently used to derive Australian level annual volume estimates of industry GVA (for the quarterly and latest year estimates) have been used, where possible, in estimating GSP(P). That is, by using different indicators for each industry to interpolate and extrapolate the supply use benchmark estimates. Most of the indicators are output indicators. One exception is the Agriculture sub-division where a double deflation approach is used. Assumptions have been made, or alternate indicators have been used, on occasions where data availability has limited the application of the national quarterly method.

The GSP(P) method uses an output indicator approach for most industries to compile state by industry GVA estimates. This involves extrapolating reference year estimates of current price GVA using movements in a volume indicator of output. A double deflation methodology is used for the Agriculture sub-division within the Agriculture, forestry and fishing industry.

The method used to derive a current price GVA by state for each industry is to split that particular industry GVA to the states using state based output indicators to split the National output estimates for each industry. National output to TIU ratios are then applied to calculate industry GVA estimates for each state which are benchmarked to the Australian industry GVA estimates.

There are two basic approaches for producing volume indicators, price deflation and quantity revaluation. Some industries only use price deflation while others use a combination of price deflation and quantity revaluation to produce an industry level estimate. Chapter 21 of the Australian System of National Accounts: Concepts, Source and Methods (cat. no. 5216.0) outlines in detail the methods and data sources used for each industry. These two methods provide the output volume indicator which is then used (with corresponding price information) to produce a chain volume measure for each industry.

Once each state's current price and volume GVA estimates have been derived for each industry and Ownership of dwellings they are then benchmarked to the Australian total for each industry. Given the nature of chain volume measures benchmarking results in the volume estimates sum to the Australian total in the reference and current years, but not in other years. Each state's benchmarked industry GVA estimates (current price and other components) are then summed and then re-chained to produce GVA at basic prices for each state. In order to derive GSP(P) for each state, Taxes less subsides on products is added to each state's GVA at basic prices.

Real gross state income

The chain volume measures of GSP measure the volume of goods and services produced in each state. If the terms of trade for a state change significantly (i.e. the prices for a state's exports and imports change at different rates) then chain volume GSP will not accurately reflect the change in real purchasing power of the income generated within a state. For this reason real gross state income (RGSI), has been developed which measures chain volume GSP adjusted for changes in the terms of trade. This measure was introduced in a feature article published in the March quarter 2002 issue of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0).

To obtain an estimate of RGSI, the following adjustment is made to the volume measure of GSP, prior to chaining:

• add exports of goods and services at current prices which are deflated by the implicit price deflator for imports of goods and services;
• deduct the volume estimates of exports;
• the resultant terms of trade adjustment is then added to the volume measure of GSP; and
• the measures of RGSI in the prices of the previous year are then chained to give chain estimates of RGSI.

The estimates of exports and imports of goods and services used in these calculations include both international and interstate trade. The methods used to derive them are described in Chapter 21 of Australian System of National Accounts: Concepts, Source and Methods (cat. no. 5216.0). The international trade data are considered to be of reasonable quality and are presented in this publication. The interstate trade data are derived using a model, and are considered to be of poor quality. Fortunately, the major contribution to changes in the terms of trade of a state comes from its internationally traded goods, principally Australia's exports of primary goods (e.g. minerals) and its importation of manufactured goods (e.g. IT equipment). The contribution of interstate trade to changes in a State's terms of trade is relatively minor because the prices of goods and services exported and imported tend to change at a similar rate.

Accuracy of estimates

The estimates in this publication represent allocations of Australian estimates published in 5204.0. Therefore, they will reflect any inaccuracies in those estimates as well as inaccuracies introduced by any particular conceptual, methodological and data problems inherent in the allocation of Australian estimates to states. The degree of accuracy and reliability will necessarily be lower than that for the Australian estimates.

Uniform methodologies and consistent data sources have been used for all states. Although there is no reason to expect that there would be any bias in the methods used, there is some variation in both the quality of data between states (particularly where sample surveys are used) and the sensitivity of estimates to alternative concepts.

Detailed industry estimates for the two territories are likely to be less accurate than those for the states. The use of indirect allocators to separate the territories has a far more significant effect on the relative errors for the Australian Capital Territory and for the Northern Territory than for New South Wales and South Australia. Where sample surveys are used to collect data, standard errors are often higher for the territories than for the states.

