NATIONAL INCOME, EXPENDITURE AND PRODUCT ACCOUNTS

The Australian national income, expenditure and product accounts are compiled and published each quarter, in Australian National Accounts: National Income, Expenditure and Product (5206.0), and in greater detail once a year, in Australian System of National Accounts (5204.0).


GDP account

The GDP account indicates changes in Australian economic activity over time. Table 30.3 shows annual time series from 2001-02 to 2005-06. Table 30.4 shows expenditure on GDP in volume terms.

30.3 GDP ACCOUNT, Current prices
		2001-02	2002-03	2003-04	2004-05	2005-06
		$m	$m	$m	$m	$m
Final consumption expenditure
	Total general government	132 230	141 088	150 227	162 837	176 240
	Households	433 649	461 031	492 315	520 982	547 138
	Total final consumption expenditure	565 879	602 119	642 542	683 819	723 378
Gross fixed capital formation
	Private	141 153	165 592	182 658	196 638	218 261
	Public	27 679	28 488	30 481	34 233	37 935
	Total gross fixed capital formation	168 832	194 080	213 140	230 871	256 196
Total changes in inventories		-25	1 419	6 111	4 501	1 513
Gross national expenditure		734 687	797 619	861 793	919 191	981 087
Exports of goods and services		156 102	151 790	147 205	167 562	196 117
less Imports of goods and services		155 078	167 736	168 714	190 188	210 486
Statistical discrepancy(a)		-	-	-	-	-749
Gross domestic product		735 714	781 675	840 285	896 568	965 969
Compensation of employees		356 095	375 509	399 334	428 549	460 318
Gross operating surplus		226 582	243 704	263 896	285 992	316 160
Gross mixed income		68 835	69 700	77 750	80 049	82 096
Total factor income		651 512	688 913	740 980	794 590	858 574
Taxes less subsidies on production and imports		84 202	92 761	99 305	101 978	106 034
Statistical discrepancy(b)		-	-	-	-	1 361
Gross domestic product		735 714	781 675	840 285	896 568	965 969
- nil or rounded to zero (including null cells)
(a) Expenditure-based.
(b) Income-based.
Source: Australian System of National Accounts (5204.0).

In volume terms (i.e. after the effects of price change are removed from the dollar value of Australia's production) GDP recorded a growth rate of 2.8% in 2005-06. This was higher than the 2.7% recorded in the previous year.

30.4 EXPENDITURE ON GDP, Chain volume measures(a)
		2001-02	2002-03	2003-04	2004-05	2005-06
		$m	$m	$m	$m	$m
Final consumption expenditure
	General government	146 210	150 840	156 783	162 837	168 049
	Households	458 647	474 389	499 526	520 982	534 311
	Total final consumption expenditure	604 778	625 160	656 296	683 819	702 360
Gross fixed capital formation
	Private	147 909	172 038	186 422	196 638	213 763
	Public	28 017	29 238	31 471	34 233	36 759
	Total gross fixed capital formation	176 022	201 287	217 903	230 871	250 522
Domestic final demand		780 442	826 442	874 202	914 690	952 882
Changes in inventories		156	842	5 765	4 501	1 893
Gross national expenditure		780 767	827 696	879 908	919 191	954 775
Exports of goods and services		159 887	159 183	162 583	167 562	171 053
less Imports of goods and services		132 677	150 025	169 591	190 188	203 402
Statistical discrepancy(b)		-	-	-	-	-678
Gross domestic product		813 542	839 187	873 197	896 568	921 747
- nil or rounded to zero (including null cells)
(a) Reference year is 2004-05. Measures for years other than 2004-05 and 2005-06 are not additive.
(b) Expenditure-based.
Source: Australian System of National Accounts (5204.0).

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 1960-61. (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 2005-06 was 53.6%, slightly lower than the previous year (53.9%), and at its lowest level since 1969-70. The profits share of total factor income has been growing steadily since 1998-99. In 2005-06 profits share was 26.9%, the highest share recorded.

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 2001-02 to 2005-06.

