EXPLANATORY NOTES


INTRODUCTION

1 The national accounts are a comprehensive set of economic data which are fully consistent and complete within the boundary of the economic activities they cover. Gross Domestic Product (GDP) is perhaps the most recognisable and important economic statistic from the core national accounts. Satellite accounts allow an expansion of the national accounts for selected areas of interest while maintaining the concepts and structures of the core accounts.

2 Cultural and creative activity is implicitly included in the core national accounts but not reported separately from the aggregates it is embedded in. The cultural and creative activity satellite accounts draw out the economic contribution of this activity from the core accounts, as well as measure certain activities that are outside the national accounts production boundary in order to provide a more complete picture of the value of this activity to society.

3 The satellite accounts' key monetary measures are complemented by the inclusion of physical measures of the number of persons employed and the number of active trading entities. The range of measures included in the satellite accounts could potentially be expanded further in the future if investment funds become available. Future investment priorities are described in the ABS' Discussion Paper: Cultural and Creative Activity Satellite Accounts (cat. no. 5271.0.55.001) and Information Paper: Cultural and Creative Activity Satellite Accounts (cat. no. 5271.0.55.002).


SCOPE AND COVERAGE

4 'Cultural' is generally used to describe activities which communicate symbolic meaning (e.g. beliefs, values, traditions), require human creativity as an input, and potentially contain intellectual property, whereas 'creative' generally refers to activities for which human creativity is a particularly significant input.(footnote 1) These terms are often used to describe activities connected with the arts, media, heritage, design, fashion and information technology.

5 An activity can be both 'cultural' and 'creative', and indeed, the terms are often used in overlapping ways in government, industry and academic circles. While some stakeholders are primarily interested in 'cultural', others focus on the emerging concept of 'creative', and in order to best meet these needs the publication presents separate accounts for both segments. The separate accounts are presented after the combined account covering both cultural and creative activity, which takes into account the overlaps between 'cultural' and 'creative' so they are not double counted.

6 Satellite accounts for cultural and creative activity are a relatively recent initiative on the international stage that reflects the growing interest in these types of activities and their importance to community wellbeing and quality of life. International standards for these accounts have not yet been established and a variety of statistical definitions are in use in Australia and overseas. The variety of definitions are a result of the subjective judgement needed to decide precisely what constitutes 'cultural' and 'creative', as well as the differences in international statistical classifications that exist. These definitions share substantial common ground and their differences tend to be at the margin.

7 The concept of cultural and creative activities used for the Australian satellite accounts, and the methods of measuring them, have been informed by:

• consultations with government, industry and academic stakeholders in Australia for whom the satellite accounts must be meaningful(footnote 2) ;
• cultural statistics frameworks published by the United Nations Educational, Scientific and Cultural Organization (UNESCO)(footnote 3) and the European Commission(footnote 4) ;
• cultural and creative satellite accounts and similar works published by government agencies of other nations (e.g. Canada(footnote 5) , Finland(footnote 6) , Spain(footnote 7) , the United Kingdom(footnote 8) and the United States of America(footnote 9) ); and
• the academic literature underpinning much of the international work in this field.

8 The Australian satellite accounts measure the economic contribution of cultural and creative activity in four components:

• activity in the industries which form supply chains for cultural and creative goods and services (component 1);
• activity in other industries performed by workers in cultural and creative occupations (component 2);
• volunteer services to arts and heritage organisations (component 3); and
• non-market output of market producers in the cultural and/or creative industries (component 4).

9 The first and second components of the satellite accounts can be compared with Australian national accounts aggregates, such as Gross Domestic Product, as these activities fall within the national accounts production boundary and are measured on a consistent basis. These components are described as being on a 'national accounts basis'.

10 The third and fourth components of the satellite accounts are an extension beyond the national accounts production boundary and are therefore not directly comparable with national accounts aggregates. These extensions provide a more complete picture of the value of cultural and creative activity to society than is evident in the estimates on a national accounts basis. These extensions are also made in the ABS' Non-Profit Institutions Satellite Account (cat. no. 5256.0), which is based on the United Nations' Handbook on Non-Profit Institutions in the System of National Accounts(footnote 10) . The estimates including these components are described as being on a 'satellite accounts basis'.


Cultural and creative industries

11 Similar to the satellite accounts for other nations, the industry scope of the satellite accounts is based on a supply chain approach covering:

• Creation - industries which are the origin of cultural and creative ideas.
• Production - industries which turn the ideas into cultural and creative goods and services.
• Manufacture - industries which mass produce cultural and creative goods and services from a master copy.
• Distribution - industries which transfer cultural and creative goods and services to final consumers.
• Supporting activities - industries considered to have a significant direct supporting role to the cultural and creative activities in other parts of the industry supply chains (e.g. education and training that develops performance artists).

