1367.5 - Western Australian Statistical Indicators, Dec 2004  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 20/04/2005   
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Feature Article: State accounts: A snapshot of WA's economy in 2003-04

(This article was published in the December Quarter 2004 issue of Western Australian Statistical Indicators, ABS Catalogue Number 1367.5)


GROWTH IN GROSS STATE PRODUCT

State accounts provide a systematic statistical framework for summarising and analysing economic events, the wealth of an economy and its components. The economic performance and behaviour of an economy as a whole can be monitored using information recorded in the state accounts. The broadest measure of economic activity contained within the accounts is Gross State Product (GSP).

GSP in current prices are produced by summing factor incomes (i.e. compensation of employees and gross operating surplus and gross mixed income) plus taxes, less subsidies on production and imports. Chain volume measures of GSP are derived by revaluing current price, income-based estimates of GSP, using deflators which are calculated from the expenditure components.

Recently released GSP figures for 2003-04 showed that the Western Australian economy recorded its strongest rate of growth on record. In 2003-04, Western Australia's chain volume (or real) GSP increased by 7.5% ($6,240 million) to $89,155 million, the fastest rate of growth of all states and territories. Western Australia, along with Queensland (5.1%) and South Australia (4.3%), were the only states to experience growth rates stronger than that in Australia's Gross Domestic Product (3.8%).

GROSS STATE PRODUCT, Chain volume measures(a)(b)
LEVELS ($m)
 PER CAPITA ($)
2002-03
2003-04
% change
2002-03
2003-04
% change
New South Wales
264,983
270,292
2.0
39,783
40,242
1.2
Victoria
194,002
201,133
3.7
39,696
40,650
2.4
Queensland
128,711
135,226
5.1
34,294
35,210
2.7
South Australia
50,249
52,400
4.3
32,996
34,217
3.7
Western Australia
82,915
89,155
7.5
42,789
45,277
5.8
Tasmania
13,091
13,479
3.0
27,585
28,082
1.8
Northern Territory
9,173
9,210
0.4
46,299
46,356
0.1
Australian Capital Territory
15,023
15,245
1.5
46,624
47,255
1.4
Australia (GDP)
758,147
786,754
3.8
38,374
39,324
2.5
(a) Users are cautioned that these estimates are derived indirectly by calculating a deflator from the expenditure components of the state series concerned. Therefore, in general, the sum of the state estimates may not equal the estimates for Australia. It is emphasised that, at times, there may be movements that cannot be fully explained in the chain volume estimates of GSP through the use of a proxy deflator (see paragraphs 30 to 34 of the Explanatory Notes in the source publication).
(b) Reference year for chain volume measures is 2002-03.
Source: Australian National Accounts: State Accounts, 2003-04 (reissue), cat. no. 5220.0.


GSP PER CAPITA

Western Australia also recorded a faster rate of growth in GSP volume per capita than any other state or territory in 2003-04. Chain volume (or real) GSP per capita provides a picture of how much better off each member of the community has become over a period of time. In 2003-04, real GSP per capita increased by 5.8% in Western Australia, followed by 3.7% in South Australia and 2.7% in Queensland, and compared with growth of 2.5% nationally. Each person's share of real GSP in Western Australia rose by $2,488 to $45,277 in 2003-04. This share of real GSP was the highest of all states in 2003-04, ahead of Victoria ($40,650) and New South Wales ($40,242), but below the shares recorded in the Australian Capital Territory ($47,255) and Northern Territory ($46,356).


EXPENDITURE COMPONENTS OF GSP

Growth in the Western Australia economy in 2003-04 was driven by strong domestic demand, with only modest gains coming from the state's net trade result (up 0.9% or $210 million). State Final Demand (chain volumes) in Western Australia increased by 8.0% ($6,048 million) in 2003-04, primarily due to large increases in consumer spending and
business investment.


FINAL CONSUMPTION EXPENDITURE

Household final consumption expenditure made the largest contribution to GSP growth in Western Australia in 2003-04, increasing by 6.8% ($2,789 million). This increase was the third highest among all states and territories, behind Queensland (8.8%) and Tasmania (8.1%). Western Australian households increased their expenditure on Recreation and culture by $749 million (16.0%), Furnishings and other household equipment by $480 million (19.1%) and Transport by $393 million (8.0%). Government final consumption expenditure also rose in Western Australia by $382 million (3.0%) in 2003-04.