The limitations of ABS sample surveys in producing state estimates are particularly relevant for estimates of private gross fixed capital formation - machinery and equipment. Estimates for each state are derived largely from a quarterly national survey of business. The survey design aims to achieve a high degree of statistical accuracy in the samples in the larger states. However, as the accuracy of the estimates from this survey (in percentage terms) is roughly proportional to the size of the sample, the estimates for the smaller states are generally less accurate than those for the larger states. Hence, the estimates for the Northern Territory, Australian Capital Territory, Tasmania and South Australia are particularly prone to volatile movements.

Estimates of GOS plus GMI for the latest year rely on a range of broad activity indicators such as retail turnover, construction work done, QBIS and persons employed. Therefore, they are subject to revision as more suitable sources, such as taxation statistics and ABS economic survey data, become available.

Estimates of taxes less subsidies on production and imports, government final consumption expenditure, and general government and public corporation gross fixed capital formation can be substantially affected by the indicators chosen to apportion the Commonwealth government component to states. Again, care is required when interpreting these estimates.

In analysing the chain volume measures it is important to recognise the data limitations at the state level and to be aware that the accuracy of the estimates will not be as high as that of the corresponding national estimates.

Other national accounts statistical publications

This publication is part of a regular sequence of national accounts publications. The key national accounts publication is the quarterly Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) released approximately two months after the end of the reference period. The first estimates of national accounts for a particular financial year are released in the September quarter issue of 5206.0, generally in early December. This quarterly publication also contains state estimates for the aggregate State Final Demand and its components.

Also released quarterly is the publication Australian National Accounts: Finance and Wealth (cat. no. 5232.0). It contains financial profiles of each subsector of the economy and the market for each conventional financial instrument.

In late October/early November each year the annual publication Australian System of National Accounts (cat. no. 5204.0) is released. It contains the annual benchmark income, production and expenditure data on which the data in this publication are based. In addition it contains detailed income, capital and financial accounts and balance sheets for all institutional sectors, estimates of productivity and capital stock and a range of industry data. Overall it provides a detailed picture of the structure of the Australian economy.

Input-output tables are available in Australian National Accounts: Input-Output Tables (cat. no. 5209.0.55.001). The latest publication contains input-output tables for 2016-17.

In recent years the ABS has developed estimates of the contribution of tourism to the Australian economy in the form of a tourism satellite account. The latest estimates up to 2017-18 were released in Australian National Accounts: Tourism Satellite Account (cat. no. 5249.0).

Information papers, feature articles and technical notes

Feature articles and technical notes are written on a regular basis to inform users of emerging issues and methodological changes and their impact on the national accounts. Most commonly feature articles and technical notes are released in the quarterly publication Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) but other publication vehicles are also used. A full list of feature articles published since December 1988 is included on the ABS website.

The ABS website includes a National Accounts theme page which contains links to the latest National Accounts releases, feature articles and information papers. It also contains links to other related sources of information including non-ABS sources.

Glossary

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​​​​​​​Adjusted known components of GSP(E)

This is known components of GSP(E) plus the addition of net interstate trade in goods (including re-exports), net Household final consumption expenditure (HFCE) expenditure interstate and net BOP adjustments to international merchandise goods trade (exports - imports). This is compiled largely for creation of the GSP(I/E) deflator and is not published.

Agricultural factor income

The total factor income arising from production in agriculture and services to agriculture. It is equal to the estimated gross value of production (after the inventory valuation adjustment) less estimated production costs other than compensation of employees and consumption of fixed capital for all enterprises engaged in agriculture and services to agriculture. It includes agricultural output produced by the household sector for its own consumption.

Agricultural income

The income accruing from agricultural production during the year. It is equal to gross agricultural product at factor cost less consumption of fixed capital, compensation of employees, and net rent and interest payments.

Agricultural production costs

Includes all costs (other than compensation of employees and consumption of fixed capital) incurred in current production but excludes net rent and interest payable which are treated as appropriations out of operating surplus. In general, marketing costs are as shown in the statistical publication Value of Agricultural Commodities Produced, Australia (cat. no. 7503.0) and represent the difference between the value at the farm (or other place of production) and wholesale markets. Other costs include taxes on production and imports, fertilisers, fuel, costs associated with inter-farm transfers of livestock and fodder, maintenance and other miscellaneous items.