12 Industries have been included within the coverage of the satellite accounts based on their predominant industrial activities according to the 2006 edition of the Australian and New Zealand Standard Industrial Classification (ANZSIC) (cat. no. 1292.0). Industries were also identified with the aid of the 2008 edition of the Australian Culture and Leisure Classifications (ACLC) (cat. no. 4902.0) and industry employment 'intensities' calculated from 2011 Census of Population and Housing data.(footnote 11) Industry employment intensities are the proportion of total employment in an industry engaged in cultural and creative occupations. Appendix 1 contains a list of the industries which have been included within the coverage.

13 Some industries identified as in-scope have significant amounts of activity that stakeholders do not view as cultural or creative and do not directly support such activity. An example of this is higher education (a supporting industry) that covers entities mainly engaged in undergraduate or postgraduate teaching, of which cultural and creative fields are only one part. In such cases, out-of-scope activities are removed from the satellite accounts through an apportioning process where possible, otherwise the industries are excluded to prevent the accounts being overstated. The industries excluded for this reason are listed below. The cultural and creative activity in these industries is, however, partly captured by the second component of the satellite accounts (cultural and creative occupations in other industries).

Code ANZSIC class name
1320 Leather Tanning, Fur Dressing and Leather Product Manufacturing
2029 Other Ceramic Product Manufacturing
2599 Other Manufacturing n.e.c.
3020 Non-Residential Building Construction
3109 Other Heavy and Civil Engineering Construction
4273 Antique and Used Goods Retailing
4520 Pubs, Taverns and Bars
4530 Clubs (Hospitality)
6639 Other Goods and Equipment Rental and Hiring n.e.c.
6962 Management Advice and Related Consulting Services
7211 Employment Placement and Recruitment Services
7212 Labour Supply Services
7299 Other Administrative Services n.e.c.
7510 Central Government Administration
7520 State Government Administration
7530 Local Government Administration
8101 Technical and Vocational Education and Training
8102 Higher Education
9499 Other Repair and Maintenance n.e.c.
9551 Business and Professional Association Services
9552 Labour Association Services
9559 Other Interest Group Services n.e.c.

Cultural and creative occupations in other industries

14 Cultural and creative activity is also carried out by people employed in non-cultural and creative industries. An example is someone employed in the insurance industry to develop advertising content - the work activity they perform is considered cultural and creative in nature, even if the industry is not. To measure the size of activity in non-cultural and creative industries, a variety of academic studies(footnote 12) , and the UNESCO and European Commission frameworks, propose using employment classified by both industry and occupation. Workers in the cultural or creative industries are said to be 'specialist' if they are employed in cultural or creative occupations and 'support' if employed in other occupations. Workers in cultural or creative occupations in other industries are said to be 'embedded'. It is the activity undertaken by embedded workers (including multiple job holders) that is captured in the second component of the satellite accounts. The activity of specialist and support workers is captured as part of the industries component.

15 Occupations have been included within the coverage of the satellite accounts based on their skills according to edition 1.1 of the Australian and New Zealand Standard Classification of Occupations (ANZSCO) (cat. no. 1220.0). Occupations were identified with the aid of the ACLC and occupation employment intensities(footnote 13) calculated from 2011 Census of Population and Housing data. Occupation employment intensities are the proportion of total employment in an ANZSCO occupation that is engaged in cultural and creative industries.


Volunteer services

16 Volunteers services measures the value of unpaid labour willingly given by people to help to an organisation or group in the cultural or creative industries. Volunteering is prevalent in cultural and creative industries where people, for example, give their time unpaid as art gallery guides, as members of museum management boards, or to collect donations from the public. Although unpaid labour is excluded from the national accounts production boundary, it can be appropriate to include in the boundary of a satellite account. This is done as part of the ABS' Non-Profit Institutions Satellite Account, which is based on the United Nations' Handbook on Non-profit Institutions in the System of National Accounts. The Handbook recognises that as volunteer labour is critical to the output of non-profit institutions and their ability to produce a level and quality of service, it is important to capture and value this activity.


