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APPENDIX ADJUSTED MEASURES OF GOVERNMENT REVENUE

ADJUSTED MEASURES OF GOVERNMENT REVENUE

The taxation revenue statistics presented in this release are in accordance with the Australian system of Government Finance Statistics (GFS). This system is outlined in the Australian System of Government Finance Statistics: Concepts, Sources and Methods (cat no 5514.0) which is consistent with the International Monetary Fund's Government Finance Statistics Manual 2001 (IMF GFSM2001).

The GFS framework reflects taxation revenue collected by each level of government. The purpose of this appendix is to consider an alternative presentation of revenue which takes into account the level of government at which revenue is used rather than simply collected. The analysis considers the flows, by way of current grants, that occur between the levels of government in Australia, and the impact that this has on revenue at each of these levels. Also considered is the effect of direct and indirect transfers to households on total revenue. To aid in the understanding of these flows, the following analytical measures of revenue have been derived. Users should note that these measures are not themselves part of the GFS framework.

Adjusted taxation revenue

Adjusted taxation revenue is equal to GFS taxation revenue collected by each level of government, plus current grants received from higher levels of government, less current grants paid to lower levels of government. This measure is designed to give a clearer indication of the levels of government at which taxation revenue is actually used or spent. The source for a significant amount of the current grants distributed between levels of government is taxation revenue, such as the GST. However, some of the revenue distributed may have come from a source other than taxation. Further, it should be noted that some of the current grants transferred from Commonwealth to the states are Specific Purpose Payments (SPPs). Unlike the GST-related grants, these payments are 'tied' to specific policy areas or programs as agreed between the two levels of government. Similar arrangements exist between the states and local government. SPPs for current purposes are included with other current grants in deriving adjusted taxation revenue. The ABS does not have the data required to separate out SPPs from other grants.

Adjusted total revenue

Adjusted total revenue is equal to adjusted taxation revenue plus all other non-taxation sources of revenue. Non-taxation revenue includes revenue from sales of goods and services, property income (interest, dividends, income tax equivalents, land rents and royalties), fines, capital transfers, and current transfers other than grants. Current grants are excluded from non-taxation revenue because these have already been taken into account in deriving adjusted taxation revenue.

Adjusted total revenue less transfers to households

An important role of government is the redistribution of income, by way of direct and indirect 'benefits', to individual households. These transfers can be deducted from adjusted total revenue to derive adjusted total revenue less transfers to households. Direct benefits are regular cash payments made to households by government without any requirement to provide goods and services in return (for example, welfare payments). Indirect benefits are non-cash benefits and services provided by government to individual households (for example, concessions for transport and utilities, as well as natural disaster relief).

The three derived measures explained above are illustrated in the following diagram:

ANALYSIS

Adjusted taxation revenue

Table 1 shows the derivation of adjusted taxation revenue, for all three levels of government in Australia.

Table 1. Adjusted taxation revenue by level of government, and as % of GDP
	2000-01	2001-02	2002-03	2003-04	2004-05	2005-06
	$m	$m	$m	$m	$m	$m
Commonwealth
1. Taxation revenue collected(a)	175 591	177 838	194 827	209 560	229 131	245 223
As % of GDP	25.5	24.2	24.9	24.9	25.6	25.4
As % of total tax revenue	82.0	81.8	81.8	81.5	82.2	82.3
2. Current grants to state government(b)	44 268	49 283	51 170	53 801	57 560	61 394
3. Current grants to local government	102	490	274	351	305	100
4. Current grants to multi-jurisdictional sector(c)	4 118	4 327	4 381	4 788	4 839	5 556
5. Adjusted taxation revenue =1-2-3-4(d)	127 103	123 738	139 002	150 620	166 427	178 173
As % of GDP	18.4	16.8	17.8	17.9	18.6	18.4
As % of total tax revenue	59.3	56.9	58.4	58.5	59.7	59.8
State
1. Taxation revenue collected(a)	32 679	33 341	36 418	40 394	41 649	44 235
As % of GDP	4.7	4.5	4.7	4.8	4.6	4.6
As % of total tax revenue	15.3	15.3	15.3	15.7	14.9	14.8
2. Current grants from Commonwealth government	44 268	49 283	51 170	53 801	57 560	61 394
3. Current grants to local government	2 025	1 795	1 827	1 851	1 894	2 008
4. Current grants to multi-jurisdictional sector(c)	194	204	264	253	389	410
5. Adjusted taxation revenue =1+2-3-4(d)	74 728	80 625	85 497	92 091	96 926	103 211
As % of GDP	10.8	11.0	10.9	11.0	10.8	10.7
As % of total tax revenue	34.9	37.1	35.9	35.8	34.8	34.6
Local
1. Taxation revenue collected(a)	6 303	6 668	7 224	7 673	8 306	8 920
As % of GDP	0.9	0.9	0.9	0.9	0.9	0.9
As % of total tax revenue	2.9	3.1	3.0	3.0	3.0	3.0
2. Current grants from Commonwealth government	102	490	274	351	305	100
3. Current grants from state government	2 025	1 795	1 827	1 851	1 894	2 008
4. Adjusted taxation revenue =1+2+3(d)	8 430	8 953	9 325	9 875	10 505	11 028
As % of GDP	1.2	1.2	1.2	1.2	1.2	1.1
As % of total tax revenue	3.9	4.1	3.9	3.8	3.8	3.7
Gross Domestic Product(e)	689 262	735 714	781 675	840 285	896 568	966 335
Total taxation revenue collected(a)	214 264	217 520	238 118	257 255	278 685	297 942
As % of GDP	31.1	29.6	30.5	30.6	31.1	30.8
(a) According to GFSM2001.
(b) Part of the Commonwealth grants paid to states are onpassed to local government.
(c) The multi-jurisdictional sector contains units where jurisdiction is shared between two or more governments, or where classification of a unit to a jurisdiction is otherwise unclear. The main type of units currently falling into this category are the public universities.
(d) The sum of taxation revenue does not equal the sum of adjusted taxation revenue owing to grants paid to the multi-jurisdictional sector.
(e) As published in Australian National Accounts, December Quarter 2006 (cat. no. 5206.0).