Balance of payments (BOP) trade

Customs or merchandise trade adjusted for trade in goods which is not captured adequately as part of customs reporting.

Balancing item

Calculated as the residual of the sum of the components of GSP(E) less state final demand less international trade in exports of goods and services, plus international trade in imports of goods and services. The balancing item implicitly comprises changes in inventories, total net interstate trade as well as other miscellaneous items such as the balancing item discrepancy.

Balancing item discrepancy

At the state level the national statistical discrepancy is allocated across the states and territories to ensure consistency between the sum of the states and Australia. In addition, the balancing item for each state implicitly contains the statistical discrepancy for that state - calculated as GSP using the income approach less GSP using the expenditure approach.

Basic prices

The amount receivable by the producer from the purchaser for a unit of a good or service produced as output, minus any tax payable plus any subsidy receivable, on that unit as a consequence of its production or sale; it excludes any transport charges invoiced separately by the producer.

Bottom up approach

The bottom up approach is used where national estimates in the national accounts are created as the sum of states.

Chain volume measure

Annually-reweighted chain Laspeyres volume price indexes referenced to the current price values in a chosen reference year (i.e. the year when the quarterly chain volume measures sum to the current price annual values). Chain Laspeyres volume measures are compiled by linking together (compounding) movements in volumes, calculated using the average prices of the previous financial year, and applying the compounded movements to the current price estimates of the reference year. Generally, chain volume measures are not additive. In other words, component chain volume measures do not sum to a total in the way original current price components do. In order to minimise the impact of this property, the ABS uses the latest base year as the reference year. By adopting this approach, additivity exists for the period following the reference year and non-additivity is relatively small for the years immediately preceding. A change in reference year changes levels but not growth rates, although some revision to recent growth rates can be expected because of the introduction of a more recent base year (and revisions to the current price estimates underlying the chain volume measures).

Compensation of employees

The total remuneration, in cash or in kind, payable by an enterprise to an employee in return for work done by the employee during the accounting period. It is further classified into two sub-components: wages and salaries; and employers' social contributions. Compensation of employees is not payable in respect of unpaid work undertaken voluntarily, including the work done by members of a household within an unincorporated enterprise owned by the same household. Compensation of employees excludes any taxes payable by the employer on the wage and salary bill (e.g. payroll tax). See also Employers' social contributions; Wages and salaries.

Consumption of fixed capital

The reduction in the value of fixed assets used in production during the accounting period resulting from physical deterioration, normal obsolescence or normal accidental damage. Unforeseen obsolescence, major catastrophes and the depletion of natural resources are not taken into account.

Contributions to growth in GDP

The contributions to growth for a given aggregate 'A' is calculated as:
$$100*(({PY^{A}}_{t}-{PP^{A}}_{t})/{PP^{A}}_{t})\times({PP^{A}}_{t}/{PP^{GDP}}_{t})$$

Where:

• $${PY^{A}}_{t}$$ is the quantity of an aggregate in the current period, in previous period prices
• $${PP^{A}}_{t}$$ is the quantity of an aggregate in the previous period, in previous period prices
• $${PP^{GDP}}_{t}$$ is the current price value of GDP in the previous period

Additivity for contributions to growth exists for the years where the statistical discrepancy is zero, effectively 1995-96 onwards, by using GDP expressed in the prices of the previous year. For the period 1986-87 to 1994-95, where the statistical discrepancy is not zero, the result is close to additive but not exact because the statistical discrepancy cannot be expressed in prices of the previous year.

Cultivated biological assets

Includes such assets as orchard growth and livestock. The definition of orchard growth is any plant that can produce a marketable quantity of fruit for more than one year in which the grower intends to obtain a future benefit from the sale of the fruits borne. It can include trees, vines, bushes and shrubs. The costs to be capitalised as part of the value of fruit and nut bearing plants are the establishment costs involved in planting the new nursery plant and then maintenance costs associated with making the plant grow. Livestock assets are classified as either fixed assets or inventories. Those livestock which are used in production of other products (e.g. breeding stock, animals for entertainment, sheep for wool and dairy cattle) are fixed assets. Inventories cover all other livestock types and includes those animals raised for meat or other one-off products (e.g. leather).

Current prices

Estimates are valued at the prices of the period to which the observation relates. For example, estimates for 2003-04 are valued using 2003-04 prices. This contrasts to chain volume measures where the prices used in valuation refer to the prices of a previous period.

