Forthcoming changes to the annual publication for Government Finance Statistics

This information paper provides an overview of forthcoming changes to the 2017-18 release of the annual Government Finance Statistics (GFS) publication resulting from the implementation of the new Australian System of Government Finance Statistics 2015 framework (AGFS15). This information paper follows a similar paper released prior to the adoption of AGFS15 in GFS quarterly statistics.

Australia's system for producing GFS has been updated as a result of revised international standards for compiling national accounts (2008 System of National Accounts) and the consequent revision of the International Monetary Fund's GFS Manual 2014 (IMF GFSM 2014). An updated ABS GFS Manual was released in late 2015 to reflect the AGFS15 changes and can be found in Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2015 (cat. no. 5514.0).

AGFS15 became effective for all GFS data reported from 1 July 2017 onwards, beginning with the September quarter 2017 publication that was released on 5 December 2017.

The introduction of AGFS15 requires data providers to comply with a new reporting framework which will result in changes to some data series. The ABS has been working with data providers to limit the effect on key GFS data items that flow into public sector measures of the Australian National Accounts.

Current transfer expenses refer to regular payments that are current in nature and where no economic benefits are received in return for payment.

Under the previous framework (AGFS05), current transfer expenses from the general government sector to the non-public sector were typically recorded against current grant expenses. Under AGFS15 this has changed to align with the clearer IMF GFSM 2014 definition whereby grants only include transfers between units within the general government sector or between the general government sector and international organisations.

Current transfer expenses to the non-public sector, primarily to non-profit institutions, will now be recorded against current transfer expenses n.e.c. rather than current grant expenses. Current transfer expenses from the general government sector to public corporations will continue to be recorded against subsidy expenses.

Taxation revenue refers to compulsory, unrequited amounts received by government units. This is collected through the taxation of individuals, corporations, property, products or production and via other taxes.

Previously under AGFS05, fines and penalties for breaching tax laws and regulations were classified to the associated taxation revenue category. This has changed under AGFS15, with charges on overdue taxes and for the evasion of taxes now recorded against fines, penalties and forfeits when they are able to be separately identified. In addition, interest expenses that are applied to the unpaid tax liabilities arising from these charges are now recorded against interest income. Goods and services tax (GST) revenue will be impacted most significantly by this change of treatment.

Interest is an operating expense for the borrower (debtor) and an operating revenue for the lender (creditor) that accrues continuously to the value of the underlying debt instrument.

Under AGFS15 standards, interest expenses are valued using the creditor approach. This is a significant change from the debtor approach adopted under AGFS05 and was implemented to improve consistency across all ABS macroeconomic statistics by valuing interest using market based principles. 

In public sector accounts under Australian Accounting Standards Board (AASB) standards, interest expenses are typically calculated using the debtor approach which is based on contractual value. Under the debtor approach the amount of interest paid in a particular reference period differs from the creditor approach whenever the prevailing market interest rate differs from the contractual rate at that point in time. The change to a creditor approach under AGFS15 would therefore create substantial reporting differences when comparing the financial accounts of the public sector to GFS outputs.

The ABS currently produces estimates of creditor interest expenses on a quarterly basis for key aggregate sectors in GFS. This data is sourced directly from ABS publication 5232.0 - Australian National Accounts: Finance and Wealth and replicated in the quarterly GFS publication as a memorandum item.

Due to current limitations in source data availability, GFS will continue publishing interest expenses using the debtor approach. Based on provider and user engagement to date, this is not expected to cause issues for users. On an annual basis from 2017-18, a publication note will be included to direct those interested in creditor basis interest to the appropriate National Accounts publication data series. On a quarterly basis, the ABS will cease publication of the memorandum item on creditor interest expenses from September quarter 2019, likewise directing users to the appropriate National Accounts publication data series. The ABS will continue monitoring data sources and methods going forward to assess the feasibility of incorporating creditor interest into GFS in the future.

With the release of AGFS15, the ABS stated that in order to align with the IMF GFSM 2014, data on subsoil assets would be included in GFS balance sheets.

Following investigations into potential data sources, it has become clear that the inclusion of data on subsoil assets by jurisdiction is not possible due to the unavailability of suitable data at a jurisdiction level. Therefore data on subsoil assets will not be included in the annual GFS publication at this point.