Taking into account taxation revenue distributed by the Commonwealth government to both state and local levels of government by way of current grants, the level of adjusted taxation revenue at the Commonwealth's disposal in 2005-06 was $178,173 million. This represents a 7.1% increase from the previous year, compared with a 7.0% increase in directly collected taxation revenue. Adjusted taxation revenue for the Commonwealth was 59.8% of total taxation revenue in Australia in 2005-06, compared with 59.3% in 2000-01.

Adjusted taxation revenue at the state level of government in 2005-06 was $103,211 million. This represents a 6.5% increase from the previous year, compared with a 6.2% increase in directly collected taxation revenue. Adjusted taxation revenue at the state level of government was 34.6% of total taxation revenue in 2005-06, compared with 34.9% in 2000-01.

The two graphs below show taxation revenue and adjusted taxation revenue as a proportion of GDP for each level of government. Graph 1 shows that in 2005-06 taxation revenue collected by the Commonwealth was equal to 25.4% of GDP whereas taxation revenue collected by states was equivalent to 4.6% of GDP. After taking into account current grants (adjusted taxation revenue in graph 2) these proportions change to 18.4% and 10.7% respectively.

Graph 1. Taxation Revenue, Australia, As a percentage of GDP



Graph 2. Adjusted taxation revenue, As a percentage of GDP

Table 2. Adjusted total revenue, less transfers to households
	2000-01	2001-02	2002-03	2003-04	2004-05	2005-06
	$m	$m	$m	$m	$m	$m
Commonwealth
1. Adjusted taxation revenue(a)	127 103.0	123 738	139 002	150 620	166 427	178 173
2. Non-taxation revenue(b)	10 126	12 319	11 793	12 350	12 754	15 370
3. Adjusted total revenue =1+2	137 229	136 057	150 795	162 970	179 181	193 543
As % of GDP	19.9	18.5	19.3	19.4	20.0	20.0
4. Direct benefits to households(c)	58 992	61 662	63 607	71 897	73 989	76 997
5. Indirect benefits to households(d)	15 997	17 060	17 765	19 590	22 164	22 789
6. Adjusted total revenue, less transfers to households =3-4-5	62 240	57 335	69 423	71 483	83 028	93 757
As % of GDP	9.0	7.8	8.9	8.5	9.3	9.7
State
1. Adjusted taxation revenue(a)	74 728	80 625	85 497	92 091	96 926	103 211
2. Non-taxation revenue, excluding current grants from Commonwealth government(b)	24 442	24 175	26 230	29 834	32 717	36 948
3. Adjusted total revenue =1+2	99 170	104 800	111 727	121 925	129 643	140 159
As % of GDP	14.4	14.2	14.3	14.5	14.5	14.5
4. Direct benefits to households(c)	690	787	738	759	1 085	1 008
5. Indirect benefits to households(d)	1 919	1 925	1 974	1 965	1 861	1 822
6. Adjusted total revenue, less transfers to households =3-4-5	96 561	102 088	109 015	119 201	126 697	137 329
As % of GDP	14.0	13.9	13.9	14.2	14.1	14.2
Local
1. Adjusted taxation revenue(a)	8 430	8 953	9 325	9 875	10 505	11 028
2. Non-taxation revenue, excluding current grants from Commonwealth and state governments(b)	8 381	8 930	9 394	10 084	11 243	12 062
3. Adjusted total revenue =1+2	16 811	17 883	18 719	19 959	21 748	23 090
As % of GDP	2.4	2.4	2.4	2.4	2.4	2.4
4. Direct and indirect benefits to households(e)	. .	. .	. .	. .	. .	. .
5. Adjusted total revenue, less transfers to households = 3-4	16 811	17 883	18 719	19 959	21 748	23 090
As % of GDP	2.4	2.4	2.4	2.4	2.4	2.4
. . not applicable
(a) Derived in Table 1.
(b) Non-taxation revenue includes revenue from sales of goods and services, interest income, other property income (such as dividends, income tax equivalents, land rents and royalties), fines, capital revenue, and all current revenue other than grants.
(c) Direct benefits to households are monetary transfers.
(d) Indirect benefits to households are transfers 'in-kind' via goods and services.
(e) Local government does not make transfers of this kind to households.

Adjusted total revenue for the Commonwealth in 2005-06 was $193,543 million, up 8.0% from the previous year, compared with an increase of 7.1% in adjusted taxation revenue. For the state governments, adjusted total revenue in 2005-06 was $140,159 million, an increase of 8.1%, compared with an increase of 6.5% in adjusted taxation revenue.

Graph 3 shows the adjusted total revenue for each level of government and graph 4 shows the amounts as a percentage of GDP.

Graph 3. Adjusted total revenue



Graph 4. Adjusted total revenue, As a percentage of GDP

Graph 5. Adjusted total revenue less transfers to households

Graph 6. Adjusted total revenue less transfers to households, As a percentage of GDP