INTRODUCTION

The purpose of this information paper is to inform users of the changes to the 2016-17 issue of the Australian System of National Accounts (ASNA) (cat. no. 5204.0) scheduled to be released on 27 October 2017.

Each year the annual and quarterly national accounts are revised using updated annual benchmarks provided from the supply and use tables. Usually, only the annual benchmarks for the previous three years are revised however, periodically the entire time series is opened up for historical revisions. The compilation of the 2016-17 annual national accounts is a historical revision cycle, where the annual benchmarks are revised through the entire time series for the purposes of incorporating revisions from updated data sources and a range of improvements to compilation methods and classifications. The impact of the revisions will largely be seen in changes to the level of GDP and the component series rather than in the movements in these series.

Quarterly data consistent with the revised annual data will be released in the September quarter 2017 publication of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) on 6 December 2017 and Australian National Accounts: Financial and Wealth (cat. no. 5232.0) scheduled to be released on 14 December 2017.

State accounts estimates consistent with the revised annual data will be released in the 2016-17 publication of Australian National Accounts: State Accounts (cat. no. 5220.0) scheduled to be released on 17 November 2017. The annual Estimates of Industry Multifactor Productivity (cat. no. 5260.0.55.002) scheduled for release on 24 November 2017 will also contain data consistent with the revised annual data.


UPDATED ANNUAL SOURCE DATA

The primary data source used to compile annual benchmarks is the information in Australian Industry (cat. no. 8155.0), which provides estimates of the economic performance of selected industries in current prices. To capture quality product level estimates, the Australian Industry data is supplemented by a rotating program of detailed industry surveys. As these survey data are generally available outside the standard annual revisions period of 3 years, they are typically reserved for incorporation in the national accounts during a historical revision cycle.

For the 2016-17 annual national accounts, other data will be incorporated including the Household Expenditure Survey 2015-16 and the Census of Population and Housing 2016, which will result in revisions to household final consumption and subsequently household net savings. The full list of updated source data that will be implemented in the annual benchmarks is provided in Table 1.

TABLE 1: UPDATED SOURCE DATA INCORPORATED IN THE ANNUAL BENCHMARKS
Data Source		Benchmark series		Description
Retail and Wholesale Industries, Australia (RISWIS), 2012-13, (cat. no. 8622.0)		Household final consumption expenditure,		The RISWIS is an important source of commodity data and trade margins paid by households. This periodic survey provides the benchmarks for a number of the household consumption of goods components.
		trade margins
Household Expenditure Survey (HES), 2015-16, (cat. no. 6530.0)(a)		Household final consumption expenditure		The HES provides benchmark estimates for household consumption of services components such as electricity, gas and other fuels, transport, communications, hotels, cafes and restaurants, and other goods and services.
Australian National Accounts: Non-Profit Institutions Satellite Account, 2012-13 (cat. no. 5256.0).		Household final consumption expenditure		The final consumption expenditure of Non-Profit Institutions Serving Households (NPISHs) is included with households in the ASNA. This satellite account provides estimates for consumption of goods and services by NPISHs.
Census of Population and Housing, 2016		Household final consumption expenditure, ownership of dwellings gross value added		The data sourced from the 2016 Census provides an improved estimate of actual and imputed rent which is the largest contributor to household final consumption expenditure.
Agricultural Commodities, Australia, 2015-16  (cat. no. 7121.0)		Agriculture product level data,		Industry product estimates for primary and secondary production are modelled using the estimates calculated from this ABS publication. These data are also used to update gross fixed capital formation on cultivated biological resources.
		gross fixed capital formation
Manufacturing industry surveys, 2014-15, 2015-16 (b)		Manufacturing product level data		This survey identifies the type of products being manufactured, providing an updated analysis of the primary and secondary production carried out by the Manufacturing industry.
Private Sector Construction Industry, Australia (CIS), 2011-12 (cat. no. 8772.0)		Construction product level data,		The CIS data are used to update the composition of the supply of construction related products by the construction industry.
		gross fixed capital formation
Information Media and Telecommunications Services (IMT), 2013-14, (cat. no. 8681.0)		Information, Media and Telecommunication product level data		This survey contains national estimates of the major economic and financial indicators for the IMT industry and identifies the sources of income for businesses classified to the IMT industry. These data are sourced to update the allocation of products within this industry.
Professional, Scientific & Technical Services, 2015-16, (PST)(b)		Professional, Scientific & Technical product level data		This survey identifies the type of services being provided by this industry and allows for an updated analysis of the primary and secondary production being carried out by each PST sub-industry.
Labour Costs (MLC), 2015-16, (cat no. 6348.0)(a)		Compensation of employees		The MLC provide benchmark estimates of labour costs for the private and public sectors including employee earnings, superannuation, payroll tax, workers' compensation and fringe benefit tax.
BIS Shrapnel survey on the Home Improvements Market in Australia, 2006, 2010 and 2014		Gross fixed capital formation		This survey has been used to update an under‑coverage factor for alterations and additions that are out of scope of Building Activity Survey (cat. no. 8752.0).
(a) Forthcoming ABS publication.
(b) Estimates published in 8155.0 – Australian Industry, 2015-16

The annual benchmarks will also be updated to incorporate revisions in Government Finance Statistics, Australia (cat. no. 5512.0) and Balance of Payments and International Investment Position, Australia (cat. no. 5302.0) and also revisions in data received from the Australian Prudential Regulatory Authority (APRA).


