4611.0 - Environment Expenditure, Local Government, Australia, 2000-01

ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 18/10/2002

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Explanatory Notes	INTERNATIONAL FRAMEWORKS 1 The ABS Environment and Natural Resources Survey was developed in the mid to late 1990s in response to calls from councils themselves, local government associations and agencies and other interested parties for comprehensive information on the financial activities of local government authorities related to managing the environment and natural resources. While all local governments keep financial records of their activities, there has in the past been limited information available on the financial transactions related specifically to managing local environments and natural resources. 2 Development of the Environment and Natural Resources Survey was based on international guidelines on environmental accounting. These guidelines are contained in the United Nations System of Integrated Environmental and Economic Accounting (SEEA 1993). SEEA, which is currently being revised, proposes that countries use both physical and financial measures to analyse environment-economy interactions. The SEEA manual provides detailed guidelines on how environmental accounts can be compiled using both physical and financial measures, and how these data can be linked to better inform decision-making. 3 The Environment and Natural Resources Survey of local government collects only financial information, and was developed to be consistent with the financial accounting guidelines provided in SEEA. The survey also drew upon guidelines on measuring financial transactions related to environmental management contained in the European Statistical Agency's (Eurostat's) European System for the Collection of Economic Information on the Environment (known by the French acronym, SERIEE 1994). SERIEE proposes that relevant financial transactions can be grouped under two main headings, 'environmental protection', and 'natural resource management'. For each of these activities it is possible to compile a separate account of relevant financial transactions. 4 The main distinction between the 'environment protection' and 'natural resource management' accounts is that environment protection account covers activities related specifically to protecting the environment from the harmful effects of socio-economic activities, by preventing, reducing or repairing damage where it occurs. The natural resource management account covers activities which involve using (and conserving) natural resources for social and economic purposes (such as providing drinking water and water for industrial purposes). 5 For the local government collection, these international guidelines were used for the following purposes: to help define the activities that are included in the survey to ensure comprehensive coverage of relevant activities to determine the types of financial information collected and to avoid double-counting. 6 Use of these guidelines also ensures that information published from the local government collection is comparable between local governments in different states, between levels of government, and between the local government sector and other industry sectors. It also permits international comparisons. THE ENVIRONMENT PROTECTION EXPENDITURE ACCOUNT 7 The Environment Protection Expenditure Account is the most developed of the monetary accounts proposed by SEEA. It describes the activities occurring in an economy aimed at protecting the environment; that is, the cost of protecting the environment from damage from development and the cost of remedying damage after it has occurred. 8 Environment protection activities are classified into a number of categories based upon the UN Classification of Environmental Protection Activities, including: Waste water management and water protection Solid waste management Protection of biodiversity and habitat Protection of soil resources Other environmental protection activities 9 For the local government survey, the ABS added a category of 'protecting cultural heritage' in response to requests from councils involved in piloting the survey for this information to be collected as a distinct category of activity. The activities covered by each of these categories are outlined in the main findings, or in the publication's glossary. 10 In seeking to comprehensively measure economic transactions related to these categories of activity, the environment protection account focuses upon identifying and measuring three distinct types of economic activity the purchase or use of environment protection products and services the supply of the environment protection products and services and the financing of environment protection products and services. 11 To obtain this information in relation to local government requires detailed measures of councils' current expenses (such as wages and salaries, payments to contractors, materials and fuels, etc.) related to environmental protection products or services for each category of activity. Information is also required on councils' capital expenditure on fixed assets (such as machinery and equipment) needed to undertake these activities. Information was also collected on revenue received for supplying such services in order to measure the extent to which local governments supply environment protection services. In addition, information was collected on how much money local government received from other levels of government, from businesses and from households, to finance its activities in this area. 12 The survey showed that councils are major suppliers of services related to waste water (sewage) and solid waste management. They are often - with the exception of some metropolitan councils - the only provider of these services. For these environment protection activities it is often possible to recover some or all of the costs of providing the service, mainly in the form of rates paid by households and businesses. 