The ABS currently models national data on mineral and energy resources, and further reports on subsoil assets to the IMF. Users who are interested in subsoil assets can find national data in Catalogue No. 5204.0 Australian System of National Accounts.

With the release of AGFS15, the ABS stated that a summary statement of explicit contingent liabilities and implicit contingent liabilities would be published in the annual GFS publication and contingent liabilities would be reported as a memorandum item.

Consultation with data providers has indicated that data on contingent liabilities is not consistently compiled and released by all jurisdictions. Therefore data on contingent liabilities will not be included in the annual GFS publication at this point. A publication note will be included to direct users to budget information on contingent liabilities where available.

The ABS will adopt a matrix presentation of gross and net public sector debt and other liabilities by instrument, sector and level of government. To support best practice reporting by Australia against IMF standards, the ABS will compile the debt matrix on an annual basis.
Under the previous AGFS05 framework the definition of net debt in GFS was equal to [deposits held plus proceeds from advances plus borrowing] minus [cash and deposits plus investments plus advances outstanding]. Under AGFS15 no single measure of debt will be presented, instead taking a broader view to provide information on overall government exposure to debt and other liabilities / equities. Statistics on all liabilities of government will be presented covering debt instruments, derivatives and equities by level of government. The GFS presentation of debt is based on the IMF staff discussion note What Lies Beneath: The Statistical Definition of Public Sector Debt , IMF Staff Discussion Note. IMF July 27, 2012.

The ABS will present a statement of total changes in net worth, combining elements of the statement of operations and the statement of stocks and flows in the one statement. The ABS currently compiles this statement for international reporting to the IMF from existing content in other statements. 

Paragraph 4.46 of the IMF GFSM 2014 notes that the statement of total changes in net worth provides a clear statistical explanation of the factors resulting in a change in the net worth of government. It explains the sources of changes in assets and liabilities from one reporting period to another in terms of transactions in revenue and expense and other economic flows.

An outline of the Statement is presented on p.315 of Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2015 (ABS Cat 5514.0)

Blank templates of selected revised data cubes to be included in the GFS annual publication from 2017-18 are included in the Data downloads section below.

The most significant presentation updates to the core GFS statements are discussed below.

The ordering of revenue and expense items in the GFS operating statement has been revised to improve readability and more closely align to the Australian Heads of Treasuries Uniform Presentation Framework (UPF). 
 

The ordering of receipt and payment items in the GFS cash flow statement has been revised to improve readability. The GFS Cash Surplus (+) / Deficit (-) item has been elevated to remove ambiguity around items contributing to the aggregate.

In the AGFS05 publication this item was referred to as the "Net cash flows from operating activities and net cash flows from investments in non-financial assets". Finance leases were removed from the GFS cash surplus / deficit derivation. These were included as a transitional measure during the GFS transition from cash to accrual accounting so as not to distort the time series. This change aligns with IMF GFSM 2014. A GFS Cash Surplus (+) / Deficit (-) (alternative) view has been added representing the Cash Surplus (+) / Deficit (-) including acquisitions of non-financial assets under new finance leases. 

The presentation order of assets on the GFS balance sheet has changed to display non-financial assets above financial assets. This results in financial assets and liabilities being presented adjacent to each other, emphasising the relationship between these instrument types. The new presentation also provides clearer distinction between produced and non-produced assets. Selected non-financial and financial asset and liability groups have been updated to include more detailed breakdowns. Net Debt has been removed due to the adoption of the matrix presentation for describing debt.

Under AGFS15, COFOG-A (Classification of the Functions of Government - Australia) replaces the former GPC (Government Purpose Classification) classification. COFOG provides greater alignment to international standards across countries compiling GFS. The purpose dimension of expense by purpose statements has been revised to reflect the new classification. The AGFS15 concepts, sources and methods manual indicated the intention to publish COFOG at the 3 digit level, however the GFS expense breakdowns will initially present a similar breakdown to that historically published.

For further information about the changes under AGFS15 and related statistics, contact the National Information and Referral Service on 1300 135 070, email client.services@abs.gov.au or email public.finance@abs.gov.au. The ABS Privacy Policy outlines how the ABS will handle any personal information that you provide to us.

This release previously used catalogue number 5512.0.55.001.