Current taxes on income, wealth, etc.

Includes taxes on the incomes of households or the profits of corporations and taxes on wealth that are payable regularly every tax assessment period (as distinct from capital taxes that are levied infrequently).

Current transfers

Transactions, other than those classified as capital transfers, in which one institutional unit provides a good, service or cash to another unit without receiving from the latter anything of economic value in return.

Current transfers to non-profit institutions

Transfers for non-capital purposes to private non-profit institutions serving households such as hospitals, independent schools, and religious and charitable organisations.

Economically significant prices

Prices which have significant influence on both the amounts producers are willing to supply and the amounts purchasers wish to buy.

Employers' social contributions

Payments by employers which are intended to secure for their employees the entitlement to social benefits should certain events occur, or certain circumstances exist, that may adversely affect their employees' income or welfare - namely work-related accidents and retirement.

Exports of goods and services

The value of goods exported and amounts receivable from non-residents for the provision of services by residents.

Final consumption expenditure - general government

Government final consumption expenditure is current expenditure by general government bodies on services to the community such as defence, education, and public order and safety less any explicit charges for these services. If these are provided free of charge or at charges which cover only a small proportion of costs, the government is considered to be the consumer of its own output. This output has no directly observable market value, and so it is valued in the national accounts at its cost of production. It also includes the value of the portion of market output purchased by the General Government sector on behalf of beneficiaries.

Final consumption expenditure - households

Net expenditure on goods and services by persons and expenditure of a current nature by private non-profit institutions serving households. This item excludes expenditures by unincorporated businesses and expenditures on assets by non-profit institutions (included in gross fixed capital formation). Also excluded is expenditure on maintenance of dwellings (treated as intermediate expenses of private enterprises), but personal expenditure on motor vehicles and other durable goods and the imputed rent of owner-occupied dwellings are included. The value of 'backyard' production (including food produced and consumed on farms) is included in household final consumption expenditure and the payment of wages and salaries in kind (e.g. food and lodging supplied free to employees) is counted in both household income and household final consumption expenditure.

Gross disposable income - households

Gross household income less income tax payable, other current taxes on income, wealth etc., consumer debt interest, interest payable by unincorporated enterprises, net non-life insurance premiums and other current transfers payable by households.

Gross domestic product (GDP)

The total market value of goods and services produced in Australia within a given period after deducting the cost of goods and services used up in the process of production but before deducting allowances for the consumption of fixed capital. Thus gross domestic product, as defined here, is 'at market prices'. It is equivalent to gross national expenditure plus exports of goods and services less imports of goods and services.

Gross fixed capital formation - general government

Expenditure on new fixed assets plus net expenditure on second-hand fixed assets whether for additions or replacements including defence weapons platforms that have an anticipated ongoing use (greater than one year). Expenditure on new roadworks (or upgrading existing roads) is included but expenditure on road repair and maintenance is classified as government final consumption expenditure.

Gross fixed capital formation - private

Expenditure on fixed assets broken down into dwellings, non-dwelling construction, machinery and equipment, cultivated biological assets, intellectual property products and ownership transfer costs. The machinery and equipment category includes plant, machinery, equipment, vehicles, etc. Expenditure on repair and maintenance of fixed assets is excluded, being chargeable to the production account. Additions to fixed assets are regarded as capital formation. Also included is compensation of employees and other costs paid by private enterprise in connection with own-account capital formation. Expenditure on dwellings, non-dwelling construction, and machinery and equipment is measured as expenditure on new and second-hand assets, less sales of existing assets. Cultivated biological assets includes livestock and orchard growth. Along with Computer software, Mineral and petroleum exploration and Artistic originals, Research and development is now included in the intellectual property products asset type. Ownership transfer costs comprise of stamp duty, real estate agents' fees and sales commissions, conveyancing fees and miscellaneous government charges.

Gross fixed capital formation - public corporations

Expenditure on new fixed assets plus net expenditure on second-hand fixed assets and including both additions and replacements. Also included is compensation of employees paid by public corporations in connection with capital works undertaken on own account.

Gross income - households

The total income, whether in cash or kind, receivable by persons normally resident in Australia. It includes both income in return for productive activity (such as compensation of employees, the gross mixed income of unincorporated enterprises, gross operating surplus on dwellings owned by persons, and property income receivable, etc.) as well as transfers receivable (such as social assistance benefits and non-life insurance claims).