EXPENDITURE COMPONENTS OF GSP, Western Australia - Chain volume measures(a)
2002-03
2003-04
Change
Change
$m
$m
$m
%
Final consumption expenditure
    General government
12,595
12,977
382
3.0
    Households
41,309
44,098
2,789
6.8
Gross fixed capital formation
    Private
      Machinery and equipment
6,429
8,469
2,040
31.7
      Non-dwelling construction
5,026
5,068
42
0.8
      Livestock
111
163
52
46.8
      Intangible fixed assets
1,570
1,694
124
7.9
      Dwellings
4,567
4,536
-31
-0.7
      Ownership transfer costs
1,402
1,444
42
3.0
    Public
2,760
3,368
608
22.0
State final demand
75,769
81,817
6,048
8.0
Exports of goods and services
37,605
39,312
1,707
4.5
less Imports of goods and services
14,809
16,306
1,497
10.1
Balancing item
-15,650
-15,667
-17
0.1
Gross State Product
82,915
89,155
6,240
7.5
(a) Reference year for chain volume measures is 2002-03.
Source: Australian National Accounts: State Accounts, 2003-04 (reissue), cat. no. 5220.0.


GROSS FIXED CAPITAL FORMATION

In 2003-04, Western Australia experienced strong volume growth in Private gross fixed capital formation, rising by 11.9% ($2,269 million), the second largest increase of all states and territories behind Tasmania (16.7%). Nearly all of this increase was attributable to business investment on Machinery and equipment (up $2,040 million or 31.7%), supported by a strong $A and the expansion of the state's resources industry. Business investment was
also strong in Intangible fixed assets (comprising exploration expenditure and computer software) (up $124 million or 7.9%) and Livestock (up $52 million or 46.8%). Detracting from private sector growth in 2003-04 was Dwelling investment, down marginally ($31 million or 0.7%) from high levels in 2002-03. Public sector gross fixed capital formation in Western Australia rose by 22.0% ($608 million) in 2003-04, ranked second behind the Australian Capital Territory (up 26.0%).


INDUSTRY COMPOSITION OF TOTAL FACTOR INCOME

Total Factor Income (TFI) in current price terms is that part of the cost of producing GSP which consists of gross payments to the factors of production (labour and capital). It represents the value added by these factors in the process of production and is equivalent to GSP less taxes, plus subsidies on production and imports. In 2003-04, TFI grew by 6.8% ($5,060 million) in Western Australia. Total Factor Incomes grew in all Western Australian industries in 2003-04, except Mining (down 3.0% or $443 million).

The main industry contributing to 2003-04 TFI growth in Western Australia was Agriculture, forestry and fishing (up 62.5% or $1,423 million), which rebounded strongly from the 2002-03 drought. Other contributors were Property and business services (up 9.7% or $718 million), Construction (up 8.3% or $499 million) and Manufacturing (up 5.9% or $402 million). Growth in property services and construction were largely attributable to the high level of activity in the state's property market in 2003-04. The manufacturing industry, which includes downstream mineral processing, has benefited from the expansion of processing activities within the state's resources sector.

TOTAL FACTOR INCOME BY INDUSTRY AND PRINCIPAL COMPONENTS, Western Australia - Current prices
2002-03
2003-04
Change
Change
$m
$m
$m
%
Agriculture, forestry and fishing
2,275
3,698
1,423
62.5
Mining
14,830
14,387
-443
-3.0
Manufacturing
6,812
7,214
402
5.9
Electricity, gas and water supply
2,057
2,266
209
10.2
Construction
6,046
6,545
499
8.3
Wholesale trade
3,443
3,678
235
6.8
Retail trade
3,891
4,181
290
7.5
Accommodation, cafes and restaurants
1,202
1,282
80
6.7
Transport and storage
3,750
4,079
329
8.8
Communication services
1,762
1,900
138
7.8
Finance and insurance
3,543
3,798
255
7.2
Property and business services
7,428
8,146
718
9.7
Government administration and defence
1,728
1,841
113
6.5
Education
2,725
2,912
187
6.9
Health and community services
4,293
4,572
279
6.5
Cultural and recreational services
1,063
1,108
45
4.2
Personal and other services
1,922
1,943
21
1.1
Ownership of dwellings
4,908
5,128
220
4.5
General government
1,271
1,331
60
4.7
All industries
74,949
80,009
5,060
6.8
Source: Australian National Accounts: State Accounts, 2003-04 (reissue), cat. no. 5220.0.