30.7 NATIONAL INCOME ACCOUNT, Current prices
		2001-02	2002-03	2003-04	2004-05	2005-06
		$m	$m	$m	$m	$m
Income
Compensation of employees		356 095	375 509	399 334	428 549	460 318
Gross operating surplus		226 582	243 704	263 896	285 992	316 160
Gross mixed income		68 835	69 700	77 750	80 049	82 096
Taxes less subsidies on production and imports		84 202	92 761	99 305	101 978	106 034
Net primary income from non-residents		-19 667	-22 190	-23 529	-32 444	-37 467
Gross national income		716 047	759 484	816 756	864 124	927 141
Net secondary income from non-residents
	Current taxes on income, wealth, etc.	1 002	965	981	989	1 001
	Other current transfers	-1 019	-1 179	-1 250	-1 409	-1 438
Gross disposable income		716 030	759 270	816 487	863 704	926 704
Use of gross disposable income
Final consumption expenditure
	General government	132 230	141 088	150 227	162 837	176 240
	Households	433 649	461 031	492 315	520 982	547 138
	Total final consumption expenditure	565 879	602 119	642 542	683 819	723 378
Net saving(a)		34 891	35 625	46 190	45 362	57 850
Consumption of fixed capital		115 259	121 526	127 754	134 523	145 476
Total use of gross disposable income		716 030	759 270	816 487	863 704	926 704
(a) Net saving is derived as a balancing item.
Source: Australian System of National Accounts (5204.0).

Graph 30.8 shows net saving by institutional sector as a proportion of GDP for the years 1960-61 to 2005-06. Household net saving as a percentage of GDP generally fluctuated between 6% and 7% between 1960-61 and 1971-72. It then rose to a peak of 11.6% in 1974-75. Since then it has fallen to a position in 2002-03 when consumption by households exceeded income and, consequently, household net saving was negative for the first time. Household net saving has remained negative since 2002-03. In 2005-06 consumption exceeded household income, by $3.8 billion (b) (table 30.9).
General government net saving was positive from 1960-61 to 1972-73 before turning negative from 1974-75 to 1996-97 (except for 1988-89). It has remained positive since 1997-98. In 2005-06 general government net saving was positive at 2.5% of GDP ($23.9b). In 2005-06 net saving of non-financial corporations was 1.0% of GDP ($10.0b). Net saving of financial corporations has been positive at about 1% to 2% of GDP for virtually all of its history. In 2005-06 net saving of financial corporations was 2.9% of GDP ($27.7b).


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 2001-02 to 2005-06.

30.9 NATIONAL CAPITAL ACCOUNT, Current prices
		2001-02	2002-03	2003-04	2004-05	2005-06
		$m	$m	$m	$m	$m
National net saving
	General government	7 686	15 891	15 514	18 088	23 920
	Households	4 684	-12 024	-13 240	-9 719	-3 812
	Non-financial corporations	13 124	13 925	21 270	11 443	10 036
	Financial corporations	9 396	17 833	22 647	25 551	27 704
	Total national net saving	34 891	35 625	46 190	45 362	57 850
Consumption of fixed capital		115 259	121 526	127 754	134 523	145 476
Capital transfers
	Receivable from non-residents	2 543	2 404	2 571	2 674	2 648
	less Payable to non-residents	1 357	1 301	1 404	1 533	1 512
Gross saving and capital transfers		151 337	158 254	175 112	181 026	204 461
Gross fixed capital formation
	Private	141 153	165 592	182 658	196 638	218 261
	Public corporations	10 126	10 688	11 934	14 013	17 394
	General government	17 553	17 800	18 548	20 220	20 541
	Total gross fixed capital formation	168 832	194 080	213 140	230 871	256 196
Changes in inventories
	Private non-farm(a)	-223	1 937	6 448	4 294	482
	Farm	176	-407	-31	271	683
	Public authorities	22	-111	-306	-64	348
	Total changes in inventories	-25	1 419	6 111	4 501	1 513
Acquisitions less disposals of non-produced non-financial assets		170	112	72	-71	4
Statistical discrepancy(b)		-	-	-	-	-2 110
Net lending to non-residents		-17 644	-37 359	-44 212	-54 278	-51 141
Total capital accumulation and net lending		151 337	158 254	175 112	181 026	204 461
- nil or rounded to zero (including null cells)
(a) Includes for all periods the privatised marketing authorities.
(b) Statistical discrepancy (E) less statistical discrepancy (I).
Source: Australian System of National Accounts (5204.0).