Non-market output of market producers

17 Non-market output is a term used in the national accounts to describe goods and services supplied for free or at prices that are not economically significant. Non-market output is excluded from the national accounts production boundary for institutions that offer the majority of their production at economically significant prices (these institutions are known as 'market producers'). Non-market output of market producers is, however, included in the ABS' Non-Profit Institutions Satellite Account based on the United Nations' Handbook. The Handbook argues that if an adjustment is not made to value any non-market output produced by market units which are non-profit institutions, then the value of the output of these units is understated, as such units can produce significant amounts of output which are supported by charitable contributions or other transfers that is not evident in sales revenue. The fourth component of the satellite accounts measures the value of this production by the non-profit institutions operating in the cultural and creative industries. Other types of production by these institutions are captured within the industries component of the satellite accounts.


MEASUREMENT APPROACH AND DATA SOURCES

18 The monetary and physical measures presented in the satellite accounts have been estimated using approaches that maintain consistency with Australia's national accounts and the Non-Profit Institutions Satellite Accounts. The estimates may differ to statistics published from other sources because of differences in timing, scope, coverage and concepts.


Industries

19 Activity in the cultural and creative industries is estimated for Australia using a top down approach from the financial year aggregates published in the ABS' input-output tables(footnote 14) . The input-output tables provide information about the supply and use of products in the Australian economy, and the structure of, and inter relationships between, industries. The input-output tables are prepared in accordance with the international standards contained in the System of National Accounts 2008(footnote 15) .

20 Industry estimates in the input-output tables are presented by Input-Output Industry Groups (IOIGs), which are aggregations of ANZSIC classes. The satellite accounts split the estimates for IOIGs into smaller industry levels based on the product details tables published as part of the input-output suite. The product details tables contain the value of Australian production for the 1,284 product categories in the ABS' Input-Output Product Classification (IOPC). The product categories represent goods and services characteristic of an industry and can be mapped to the ANZSIC classes in which they are primarily produced.

21 To split IOIGs, the production value of products mapped to a cultural or creative ANZSIC class are divided by the total production of the broader IOIG in the products which are primary to it. This forms a benchmark share which is then used to apportion any production of the IOIG which is of a secondary nature. The resulting share of total output within the IOIG (calculated from both primary and secondary production) is then applied to other aggregate data of the IOIG, such as Gross Value Added, to derive estimates for the cultural and creative ANZSIC class.

22 Splits of the IOIGs for wholesale and retail trade are handled slightly differently since their production is mostly formed in input-output tables by the trade margins on the goods they purchase for resale. The trade margins for each product are mapped to ANZSIC classes in wholesale and retail trade, which are then used to calculate the benchmark shares, such as done for other industries. This mapping is also used to assign any secondary production within wholesale and retail trade (e.g. clothing produced within retail trade is assigned to the ANZSIC class for clothing retailing).

23 Using the production value of products to split IOIGs in this way requires a default assumption that all the products produced by an IOIG have an identical production function. This assumption is used in the ABS' Tourism Satellite Accounts (cat. no. 5249.0) and is likely to be more valid for some IOIGs than others. Where appropriate, adjustments are made to reduce errors resulting from this assumption, however caution should still be exercised in the use and interpretation of the estimates. Errors at fine industry levels are expected to tend to offset one another in the estimates at higher industry or domain levels.


Cultural and creative occupations in other industries

24 Cultural and creative activity undertaken outside of the cultural and creative industries is valued top-down from the ABS' input-output tables as a share of Compensation of Employees. Compensation of Employees is the total remuneration payable by enterprises to employees, in cash or in kind, comprised of wages and salaries, and employers' social contributions (the latter includes contributions towards retirement benefits such as superannuation).

25 Compensation of Employees is apportioned in the satellite accounts by estimating the share of total employee remuneration payable to people employed in cultural and creative occupations. Multiple jobholding is prevalent among cultural and creative occupations and consequently this estimate factors in main jobs and secondary jobs.

• For main jobs, employee remuneration is estimated by applying the satellite accounts' estimates of employment by occupation and industry to average earnings data from the ABS' 2008 Survey of Employee Earnings and Hours(footnote 16) .
• For secondary jobs, employee remuneration is estimated using the data on total earnings in secondary jobs by occupation and industry from the ABS' 2007 Survey of Employment Arrangements, Retirement and Superannuation. The data has been adjusted over time for wage inflation using the ABS' Wage Price Index, Australia (cat. no. 6345.0).

26 This component of the satellite accounts does not also include shares of Gross Operating Surplus and Gross Mixed Income, which in the input-output tables represent returns to the capital used by workers, as there are considerable conceptual and practical difficulties with identifying how the use of capital is spread within an industry across different types of workers.