Gross mixed income of unincorporated enterprises

The surplus or deficit accruing from production by unincorporated enterprises. It includes elements of both compensation of employees (returns on labour inputs) and operating surplus (returns on capital inputs).

Gross operating surplus

The operating surplus accruing to all enterprises, except unincorporated enterprises, from their operations in Australia. It is the excess of gross output over the sum of intermediate consumption, compensation of employees, and taxes less subsidies on production and imports. It is calculated before deduction of consumption of fixed capital, dividends, interest, royalties and land rent, and direct taxes payable, but after deducting the inventory valuation adjustment. Gross operating surplus is also calculated for general government, and it equals general government's consumption of fixed capital.

Gross state product (GSP)

GSP is defined equivalently to gross domestic product (GDP) but refers to production within a state or territory rather than to the nation as a whole. See gross domestic product.

GSP(A)

The simple average of the available GSP measures. That is, in current price and volume terms the average of GSP(P) and GSP(I/E).

GSP(E)

GSP using the expenditure approach. Estimated in current prices. Not all of the expenditure components are available at the state level so the difference between the sum of the available components (State Final Demand and International trade in goods and services) and GSP(I) is reflected as a balancing item. See also Balancing item.

GSP(I)

GSP using the income approach. Estimated in current prices only by summing factor incomes (i.e. compensation of employees, gross operating surplus and gross mixed income) and taxes less subsidies on production and imports.

GSP(I/E)

GSP using a combination of the income and expenditure approaches. Current price GSP(I/E) is produced using the GSP(I) measure to allocate to states the average of the GDP(I) and GDP(E) measures. chain volume GSP(I/E) is then produced by deflating current price GSP(I/E) with a deflator produced with known adjusted components of GSP(E).

GSP(I/E) deflator

The GSP(I/E) deflator is derived by aggregating the deflators for the adjusted known components of GSP(E).

GSP(P)

GSP using the production approach. Estimated in volume terms by using different indicators (mostly output indicators) for each industry to compile state by industry GVA volume estimates and adding the volume of taxes less subsidies on products. Current prices are estimated using components of income GOSMI, COE and other taxes less subsidies on production.

GSP per capita

The ratio of the chain volume estimates of GSP to an estimate of the resident Australian population. Population estimates use data published in the quarterly publication Australian Demographic Statistics (cat. no. 3101.0) and ABS projections.

Gross value added (GVA)

GVA is the value of output at basic prices minus the value of intermediate consumption at purchasers' prices. The term is used to describe gross product by industry. Basic prices valuation of output removes the distortion caused by variations in the incidence of commodity taxes and subsidies across the output of individual industries. State GVA in current prices is not directly compiled so the Australia GVA by industry is allocated to the states using factor income shares. GVA can also be compiled in volume terms. For most industries an output indicator approach is used to create the volume measures of GVA by industry for each of the states.

Identified components of the balancing item

Includes items of the balancing which are estimated or modelled including interstate trade in goods (including re-exports), net HFCE expenditure interstate, changes in inventories and the balancing item discrepancy. This is compiled for internal analytical purposes and not published due to quality concerns.

Implicit price deflator

Obtained by dividing a current price value by its real counterpart (the chain volume measure). When calculated from the major national accounting aggregates, such as gross domestic product, implicit price deflators relate to a broader range of goods and services in the economy than that represented by any of the individual price indexes that are published by the ABS. Whereas the chain price indexes are chain Laspeyres indexes, the annual implicit price deflators are chain Paasche price indexes, i.e. each year-to-year movement is calculated using the current price value shares of the second of the two years to weight together the elemental price indexes.

Imports of goods and services

The value of goods imported and amounts payable to non-residents for the provision of services to residents.

Intellectual property products

Includes such assets as computer software, research and development, entertainment, literary or artistic originals, and mineral exploration intended to be used for more than a year.

Intermediate usage

Consists of the value of the goods and services used as inputs by a process of production, excluding compensation of employees and the consumption of fixed capital. Can also be defined as intermediate consumption.

Inventories

Consist of stocks of outputs that are held at the end of a period by the units that produced them prior to their being further processed, sold, delivered to other units or used in other ways and stocks of products acquired from other units that are intended to be used for intermediate consumption or for resale without further processing.