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 1970s and was reasonably stable up to the 1990s. It has generally been above 10% of GDP and in 2005-06 investment by non-financial corporations was 13.2% of GDP. Household investment as a proportion of GDP declined steadily between 1960-61 and 1973-74 but has since remained steady at around 10% of GDP. In 2005-06 the ratio to GDP was 10.5%. General government investment as a proportion of GDP peaked at 4.6% in 1975-76 and has generally fallen since then. It was 2.1% of GDP in 2005-06. The highest 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 0.8% of GDP in 2005-06.
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.

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 8.3%. Since then it has trended downwards and the household sector changed from a net lender to a net borrower in 1997-98. In 2005-06 household net borrowing was 4.9%. Non-financial corporations have been net borrowers over the entire period 1967-68 to 2005-06 (except for 1993-94), and the amounts borrowed have fluctuated significantly from year to year. As a proportion of GDP, their net borrowing was 5.0% in 2005-06.

In 2005-06 financial corporations net lending represented 2.8% of GDP, the highest recorded level. After recording a record level of borrowing as a proportion of GDP in 1992-93 (5.9%), general government borrowing steadily declined. From 1997-98 to 1999-2000 the sector was a net lender and in 2000-01 and 2001-02 general government was a net borrower before returning to being a net lender from 2002-03 to 2005-06. In 2005-06 general government net lending represented 1.7% of GDP.

External account

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.

30.12 EXTERNAL ACCOUNTS, Current prices
			2001-02	2002-03	2003-04	2004-05	2005-06
			$m	$m	$m	$m	$m
Income account
Income of non-residents
	Imports of goods and services		155 078	167 736	168 714	190 188	210 486
	Primary income receivable
		Compensation of employees	1 196	1 324	1 619	1 703	1 802
		Property income receivable	34 057	36 605	38 903	51 722	60 625
		Total primary income receivable	35 253	37 929	40 522	53 425	62 427
	Secondary income receivable		4 297	4 447	4 542	4 689	4 710
	Total income of non-residents		194 628	210 112	213 778	248 302	277 623
Uses of income of non-residents
	Exports of goods and services		156 102	151 790	147 205	167 562	196 117
	Primary income payable
		Compensation of employees	902	900	989	1 113	1 189
		Property income payable	14 684	14 839	16 004	19 868	23 771
		Total primary income payable	15 586	15 739	16 993	20 981	24 960
	Secondary income payable		4 280	4 233	4 273	4 269	4 273
	Balance on external income account		18 660	38 350	45 307	55 490	52 273
	Total use of income of non residents		194 628	210 112	213 778	248 302	277 623
Capital account
Balance on external income account			18 660	38 350	45 307	55 490	52 273
Capital transfers receivable			1 357	1 301	1 404	1 533	1 512
less Capital transfers payable			2 543	2 404	2 571	2 674	2 648
Total net capital transfers			-1 186	-1 103	-1 167	-1 141	-1 136
Gross saving and capital transfers			17 474	37 247	44 140	54 349	51 137
Acquisitions less disposals of non-produced non-financial assets			-170	-112	-72	71	-4
Net lending (+) / net borrowing (-)			17 644	37 359	44 212	54 278	51 141
Total capital accumulation and net lending (+) / net borrowing (-)			17 474	37 247	44 140	54 349	51 137
Source: Australian System of National Accounts (5204.0).

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 2005-06 was 5.3%, down from 6.1% in 2004-05. Graph 30.13 shows net lending to non-residents as a proportion of GDP since 1960-61.

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 1960-61. In 2005-06 the imports ratio was 21.8% and the exports ratio was 20.3%. Since 2000-01 imports increased 55.6% in volume terms compared with a 6.0% growth in exports.

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