13 Other environmental protection activities, such as protecting biodiversity and habitats or protection of soil resources are typically carried out at a net cost to councils, that is, expenditure usually exceeds revenue in these activities. Revenue for such activities comes from a range of sources, including subsidies and grants from state and Commonwealth governments earmarked for environmental protection activities and other areas of council budgets not related to environmental protection. 14 The concepts and methodologies used to estimate environment protection expenditure for Australia as a whole, and for local government, are discussed in more detail in Environment Protection Expenditure, Australia (Cat. no. 4603.0). NATURAL RESOURCE MANAGEMENT ACCOUNT 15 The natural resource management account describes the extraction of natural resources and the expenditure on prolonging the use of a resource through improvements in resource efficiency. SERIEE proposes three main categories of natural resource management: Water supply (inland water) Land management Other resource management. 16 Councils often have a dual role in the management of natural resources. For example, many councils are involved in supplying water for use by householders while at the same time restrictions are imposed to limit that usage. Land is developed for expansion of townships and for industrialisation while controls are placed on the use of land taking into account economic, social and environmental considerations. Management decisions by councils on such issues as the rate at which resources like water and land are used for socio-economic purposes, and the locations from which such resources are drawn, can have a significant impact on the local environment. METHODOLOGY 17 The statistics presented in this publication are estimated from a survey of local councils, conducted under the Census and Statistics Act 1905. The survey is a mail out questionnaire on environment protection and natural resources management. 18 The survey was mailed to approximately half of the total number of local government authorities, not including Aboriginal regional councils, which existed in November 2001. The sample was representative of councils in all states, of councils with large, medium and small populations, and of councils in urban, provincial, fringe metropolitan and rural locations. 19 For the purpose of this survey, the councils were deemed to be small if they had a population of less than 10,000, medium sized if they had a population of between 10,000 and 39,999 and large if their population was greater than 40,000. 20 The estimation process used the number raised estimator. The majority of aggregated data presented in the results have a standard error of less than 15%. Most of the totals presented have a standard error of less than 10%. Standard errors for the state level and council size estimates are sometimes high because of the smaller sample of councils contributing to the estimates. Estimates with a standard error of more than 25% have been marked with a . Estimates with a standard error of more than 50% have been marked with a . Estimates marked with either one or two stars should be used with caution. Some cells have been combined due to confidentiality and high standard errors. 21 Implementation by councils of Australian Accounting Standard 27 has resulted in a change in the accounting systems used by local governments from cash accounting to accrual accounting. This means that estimates of the proportion of total council transactions related to environment and natural resource management presented in the overview of results section of this publication are not directly comparable with the proportions presented in the earliest edition of this publication (Environment Expenditure, Local Government, Experimental Estimates, Australia: 1997-98). The change to accrual based accounting may also have influenced some of the estimates presented for 1998-99. 22 Between the 1998-99 and 1999-2000 collection years some changes were made to the survey form. The redesigned form was intended to reduce the burden of the survey on councils. Many of the questions asked previously were combined into fewer questions, and depreciation was dropped entirely from the survey. The change in the form design may have impacted on the number of transactions recorded by councils. 23 Per capita figures are based on council population figures (estimated residential population as at June 2001). These figures were derived from Regional Population Growth, Australia and New Zealand* (Cat.no.3218.0). FUTURE DIRECTIONS AND ADDITIONAL INFORMATION 24 The collection of information on local government environment-related transactions was initially a collaborative effort with the National Office of Local Government, University of Canberra and the Australian Bureau of Statistics, as well as numerous local government councils that voluntarily participated in piloting the survey between 1996 and 1999. 25 An aim of this collection is to contribute to the development by local governments of accounting tools which may assist with improved management of local environments and natural resources. They also measure and demonstrate the significant financial contribution being made each year by the local government sector to the wider effort by all Australian governments aimed at protecting the environment and managing natural resources sustainably. These statistics also contribute to the development of more detailed environment protection expenditure information for Australia as a whole. 26 Limited additional data may be available from the collection. Inquiries about data services can be made to Bob Harrison, Director, Environment and Energy Statistics Section, on Canberra 02 6252 7369. Document Selection These documents will be presented in a new window.