Volunteer services

27 The value of volunteer services is estimated using the 'replacement cost' method used by the ABS' Non-Profit Institutions Satellite Account, based on the United Nations' Handbook. In this method, each hour of a volunteer's time is valued at what it would cost to replace with paid labour. Data on volunteers are sourced from the ABS' 2006 General Social Survey, which asks people about the type of organisations they volunteered with, the number of hours they worked unpaid and the types of work activities they performed.

28 The estimate in the cultural and creative activity satellite accounts is based on the hours volunteered with 'arts/heritage' organisations. This organisation type is the most suitable available from the General Social Survey data but is likely to understate the hours volunteered in cultural and creative industries, as well as volunteer work performed in other industries that is of a cultural and creative nature. The extent of the understatement is likely to differ for cultural activity and creative activity due to their different industry and occupation coverages.

29 To produce the estimate of volunteer services used in the satellite accounts, the number of hours volunteered with the 'arts/heritage' organisation type in the 2006 General Social Survey have been adjusted for changes in the level of the Australian population over time. The number of hours volunteered are then multiplied by replacement wage rate assumptions based on data from the Survey of Employee Earnings and Hours. The replacement wage rate assumptions vary with the work activities the volunteers performed and the occupation categories to which these activities match.


Non-market output of market producers

30 Non-market output of market producers is compiled using Business Activity Statement data provided by the Australian Taxation Office, and is estimated consistently with the approach used in the ABS' Non-Profit Institutions Satellite Account. It is valued as the difference between the output of non-profit market units when calculated by cost summation (the standard national accounts valuation method for non-market units), and output calculated by sales value (the standard national accounts method for market units). Where output on a cost valuation basis exceeds output on a sales valuation basis, the difference is taken to be the non-market output of market producers. Where output on a sales basis exceeds output on a cost basis, non-market output of market producers is assumed to equal zero.

Employment

31 The measures of employment presented in the satellite accounts are estimated top-down from the employment aggregates contained in the ABS' input output tables. IOIG employment aggregates are disaggregated to the ANZSIC subdivision level using data from Labour Force, Australia, Detailed, Quarterly (cat. no. 6291.0.55.003). These estimates are then disaggregated further using the workforce occupation structure of each ANZSIC class from the 2006 Census of Population and Housing.


Counts of entities

32 The counts of entities included in this publication are based on snapshots of actively trading businesses and non-profit institutions from the ABS Business Register. The counts of businesses are compiled on a consistent basis with the ABS' Counts of Australian Businesses, including Entries and Exits (cat. no. 8165.0), while the counts of non-profit institutions are compiled on a consistent basis with the ABS' Non-Profit Institutions Satellite Account. Entities which meet both the business definition and non-profit institution definition are counted only once.

33 During processing of the 2008-09 financial year data a subset of units were identified as having unusually high values for employment. In response, the ABS developed a more robust methodology to ensure all businesses were classified to an employment size range which reflected real world activity. This methodology has not been applied to the counts of non-profit institutions included in the counts of entities in this publication due to their negligible impact. For more information, refer to paragraph 57 of the Explanatory Notes of Counts of Australian Businesses, including Entries and Exits, Jun 2008 to Jun 2012 (cat. no. 8165.0).


Tax data

34 Estimates included in this publication are based, in part, on tax data supplied by the Australian Taxation Office under the Taxation Administration Act 1953 and Australian Business Register data supplied by the Registrar under A New Tax System (Australian Business Number) Act 1999. The Taxation Administration Act 1953 requires that such data is only used for the purpose of administering the Census and Statistics Act 1905 and the Australian Business Number Act 1999 requires that such data is only used for the purpose of carrying out functions of the ABS. Further information about the two Acts can be found at <www.comlaw.gov.au>. Information about the Australian Business Register can be obtained from the Australian Business Register website <www.abr.gov.au> or the Australian Taxation Office website <www.ato.gov.au/business>.

35 Legislative requirements to ensure privacy and secrecy of these data have been followed. Only people authorised under the Australian Bureau of Statistics Act 1975 have been allowed to view data about any particular firm in conducting these analyses. Results have been confidentialised in accordance with the Census and Statistics Act 1905, to ensure that they are not likely to enable identification of a particular person or organisation.