CHANGES TO THE GOVERNMENT FINANCE STATISTICS STANDARD

Government Finance Statistics (GFS) are an important indicator of the financial activity of governments and are a major source of data used in compiling the ASNA. The ABS conceptual framework for compiling GFS has been updated to incorporate the changes outlined in the International Monetary Fund Government Finance Statistics Manual 2014 (IMF GFS 2014), which will also bring closer alignment with the System of National Accounts 2008 (2008 SNA).

The updated framework is presented in Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2015 (AGFS 15) (cat. no. 5514.0) and will be implemented from 1 July 2017. The adoption of this new conceptual framework required changes to most of the classifications used to compile GFS, including the economic classification of stocks and flows by type (economic type classification) and selected economic flows by function (classification of the functions of government - Australia, or COFOG-A). The COFOG-A replaces the government purpose classification (GPC) previously used in the compilation of the ASNA.

The adoption of COFOG-A from AGFS 15 will result in the reallocation of superannuation expenses and the improved allocations of social benefits to households in goods and services. Whereas superannuation expenses were previously allocated to the Public Administration and Safety industry, they will now be allocated based on the employees’ industry, resulting in a reallocation of government final consumption expenditure to industries such as Health and Education. Similarly, social benefits to households in goods and services will have improved industry allocations. The result of these changes is improved industry allocations of government final consumption expenditure and correspondingly improved estimates of general government output and intermediate use.


CHANGES TO METHODS

Gross fixed capital formation

A number of the changes being implemented will cause revisions to gross fixed capital formation (GFCF) estimates. These revisions to GFCF will also result in revisions to the estimates of capital stock and consumption of fixed capital.

Capital formation for Machinery & Equipment

GFCF machinery and equipment (M&E) estimates are captured quarterly in Private New Capital Expenditure and Expected Expenditure, Australia (CAPEX) (cat. no. 5625.0). These are adjusted for the acquisitions of second hand fixed assets and industries out of scope of this survey. On the annual side, M&E asset acquisition estimates, along with the production of M&E are captured in the Economic Activity Survey (EAS).

Confrontation between all supply and use data sources identified some annual overestimation of GFCF M&E. In response to this, the annual estimates will be revised down across the time series, to produce annual benchmarks that better align with CAPEX and EAS data.

Capital formation for Computer Software

From 2006-07, the annual estimates of GFCF for computer software will be revised based on data from the EAS. Previously, the annual benchmark estimates of GFCF for computer software were based on Australian National Accounts: Information and Communication Technology, Satellite Account, 2002-03 (cat. no. 5259.0).

Capital formation for Music & Literary Originals

Data from Film, Television and Digital Games, Australia (cat. no. 8679.0) have been used to improve the estimates of private GFCF for film and television. Benchmark data from this survey are available for the reference periods 2006-07, 2012-13 and 2015-16. Estimates between these benchmark years will utilise film and television production data from Screen Australia as an indicator of year on year growth.

Capital formation on Weapons Systems

In the ASNA, expenditure on weapons systems is recorded as capital formation on the delivery of the asset. For Australia, a significant part of weapons systems are purchased from overseas producers. In the Balance of Payments (BoP), imports of weapons systems are recorded when the asset crosses the customs frontier or in cases where it is directly deployed overseas, when the asset is fully completed. However, the accrual GFS framework records progress payments for weapons systems as work proceeds and payments are recorded in the period in which they occurred. To resolve this difference in the time of recording in the ASNA, data from BoP dating back to 2008-09 will be used instead of progress payments from GFS.

International Trade

International trade in goods and services will be revised as a result of improvements to the model used to estimate trade in travel services. Estimates of the expenditure of all travellers (resident and non-resident, including students) will be now sourced from the International and National Visitors Surveys (IVS/NVS) conducted by Tourism Research Australia (TRA). Other improvements to the trade in travel services model include reinstating the commission on travel and transport services, paid by travellers, which is currently being deducted and the treatment of the expenditure of young persons (under 15 years of age). Finally, traveller’s expenditure on motor vehicle purchases will be excluded from the trade in travel services model. This expenditure is outside the scope of international trade in services. The combination of all these changes will lead to revisions to both exports and imports across the entire time series for international trade in services.

In addition to the changes outlined above, there will be other small revisions to international trade in goods and services estimates as updated data from providers have been incorporated.

Compensation of Employees

Compensation of employees (COE) estimates will be reallocated between industries based on source data from the MLC, EAS and APRA, from 2003-04 onward. This reallocation will be predominately between the Financial and Insurance Services, Administrative Support and Services and Professional, Scientific & Technical Services industries.

Taxes on Products

The measure of GST in the annual benchmarks previously included not only GST revenue, but also fines, interest charges and provisions which reflect penalties on late payment of GST. Using data from the Australian Tax Office (ATO), the fines and interest charges components can be separately identified and removed from the GST time series. This treatment of fines and interest charges are consistent with the recommendation of the new GFS manual and SNA2008. From 2003-04 onward, fines will be separately identified as other current transfers and interest charges recorded to the Income Account.


CONCLUSION

There is a substantial amount of change foreshadowed in this article, however employing new methodologies and the latest data sources ensures that the best available data are used in the compilation of the ASNA. Ongoing reviews of methods and data sources will continue into the future.

While there will be a noticeable impact on the level of GDP as a consequence of these changes, the impact on the movements in GDP in both current price and volume terms will be minor.

A more detailed article quantifying the magnitude of these revisions will be provided in Australian System of National Accounts, 2016-17 (cat. no. 5204.0). For questions concerning the nature of the revisions, contact the National Information and Referral Service on 1300 135 070 or National Accounts by email <national.accounts@abs.gov.au>.