Australian Bureau of Statistics
6421.0 - Information Paper: An Analytical Framework for Price Indexes in Australia, 1997
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 24/02/1997 Ceased
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A1.1. As noted in section 5, the ABS proposes to focus on the development of an index relating to the HCP component of DFP. However, for completeness, this Appendix contains a summary of the results of initial investigations undertaken to derive indicative weighting estimates and identify potential data sources for the possible future development of indexes for the other DFP components, namely NPISH Consumption, General Government Consumption and Capital Purchases.
A1.2. The weights for the DFP measure would be based on the share of the total value of purchases for each purchase type. They would be based primarily on national accounts data valued at purchasers’ prices (i.e. including taxes, and transport and trade margins), but significant adjustments would need to be made to account for the conceptual differences between the national accounts and DFP approaches. The different treatment of notional transactions and non-market output would be particularly important.
Potential data sources for other DFP component indexes
NPISH Consumption Purchases
A1.7. The second consumption component within the DFP model is the purchases of inputs by private NPISH such as charities, conservation groups, unions, churches, professional and sporting associations. NPISH provide educational, health, cultural, recreational and other social community services to households free of charge, or at prices which are not economically significant.
General Government Consumption Purchases
A1.11. A Government Consumption Purchases price index would represent all government input purchases associated with non-market goods and services. The main subcomponent would be a government LCI, while material and service input purchases (e.g. office supplies, electricity, consultancy fees) would also be covered. The national accounts could be the source of weights for this price index with modifications to ensure consistency with the market transactions approach.
A1.14. A price index covering all purchases of newly produced and imported capital goods by domestic institutional units would be an important component of the DFP measure. An existing capital item is one which has already been acquired by a domestic user and whose value has already been included as part of Capital Purchases. All other capital items are considered ‘new’, including purchases of second-hand imported capital goods which are being purchased by a domestic resident for the first time. Price indexes corresponding to purchases of new capital goods could be developed for the following four institutional sectors:
A1.15. National accounts capital expenditure data could be used as a weighting source with modifications to ensure the weights were in accordance with the DFP approach. It would be desirable for the Capital Purchases component to be able to be broken down by asset type, as itemised in SNA93.
A1.16. The Household Capital Purchases price index would consist mainly of purchases of new dwellings. Purchases of motor vehicles, computers and other durable goods by households are treated as consumption purchases rather than capital purchases.
A1.17. The Private Corporate Capital Purchases component is the most significant contributor to Capital Purchases and would include most of the asset types. The NPISH Capital Purchases component accounts for less than 1% of GDP but, like the Public Sector Capital Purchases component, would comprise a range of asset types.
A1.18. The concept of a Capital Purchases measure is broader than the national accounts gross fixed capital expenditure which currently excludes net acquisitions of valuables. The Capital Purchases price index would also differ from gross fixed capital expenditure in the treatment of non-market (including own-account) capital goods production.
A1.19. Even in the long term, price indexes may not be available for some types of capital purchases, and indexes may need to be imputed.
A1.20. A price index for the purchases of new dwellings would be based on the Project Homes Price Index published in ABS Cat. No. 6416.0, which would be the main contributor to the Household Capital Purchases component. Price indexes derived by Australian Construction Services relating to non-house dwellings such as townhouses, duplexes and apartments could also contribute to the Household Capital Purchases price index.
A1.21. The price index for purchases of new non-dwelling buildings could be based on output price indexes derived by Australian Construction Services for each State. This data is used to deflate the relevant components of the national accounts gross fixed capital expenditure.
A1.22. There is a significant gap in the availability of price data for engineering construction. The ABS is undertaking a study to assess the feasibility of establishing price indexes relating to the output of this industry. In the meantime, some relevant input price indexes relating to the construction of roads, railways, dams, airports, etc. are available, and are currently used to deflate this component in the national accounts.
A1.23. The price index for purchases of new machinery and equipment could be based on data from the IPI and APMI. The index would be a weighted average of the prices of domestically produced and imported machinery and equipment. Ideally, the valuation basis of the producer price data would be adjusted from basic prices to purchasers’ prices. However, this would not be a simple procedure and considerable time and effort would be required before such measures could be developed, if indeed they were warranted.
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