CLASSIFICATIONS

36 Satellite account estimates are presented in this publication using several classifications.

• Estimates of industry contributions, non-market output of market producers, and counts of entities are all presented in terms of domains. Domains are the groups of related industries which stakeholders use to describe the structure of cultural and creative activity in a summarised form. Appendix 1 shows how the domains are comprised from the industries covered within the satellite accounts.
• Estimates of employment and Compensation of Employees are presented using the 2006 edition of the Australian and New Zealand Standard Industrial Classification (ANZSIC) (cat. no. 1292.0). These estimates are not presented using the domain classification because some of the cultural and creative occupations do not logically fit in one domain over another.
• Detailed estimates of supply and use by industry and product appear in table 17 of the datacube. This table is classified according to the 2009 edition of the Input-Output Industry Group (IOIG) and Input-Output Product Group (IOPG) classifications, which are contained within table 40 of Australian National Accounts: Input-Output Tables (cat. no. 5209.0.55.001).

QUALITY OF ESTIMATES

37 While as much care as possible has been taken to ensure the quality of the estimates in the satellite accounts, users should exercise some caution in the use and interpretation of the results. In order to produce estimates at a finer level of detail than is normally provided in the national accounts, some of the data used to produce the satellite accounts have been extended to the limits of their design capabilities. Assumptions underlying the estimates also have an effect on the estimates' quality.

1 For example, see D. Throsby (2001), Economics and Culture, Cambridge University Press, p4; United Nations Conference on Trade and Development (2008), Creative Economy Report 2008, p10, <http://unctad.org/en/Docs/ditc20082cer_en.pdf>; and European Commission (2012), ESSnet-Culture: European Statistical System Network on Culture - Final Report, p42, <http://ec.europa.eu/culture/our-policy-development/documents/ess-net-report-oct2012.pdf>. <back
2 See the ABS' Discussion Paper: Cultural and Creative Activity Satellite Accounts (cat. no. 5271.0.55.001) and Information Paper: Cultural and Creative Activity Satellite Accounts (cat. no. 5271.0.55.002). <back
3 United Nations Educational Scientific and Cultural Organization (UNESCO) (2009), 2009 UNESCO Framework for Cultural Statistics, <http://www.uis.unesco.org/culture/Documents/framework-cultural-statistics-culture-2009-en.pdf>. <back
4 European Commission (2012). <back
5 Statistics Canada (2004), Economic Contribution of Culture in Canada, <http://www.statcan.gc.ca/pub/81-595-m/81-595-m2004023-eng.pdf> and Statistics Canada (2007), Economic Contribution of the Culture Sector to Canada's Provinces, <http://publications.gc.ca/Collection/Statcan/81-595-MIE/81-595-MIE2006037.pdf>. <back
6 Ministry of Education (2009), Culture Satellite Account: Final report of pilot project, <http://www.minedu.fi/export/sites/default/OPM/Julkaisut/2009/liitteet/opm13.pdf?lang=fi>. <back
7 Ministry of Culture (2011), Satellite Account on Culture in Spain: Advance of 2000-2009 results, <http://www.mcu.es/estadisticas/docs/CSCE/advance_results_csce-2011.pdf>. <back
8 Department for Culture, Media and Sport (2011), Creative Industries Economic Estimates: Full Statistical Release, <https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/77959/Creative-Industries-Econo
mic-Estimates-Report-2011-update.pdf>. <back
9 U.S. Bureau of Economic Analysis (2013), Arts and Cultural Production Satellite Account, <http://www.bea.gov/newsreleases/general/acpsa/acpsa1213.pdf>. <back
10 United Nations (2003), Handbook on Non-Profit Institutions in the System of National Accounts, <http://unstats.un.org/unsd/publication/seriesf/seriesf_91e.pdf>. <back
11 Based on H. Bakhshi, A. Freeman and P. Higgs (2012), A Dynamic Mapping of the UK's Creative Industries, report for the Nesta Operating Company, <http://www.nesta.org.uk/library/documents/Dynamic_mappingV12.pdf>. <back
12 For example, P. Higgs and S. Cunningham (2008), 'Creative Industries Mapping: Where have we come from and where are we going?', Creative Industries Journal, vol.1, no.1, p7-30, <http://portal2.ntua.edu.tw/~dc/files/F04_3.pdf>. <back
13 Based on H. Bakhshi, A. Freeman and P. Higgs (2012). <back
14 Australian National Accounts: Input-Output Tables (cat. no. 5209.0.55.001) and Australian National Accounts: Input-Output Tables (Product Details) (cat. no. 5215.0.55.001). <back
15 European Commission, International Monetary Fund, Organisation for Economic Co-operation and Development, United Nations and World Bank (2009), System of National Accounts, 2008, <http://unstats.un.org/unsd/nationalaccount/docs/SNA2008.pdf>. <back
16 Published in Employee Earnings and Hours, Australia (cat. no. 6306.0). <back