Known components of GSP(E)

Known components of GSP(E) is the aggregate of State Final Demand and International trade in goods and services.

Livestock

Livestock assets are classified as either fixed assets or inventories. Those livestock which are used in production of other products (e.g. breeding stock, animals for entertainment, sheep for wool and dairy cattle) are fixed assets. Inventories cover all other livestock types and includes those animals raised for meat or other one-off products (e.g. leather).

Machinery and equipment

Consists of transport equipment, computing equipment and other machinery and equipment other than that acquired by households for final consumption.

Market output

Output that is sold at prices that are economically significant or otherwise disposed of on the market, or intended for sale or disposal on the market.

Net saving plus consumption of fixed capital - households Is equal to gross household disposable income less household final consumption expenditure and can also be referred to as the gross saving of households. Household saving is estimated as the balancing item in the households income account. It includes saving through life insurance and superannuation funds (including net earnings on these funds), increased equity in unfunded superannuation schemes and the increase in farm assets with marketing boards. Household net saving, i.e. gross saving less consumption of fixed capital, cannot be calculated at a state level as consumption of fixed capital is only calculated at the Australia level.

Net expenditure interstate

Household final consumption expenditure (HFCE) is measured on a resident basis and as such includes the expenditure of residents who travel interstate. The data sources used to compile HFCE (such as Retail Trade) do not account for the residency of the consumer and hence an adjustment to the source data is required. This adjustment item is called Net expenditure interstate (NEI) and is calculated by adding in amounts for the expenditure of residents of a state who travel interstate and deducting the expenditure of residents from other states within that state. NEI nets to zero at the Australia level.

Non-market output

Goods and services produced by any institutional unit that are supplied free or at prices that are not economically significant.

Other subsidies on production

Consists of all subsidies, except subsidies on products, which resident enterprises may receive as a consequence of engaging in production. Other subsidies on production include: subsidies related to the payroll or workforce numbers, including subsidies payable on the total wage or salary bill, on numbers employed, or on the employment of particular types of persons, e.g. persons with disabilities or persons who have been unemployed for a long period. The subsidies may also be intended to cover some or all of the costs of training schemes organised or financed by enterprises. Subsidies aimed at reducing pollution are also included. See also Subsidies on products.

Other taxes on production

Consists of all taxes that enterprises incur as a result of engaging in production, except taxes on products. Other taxes on production include: taxes related to the payroll or workforce numbers excluding compulsory social security contributions paid by employers and any taxes paid by the employees themselves out of their wages or salaries; recurrent taxes on land, buildings or other structures; some business and professional licences where no service is provided by the Government in return; taxes on the use of fixed assets or other activities; stamp duties; taxes on pollution; and taxes on international transactions. See also Current taxes on income, wealth, etc., Taxes on production and imports and Taxes on products.

Output

Consists of those goods and services that are produced within an establishment that become available for use outside that establishment, plus any goods and services produced for own final use.

Output indicator

Output indicators are usually sales or turnover data for an industry, industry sub-divisions or commodity. These are used to allocate GVA and GOSMI to state.

Output indicator approach

This is the methodology used to create GVA in the state accounts using output indicators. This is opposed to creating GVA from components of output and intermediate use.

Price deflation

Dividing a price index into a current price value.

Primary incomes

Consist of incomes that accrue to institutional units as a consequence of their involvement in processes of production or their ownership of assets that may be needed for the purposes of production.

Producers' price

The amount receivable by the producer from the purchaser for a unit of a good or service produced as output, including any tax that is incorporated within the sales price, and excluding any subsidy that reduces the sales price, on that unit as a consequence of its production or sale. It excludes any transport charges invoiced separately by the producer, but includes delivery charges not separately invoiced.

Property income

Is the income receivable by the owner of a financial asset or a tangible non-produced asset in return for providing funds, or putting a tangible non-produced asset at the disposal of another institutional unit.

Purchasers' price

The amount paid by the purchaser, excluding any deductible tax, in order to take delivery of a unit of a good or service at the time and place required by the purchaser. The purchaser's price of a good includes any transport charges paid separately by the purchaser to take delivery at the required time and place.

Quantity revaluation

For an individual commodity, the estimate of quantity in each period is multiplied by the price (or average unit value) in some base year. This method can be applied if the commodity is defined narrowly enough to ensure that it is homogenous in content and free from quality change over time (since a change in quality is defined as a change in quantum).

