Australian Bureau of Statistics
1301.0 - Year Book Australia, 2009–10
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 04/06/2010
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NATIONAL INCOME, EXPENDITURE AND PRODUCT ACCOUNTS
The GDP account can also be used to show changes in the share of income accruing to labour (i.e. compensation of employees) compared with the share accruing to capital (i.e. profits, defined as the gross operating surplus of non-financial and financial corporations). Graphs 30.5 and 30.6 show how the shares of total factor income accruing to wages and to profits have changed since 1965-66. (Total factor income is equal to the sum of compensation of employees, gross operating surplus and gross mixed income.)
The highest recorded value of the wages share of total factor income was 62.4% in 1974-75. The wages share in 2007-08 was 53.4%, slightly lower than the previous year (53.7%), and one of the lowest levels recorded in time series presented. The profits share of total factor income has been growing steadily since 1998-99. In 2007-08 profits share was 26.5%, the highest share recorded.
30.5 Wages share of total factor income
30.6 Profits share of total factor income
National income account
The national income account shows the sources of national income and how much of this income is spent on final consumption. That part of income which is not spent in this way is saving. Table 30.7 shows annual time series from 2003-04 to 2007-08.
Graph 30.8 shows net saving by institutional sector as a proportion of GDP for the years 1965-66 to 2007-08. Household net saving as a percentage of GDP generally fluctuated between 6% and 8% between 1965-66 and 1971-72. It then rose to a peak of 11.5% in 1974-75. The series then gradually decreased, eventually reaching its lowest at -1.8% of GDP in 2003-04. Household net saving as a proportion of GDP remained negative until 2004-05 and since then has turned positive and in 2007-08 it was 0.4% of GDP, and household income exceeded consumption by $4.0 billion (b) (table 30.9).
General government net saving as a proportion of GDP was positive from 1965-66 to 1973-74 before turning negative from 1974-75 to 1996-97 (except for 1988-89). It has remained positive since 1997-98. In 2007-08 general government net saving was positive at 2.9% of GDP ($32.9b). In 2007-08 net saving of non-financial corporations was 0.1% of GDP ($0.6b). Net saving of financial corporations has been positive at about 1% to 2% of GDP for virtually all of its history. In 2007-08 net saving of financial corporations was 3.8% of GDP ($43.0b).
30.8 Net saving, Releative to GDP
National capital account
The national capital account shows how the saving from the national income account and consumption of fixed capital (depreciation) are used to finance gross fixed capital formation. If, as is currently the case for Australia, the nation's saving and consumption of fixed capital are not sufficient to pay for all the fixed capital needed for Australian production, the shortfall must be borrowed from overseas. The amount borrowed from overseas is shown in the national capital account as a negative entry for net lending to non-residents. Table 30.9 shows the annual time series from 2003-04 to 2007-08.
Graph 30.10 shows gross fixed capital formation (investment) by institutional sector as a proportion of GDP. Investment by non-financial corporations generally fell during the late 1970's but stablised in the 1980s and 1990s (it has generally been above 10% of GDP). In 2007-08 investment by non-financial corporations was 14.7% of GDP. Household investment as a proportion of GDP remained steady at around 10% of GDP throughout the time series and in 2007-08 the ratio to GDP was 10.3%. General government investment as a proportion of GDP peaked at 4.6% in 1975-76 and 1986-87, and has generally fallen since then to around 2.5% of GDP. It was 2.6% of GDP in 2007-08. The highest ever level of Financial corporations investment, expressed as a proportion of GDP, was recorded in 1989-90 (2.0%). It has generally fallen since and was 0.7% of GDP in 2007-08.
Graph 30.11 shows net lending by institutional sector as a proportion of GDP. A positive percentage for a sector indicates that it is a net lender to other sectors; a negative percentage indicates that it is a net borrower.
30.10 Investment, Relative to GDP
30.11 Net lending, Relative to GDP
The household sector has been a net lender for most years. As a proportion of GDP, net lending by households peaked in 1974-75 at 8.4%. Since then it has trended downwards and the household sector changed from a net lender to a net borrower in 1988-89,1994-95 and 1997-98. Since 1997-98 it has been a net borrower and in 2007-08 household net borrowing was 4.1%. Non-financial corporations have been net borrowers over the entire period 1965-66 to 2007-08 (except for 1993-94), and the amounts borrowed have fluctuated significantly from year to year. As a proportion of GDP, their net borrowing was 7.4% in 2007-08.
In 2007-08 net lending of financial corporations represented 3.7% of GDP, the highest recorded level. After recording a record level of borrowing as a proportion of GDP in 1992-93 (5.7%), general government borrowing steadily declined. From 1997-98 to 1999-2000 the sector was a net lender and in 2000-01 general government was a net borrower before returning to being a net lender from 2001-02 to 2007-08. In 2007-08 general government net lending represented 1.6% of GDP.
The external account is derived from the detailed balance of payments current and capital accounts (see the International accounts and trade chapter). It shows Australia's exports and imports, incomes and transfers received by Australian residents from non-residents, and incomes and transfers payable to non-residents by Australian residents. The balance on the external account is net lending to non-residents. This is the same as the balance in the national capital account. Table 30.12 shows the external account for the last five years.
Australia has generally been a net borrower of funds from overseas. In the national accounts, this situation is reflected by a negative value for net lending to non-residents. The only exception to this pattern was in 1972-73. Net borrowing from non-residents, expressed as a proportion of GDP, increased significantly in the early-1980s and has remained at relatively high levels since then. The ratio of net borrowing from overseas to GDP in 2007-08 was 6.0%, up from 5.4% in 2006-07. Graph 30.13 shows net lending to non-residents as a proportion of GDP since 1965-66.
30.13 Net lending to overseas, Relative to GDP
30.14 Exports and Imports, Relative to GDP
The growing importance of international trade to the Australian economy is illustrated by graph 30.14 which shows the ratios of exports and imports of goods and services to GDP in current prices since 1965-66. In 2007-08 the imports ratio was 22.5% and the exports ratio was 20.7%. Since 2000-01 imports increased 91.8.% in volume terms compared with a 15.0% growth in volume of exports.
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