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Australia's net saving is a key economic aggregate as it is the primary means by which the nation's real wealth increases over time. Wealth in the national accounting sense consists of holdings in produced assets (buildings, machinery and equipment, livestock, etc), non-produced assets (land, sub-soil assets, native standing timber) and financial assets less liabilities. No accommodation for human capital or consumer durable accumulation is made in the national balance sheet proper.
In Australia's national accounts, net national saving as a proportion of gross domestic product has fallen from an average of 9 per cent in the 1960s to less than 2 per cent in the 1990s - a trend observed in the UK and USA as well as other developed countries. Alternative measures of income and saving to those in the national accounts can be developed, helping to provide a different perspective on wealth accumulation and consumption decisions. They can also exhibit a different time trend to the official measures.
This paper draws out the accounting relationships between income, consumption, saving, investment and wealth generation in the national accounts and provides some alternative constructs of income and saving that could be preferred for some types of economic analysis.
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