Real gross domestic income

A measure of the real purchasing power of income generated by domestic production. It is calculated by adjusting the chain volume measure of GDP for changes in the terms of trade.

Real gross state income

A measure of the real purchasing power of income generated by production within a state or territory. It is calculated by adjusting the chain volume measure of GSP for changes in the terms of trade.

Secondary income

Consists of receipt and payment of current transfers.

Social assistance benefits in cash to residents

Includes current transfers to persons from general government in return for which no services are rendered or goods supplied. Principal components include: scholarships; maternity, sickness and unemployment benefits; family allowances; and widows', age, invalid and repatriation pensions.

State final demand

The aggregate obtained by summing government final consumption expenditure, household final consumption expenditure, private gross fixed capital formation and the gross fixed capital formation of public corporations and general government. It is conceptually equivalent to the Australia level aggregate domestic final demand.

Statistical discrepancy (I), (E) and (P)

Calculated as the difference between the individual aggregate income, expenditure and production measures of GSP and the headline GSP measure (i.e. GSP(A)).

Subsidies on products

Subsidies payable per unit of a good or service. The subsidy may be a specific amount of money per unit of quantity of a good or service, or it may be calculated ad valorem as a specified percentage of the price per unit. A subsidy may also be calculated as the difference between a specified target price and the market price actually paid by a purchaser. A subsidy on a product usually becomes payable when the product is produced, sold or imported, but it may also become payable in other circumstances, such as when a product is exported, leased, transferred, delivered or used for own consumption or own capital formation.

Taxes less subsidies on production and imports

Defined as 'taxes on products' plus 'other taxes on production' less 'subsidies on products' less 'other subsidies on production'.

Taxes on production and imports

Consists of 'taxes on products' and 'other taxes on production'. These taxes do not include any taxes on the profits or other income received by an enterprise. They are payable irrespective of the profitability of the production process. They may be payable on the land, fixed assets or labour employed in the production process, or on certain activities or transactions. See also Current taxes on income and wealth, Other taxes on production and Taxes on products.

Taxes on products

Taxes payable per unit of some good or service. The tax may be a specific amount of money per unit of quantity of a good or service (quantity being measured either in terms of discrete units or continuous physical variables such as volume, weight, strength, distance, time, etc.), or it may be calculated ad valorem as a specified percentage of the price per unit or value of the goods or services transacted. A tax on a product usually becomes payable when the product is produced, sold or imported, but it may also become payable in other circumstances, such as when a good is exported, leased, transferred, delivered, or used for own consumption or own capital formation.

Calculated by dividing the export implicit price deflator by the import implicit price deflator and multiplying by 100.

Top down approach

A top down approach allocates national estimates to the state level using state indicators.

Total factor income

That part of the cost of producing the gross domestic product which consists of gross payments to factors of production (labour and capital). It represents the value added by these factors in the process of production and is equivalent to gross domestic product less taxes plus subsidies on production and imports.

Unidentified component of the balancing item

The unidentified component is created as a residual between the total balancing item and identified components. Conceptually represents interstate trade in services, but it also embodies any remaining discrepancies that occur across state measures of expenditure and income due to measurement issues. This is compiled for internal analytical purposes and not published due to quality concerns.

Wages and salaries

Consists of amounts payable in cash including the value of any social contributions, income taxes, fringe benefits tax, etc., payable by the employee even if they are actually withheld by the employer for administrative convenience or other reasons and paid directly to social insurance schemes, tax authorities, etc., on behalf of the employee. Wages and salaries may be paid as remuneration in kind instead of, or in addition to, remuneration in cash. Separation, termination and redundancy payments are also included in wages and salaries. Wages and salaries are also measured as far as possible on an accrual rather than a strict cash basis. See also Employers' social contributions; Compensation of employees.

Quality declaration - summary

​​​​​​​Institutional environment

For information on the institutional environment of the Australian Bureau of Statistics (ABS), including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.

