EXPLANATORY NOTES


INTRODUCTION

1 This publication contains detailed national accounts estimates which are provided for gross domestic product (GDP) and its components, the national income account, the national capital account, the national financial account and the national balance sheet. Income, capital and financial accounts and a balance sheet are provided for each sector of the economy. Also provided is a range of information classified by industry, details of capital formation (including capital stocks) and productivity statistics. For information about the conceptual framework of the national accounts and about the structure of the Australian system of national accounts, see The Australian National Accounts. For a list of other sources of national accounts information, see the national accounts theme page on the ABS website. For brief definitions and description of items in the national accounts, see Glossary.


CONCEPTS, SOURCES AND METHODS

2 Australia's national accounts statistics are compiled in accordance with international standards contained in the System of National Accounts. These standards have recently been updated and are presented in the System of National Accounts, 2008 (SNA08). Australia's application of these SNA standards is described in Australian System of National Accounts: Concepts, Sources and Methods (cat. no. 5216.0). The current version of this product reflects the System of National Accounts, 2008 (SNA08) concepts and was released in December 2013. This product is available on the ABS website <https://www.abs.gov.au>. This publication outlines major concepts and definitions, describes sources of data and methods used to derive annual and quarterly estimates for major aggregates at current prices and in chain volume terms, and discusses the accuracy and reliability of the national accounts. In addition, it includes documentation on input-output tables, financial accounts, capital stock, productivity measures, balance sheets and state accounts.

3 National estimates are based on the concepts and conventions embodied in SNA08. In the main, the national concepts are applicable to state accounts, but there are a number of conceptual and measurement issues that do not apply. Information on some of the more important conceptual, methodological and data issues relating to annual and quarterly estimates by state is provided in Chapter 21 of the Australian System of National Accounts: Concepts, Sources and Methods (cat. no. 5216.0).


GROSS DOMESTIC PRODUCT (GDP)

4 GDP can be derived by three broad approaches: the income approach (I), the expenditure approach (E) and the production approach (P). A description of each approach is provided in the following paragraphs. While each measure should, conceptually, deliver the same estimate of GDP, if the three measures are compiled independently using different data sources then different estimates of GDP result. Where estimates have been derived from balanced supply-use tables, annual estimates using the I, E and P approaches are identical.

5 Prior to 1994-95 the estimates using each approach are based on independent sources, and there are usually differences between the I, E and P estimates. Nevertheless, for these periods, a single estimate of GDP has been compiled. In chain volume terms, GDP is derived by averaging the chain volume estimates obtained from each of the three independent approaches. The current price estimate of GDP is obtained by inflating the average chain volume estimate by the implicit price deflator derived from the expenditure-based estimates.

6 As a result of the above methods:

• There is no statistical discrepancy for annual estimates from 1994-95 up to the year prior to the latest complete financial year, in either current price or volume terms
• For years prior to 1994-95, and the latest year, statistical discrepancies exist between estimates based on the I, E and P approaches and the single estimate of GDP, in both current prices and volume terms. These discrepancies are shown in the relevant tables.

Income approach (I)

7 GDP using the income approach is derived as the sum of compensation of employees, gross operating surplus, gross mixed income and taxes less subsidies on production and imports.


Expenditure approach (E)

8 GDP using the expenditure approach is derived as the sum of all final expenditures, changes in inventories and exports of goods and services less imports of goods and services. Volume estimates are derived for each of the components as well as for their sum.


Production approach (P)

9 GDP using the production approach is derived as the sum of gross value added for each industry, at basic prices, plus taxes less subsidies on products. Basic values represent the amounts received by producers, including the value of any subsidies on products, but before any taxes on products. The difference between the sum over all industries of gross value added at basic prices, and GDP at market (or purchasers) prices, is the value of taxes less subsidies on products.


FINANCIAL INTERMEDIATION SERVICES

10 In the national accounts, estimates are made for the output of banks and similar institutions who produce services through the provision of deposit and loan services. Often there is no single explicit charge for these services and instead the relevant financial institutions set interest rates such that a service margin can be earned. Thus, interest rates on loans are higher than would otherwise be the case if there were no service element provided and interest rates on deposits are lower than would otherwise be the case.

11 In order to appropriately account for this service component the output produced by these financial institutions is shown as being consumed by all sectors (households, corporations, NPISH and general government). In the sector income accounts the effect of allocating the output to consuming sectors is that part of the interest flow is deemed a payment for a service and the balance is shown as interest.

12 In interpreting the income accounts it is therefore necessary to regard the interest flow series as being a flow without a service element - i.e. a pure interest flow. In the case of loans the interest flow that is shown will be less than the observed interest payment made to the financial institution. In the case of deposits the interest flow that is shown will be greater than the observed interest payment made by the financial institution. For further information users should consult Chapter 22 of the Australian System of National Accounts: Concepts, Sources and Methods (cat. no. 5216.0).


INDUSTRY CLASSIFICATION

13 The industry statistics in this publication are based on the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0).


RELIABILITY AND FUTURE REVISIONS

14 National accounts estimates are prepared from a wide range of statistical sources, some of which are available quickly and some only with a delay of several years. Some are closely related to the desired national accounting basis, but others are not completely satisfactory in various respects, including coverage, concepts and timing. Most of the basic data derive from the general system of statistical surveys or as a by-product of government administrative processes. The frequency, detail and timeliness of these data sources are constrained by many factors, including the other purposes which they must serve. Any increase in timeliness of data is usually at the expense of detail, reliability or additional resources. Therefore, estimates for recent years may be subject to considerable revision as firmer data become available.


OTHER NATIONAL ACCOUNTS STATISTICAL PUBLICATIONS

15 This publication is part of a regular sequence of national accounts publications. The key national accounts publication is the quarterly national accounts released as Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) every three months approximately two months after the end of the reference period. The first estimates of national accounts for a particular financial year are released in the June quarter issue of cat. no. 5206.0, generally released in early September.

16 State estimates are compiled on a quarterly basis for the aggregate State final demand and its components. These results are published in cat. no. 5206.0. On an annual basis estimates of Gross state product (GSP) and other relevant state data are made for each state and territory. These are released in the publication Australian National Accounts: State Accounts (cat. no. 5220.0) shortly after the release of this publication and are fully consistent with the Australian level estimates contained in this publication.

17 Input-output tables are compiled periodically. Input-output tables are available in Australian National Accounts: Input Output Tables (cat. no. 5209.0.55.001). Related to this release is the detailed commodity information contained in Australian National Accounts: Input-Output Tables (Product Details) (cat. no. 5215.0.55.001). As part of the supply use framework for compiling a set of national accounts, supply and use (S-U) tables are also compiled annually.

18 Tourism satellite accounts, which estimate the contribution of tourism to the Australian economy, are compiled annually. They are released in the publication Australian National Accounts: Tourism Satellite Account (cat. no. 5249.0), around 6 months after the release of cat. no. 5204.0, and are fully consistent with the estimates contained in cat. no. 5204.0.


OTHER SOURCES OF NATIONAL ACCOUNTS INFORMATION

19 Most commonly national accounts information (in the form of feature articles and technical notes) is released in either the quarterly publication or this annual publication. Other publication vehicles are include Spotlight on National Accounts (cat. no. 5202.0), which publishes information papers on related topics. Economic statistics from the Australian National accounts are also published in Year Book Australia (cat. no. 1301.0).


OTHER ABS PUBLICATIONS

20 Current publications and other products released by the ABS are freely available from the ABS website <https://www.abs.gov.au>. The ABS also issues a daily Release Advice on the website which details products to be released in the week ahead.