FEATURE ARTICLE: EXPANDED QUARTERLY SECTORAL ACCOUNTS


INTRODUCTION

September quarter 2014 marks the release of an expanded suite of quarterly institutional sectoral accounts across the Australian System of National Accounts products. The Australian Bureau of Statistics (ABS) has enhanced the quality and analytical usefulness of its macroeconomic statistics by publishing a comprehensive set of quarterly sectoral income, capital and financial accounts. These accounts will assist analysts in assessing the financial health and inter-linkages of the various sectors of the economy. An institutional sector breakdown will shed more light on how income arises from production, flows across sectors and is ultimately used for investment or saving.

From this quarter, the ABS will publish quarterly sectoral income, capital, and financial accounts for the following institutional sectors:

• The National sector;
• The Non-Financial Corporations sector;
  • The Private Non-Financial Corporations sector;
  • The Public Non-Financial Corporations sector;
• The Financial Corporations sector;
• The General Government sector;
  • The National General Government sector;
  • The State and Local General Government sector;
• The Household sector, and
• The Rest of World sector.

PUBLISHED OUTPUTS

Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0)

This issue of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) includes the first set of quarterly income accounts by institutional sector. The income account shows the sources and uses of income arising both from production (primary income) and re-distribution from other sectors (secondary income). The difference between income and use of income is net saving. Net saving is carried forward into the capital account as saving is used to acquire financial or non-financial assets of one kind or another, or to reduce liabilities.


Australian National Accounts: Finance and Wealth (cat. no. 5232.0)

The income accounts will be complemented by a comprehensive set of quarterly capital and financial accounts by institutional sector in the upcoming issue of Australian National Accounts: Finance and Wealth,
[Formerly Australian National Accounts: Financial Accounts] (cat. no. 5232.0) to be released on Thursday 18 December 2014.

The capital account records the value of the non-financial assets that are acquired, or disposed of, by resident institutional units, and also the change in net worth due to saving and capital transfers. The balancing item emerging from the capital account is net lending/borrowing.

The financial account shows the financial transactions associated with the net lending transactions recorded in the capital account. The balance of the financial account is net change in financial position, which is equal to net acquisition of financial assets less net incurrence of liabilities. Conceptually, net change in financial position is equal to net lending/borrowing from the capital account. However, due to differences in measurement this is rarely the case, and a net errors and omissions item is included to achieve balance.


SECTORAL ANALYSIS

The recent global financial crisis highlighted statistical gaps worldwide. This was the focus of a 2009 report by the International Monetary Fund and Financial Stability Board to the G-20 Finance Ministers and Central Bank Governors(footnote 1) . Recommendation #15 of this report highlighted the breadth of sectoral statistics published by individual countries as an identified gap. The publication of quarterly sectoral accounts is part of the ABS response in producing an integrated statistical framework. Through the timely publication of quarterly sectoral income, capital and financial accounts across the Australian System of National Accounts products users can monitor policy impacts across all sectors of the economy. The impact of the policy response to the recent global financial crisis is an example of the analytical usefulness of the sectoral accounts.

The sectoral income accounts show the effect of the economic stimulus packages (Economic Security Strategy) given by government to low and middle income earners and pensioners(footnote 2) . Social assistance benefits increased 40.8% ($9.1 billion) between September 2008 and December 2008. This partly resulted in Household final consumption expenditure increasing 4.9% ($8.2 billion) and net saving increasing 38.3% ($6.6 billion) in the same period.

The sectoral capital accounts illustrate the impact of the economic stimulus such as the increase in the first home owners grant, insulation grant and school building program (National Building Infrastructure program) on the economy(footnote 3) . General government Gross fixed capital formation increased 24.0% ($10.6 billion) and capital transfers paid increased 69.4% ($5.1 billion) over the year to June 2010. The additional capital transfers were mainly given to households and public non-financial corporations, with capital transfers received from general government increasing $1.6 billion and $3.1 billion respectively over the same period. This funded an increase in Gross fixed capital formation by both sectors.

The sectoral financial accounts demonstrates how the general government sector funded these fiscal measures through borrowing. The general government incurred liabilities of $69.9 billion and $86.4 billion in 2008-09 and 2009-10 respectively. This was achieved through their issuance of debt securities (mainly one name paper and bonds) to the financial corporations sector and rest of the world. This resulted in general government change in financial position being negative for consecutive years for the first time since 1996-97.

While the analytical usefulness of the sectoral accounts can be demonstrated with the example of the global financial crises, the value in expanding these accounts to quarterly publication is to enable timely assessment of policy impacts in both the real and financial economic systems. The income accounts are released nine weeks after the end of the quarter and the capital and financial accounts only three weeks later in Australian National Accounts: Finance and Wealth (cat. no. 5232.0).


CONCLUSION

Through the publication of a comprehensive suite of quarterly sectoral accounts, analysts will be able to see the links between the highly interconnected real and financial economic systems. The improvements to the integrated statistical framework will result in a clearer macroeconomic profile of Australia. The more timely and complete information will improve users ability to assess the impacts of policies on specific sectors of the economy. The ABS is among the first statistical agencies in the world to publish quarterly sectoral accounts, in line with the International Monetary Fund's recommendations.

1 International Monetary Fund and Financial Stability Board, 2009, Financial Crisis and Information Gaps. Last viewed 30 October 2014, <back
2 Australian Government, Mid–year Economic and Fiscal Outlook 2008–09. Last viewed 30 October 2014, <back
3 Australian Government, Budget 2009–10. Last viewed 30 October 2014, <back