Relevance

The standards governing national accounts are agreed internationally, and detailed in the "System of National Accounts 2008" (SNA08). SNA08 is endorsed by the five major international economic organisations: the United Nations, the International Monetary Fund, the OECD, the World Bank and the European Commission. The current complete version of SNA08 is available online: http://unstats.un.org/

The Australian national accounts differ from the recommendations in the SNA08 in certain cases where the data is not available to meet these requirements, or it is not considered practical to adhere to the standards. For more information on the Australian national accounts see Australian System of National Accounts: Concepts, Sources and Methods (cat. no. 5216.0). For more information on the implementation of the new international standards see Information Paper: Implementation of new international statistical standards in ABS National and International Accounts (cat. no. 5310.0.55.002).

Timeliness

The annual Australian national accounts are compiled using data from the four most recent quarters along with the latest supply and use balanced data. The release of this information generally occurs in the first week of November following the end of the most recent financial year.

Accuracy

Accuracy remains the main focus of ABS quality control. However, in the case of the national accounts, it is recognised internationally that an objective accuracy measure in the sense of proximity to the ‘true value’ is impossible to produce. The national accounts are a highly complex set of economic statistics. They combine a very large number of internal and external data sources covering various aspects of the economy to derive GDP and other headline measures.

The national accounts compilation process transforms the various partial data into a set of economic accounts. To make the data more analytically useful it also requires a further transformation of the data to produce the headline chain volume of GDP and components. These data transformations involve various assumptions.

Given the variety of data used, and the transformations and aggregations used in the national accounts process, an assessment of accuracy is necessarily subjective and indirect. It involves an assessment of the national accounts process, the input data and the transformations used to produce the national accounts. The ABS aims to achieve best practice in each of these facets of national accounts compilation. The related quality concept of reliability can be objectively measured by an analysis of revisions, but a reliable series is not necessarily accurate if it is based on poor quality data.

For a more in-depth discussion of the accuracy of the national accounts including an analysis of revisions please see the Information Paper: Quality Dimensions of the Australian National Accounts (cat. no. 5216.0.55.002).

Coherence

The coherence of data is an aspect of quality closely associated with accuracy, both within the national accounts system, and compared with the partial indicators of the economy. A major unifying feature within the Australian System of National Accounts is the use of supply and use methodology to confront the data and balance the components of GDP in annual terms.

The ABS publishes a large amount of data on various aspects of the economy. As the majority of these are used in the national accounts it could be expected that there would be coherence between the partial indicators data and the national accounts. While there are some differences in coverage and concept, there are formal processes in place to ensure that the collections and national accounts staff come to a common view of the statistical treatment of current economic events. National accounts staff also have the opportunity to comment on the partial indicators before they are finalised for publication. None the less, over time, the process of annual benchmarking may lead to some divergencies with the partial indicators.

Interpretability

There are a number of derived statistics and data transformations published with national accounts output to aid interpretation of the data. These include chain volume estimates, trend and seasonally adjusted estimates, GDP growth rates and contributions to GDP growth. Analysis and commentary is included with each publication, and quarterly presentations are available to key users across Australia to provide more information and discussion of the estimates. Australian System of National Accounts: Concepts, Sources and Methods (cat. no. 5216.0) is a comprehensive description of the methods and concepts underpinning the national accounts.

Accessibility

For links to all national accounts related data and publications, recent national accounts changes and forthcoming events, relevant websites and a range of other information about the Australian National Accounts, please see the National Accounts Statistics homepage.

For more detailed information about the quality dimensions of the Australian National Accounts please see the Information Paper: Quality Dimensions of the Australian National Accounts, Australia 2007 (cat. no. 5216.0.55.002).

Abbreviations

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 ABS Australian Bureau of Statistics ANZSIC06 Australian and New Zealand Standard Industrial Classification, 2006 Edition AWE Average Weekly Earnings BOP Balance of payments BPM6 Balance of Payments and International Investment Position Manual, Sixth Edition CoE Compensation of employees GDP Gross domestic product GFCE Government final consumption expenditure GFS Government Finance Statistics GMI Gross mixed income GOS Gross operating surplus GSP Gross state product GSP (A) Average of GSP measures GSP (E) Expenditure approach to measuring GSP GSP (I) Income approach to measuring GSP GSP (I/E) Income/expenditure approach to measuring GSP GSP (P) Production approach to measuring GSP GST Goods and services tax GVA Gross value added HFCE Household final consumption expenditure LFS Labour Force Survey QBIS Quarterly Business Indicators Survey RGSI Real gross state income SFD State final demand SITC Standard International Trade Classification SNA System of National Accounts SNA08 System of National Accounts 2008 version TFI Total factor income