1301.0 - Year Book Australia, 2007

ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 24/01/2007

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Contents >> National Accounts >> National income, expenditure and product accounts

NATIONAL INCOME, EXPENDITURE AND PRODUCT ACCOUNTS

The Australian national income, expenditure and product accounts are compiled and published in some detail every quarter, in Australian National Accounts: National Income, Expenditure and Product (5206.0), and in greater detail once a year, in Australian System of National Accounts (5204.0).

GDP ACCOUNT

The GDP account indicates changes in Australian economic activity over time. Table 29.3 shows annual time series from 2000-01 to 2004-05. Table 29.4 shows expenditure on GDP in volume terms.

29.3 GDP ACCOUNT, Current prices
		2000-01	2001-02	2002-03	2003-04	2004-05
		$m	$m	$m	$m	$m

Final consumption expenditure
	General government	125,264	132,301	141,564	150,328	162,993
	Households	411,024	434,552	462,095	493,287	522,551
	Total final consumption expenditure	536,288	566,853	603,659	643,615	685,544
Gross fixed capital formation
	Private	126,443	141,152	165,081	181,019	193,320
	Public	25,031	27,679	28,708	30,704	33,590
	Total gross fixed capital formation	151,474	168,831	193,788	211,722	226,910
Changes in inventories		818	-102	2,829	5,944	2,123
Gross national expenditure		688,580	735,582	800,276	861,282	914,577
Exports of goods and services		154,669	154,778	149,691	144,676	163,845
less Imports of goods and services		153,910	154,580	167,170	167,706	189,156
Statistical discrepancy(a)		-	-	-	-	2,258
Gross domestic product		689,340	735,783	782,798	838,251	891,524
Compensation of employees		339,301	356,095	377,268	398,662	426,419
Gross operating surplus		210,199	225,841	242,162	263,623	286,978
Gross mixed income		59,088	69,645	70,698	76,849	76,971
Total factor income		608,588	651,581	690,128	739,134	790,368
Taxes less subsidies on production and imports		80,752	84,202	92,670	99,117	103,281
Statistical discrepancy(b)		-	-	-	-	-2,125
Gross domestic product		689,340	735,783	782,798	838,251	891,524

(a) Expenditure-based. (b) Income-based.

Source: Australian System of National Accounts, 2004-05 (5204.0).

In volume terms (i.e. after the effects of price change are removed from the dollar value of Australia's production) GDP recorded a growth rate of 2.3% in 2004-05. This was lower than the 4.0% recorded in the previous year.

29.4 EXPENDITURE ON GDP, Volume measures(a)(b)
		2000-01	2001-02	2002-03	2003-04	2004-05
		$m	$m	$m	$m	$m

Final consumption expenditure
	General government	136,601	140,386	145,139	150,329	155,940
	Households	438,348	451,190	467,551	493,287	514,349
	Total final consumption expenditure	574,915	591,545	612,663	643,615	670,289
Gross fixed capital formation
	Private	130,842	143,672	167,019	181,019	189,283
	Public	25,429	27,704	28,630	30,704	33,071
	Total gross fixed capital formation	156,317	171,424	195,653	211,722	222,354
Domestic final demand		730,552	762,580	808,291	855,338	892,644
Changes in inventories		2,195	31	1,030	5,944	2,485
Gross national expenditure		732,193	763,405	810,358	861,282	895,129
Exports of goods and services		144,862	143,763	142,674	144,676	148,587
less Imports of goods and services		129,787	131,621	148,809	167,706	188,216
Statistical discrepancy(c)		-	-	-	-	2,264
Gross domestic product		752,434	780,817	806,161	838,251	857,765

(a) Reference year is 2003-04. (b) Volume measures for years other than 2003-04 and 2004-05 are not additive. (c) Expenditure-based.

Source: Australian System of National Accounts, 2004-05 (5204.0).

The GDP account can also be used to show changes in the share of income accruing to labour (i.e. compensation of employees) compared with the share accruing to capital (i.e. profits, defined as the gross operating surplus of non-financial and financial corporations). Graphs 29.5 and 29.6 show how the shares of total factor income accruing to wages and to profits have changed since 1968-69. (Total factor income is equal to the sum of compensation of employees, gross operating surplus and gross mixed income.)

The highest recorded value of the wages share of total factor income was 62.6% in 1974-75. The wages share in 2004-05 was 54.0%, relatively unchanged from the previous year. The wages share has not been at this level since 1988-89. The profits share of total factor income has been growing steadily since 1998-99. In 2004-05 profits share was 26.2%, the highest share recorded.

29.6 PROFITS SHARE OT TOTAL FACTOR INCOME

NATIONAL INCOME ACCOUNT

The national income account shows the sources of national income and how much of this income is spent on final consumption. That part of income which is not spent in this way is saving. Table 29.7 shows annual time series from 2000-01 to 2004-05.

29.7 NATIONAL INCOME ACCOUNT, Current prices
		2000-01	2001-02	2002-03	2003-04	2004-05
		$m	$m	$m	$m	$m

INCOME

Compensation of employees		339,301	356,095	377,268	398,662	426,419
Gross operating surplus		210,199	225,841	242,162	263,623	286,978
Gross mixed income		59,088	69,645	70,698	76,849	76,971
Taxes less subsidies on production and imports		80,752	84,202	92,670	99,117	103,281
Net primary income from non-residents		-18,737	-19,667	-22,491	-23,734	-31,216
Gross national income		670,603	716,116	760,307	814,517	862,433
Net secondary income from non-residents		32	-17	-214	-269	-420
Gross disposable income		670,635	716,099	760,093	814,248	862,013

USE OF DISPOSABLE INCOME

Final consumption expenditure
	General government	125,264	132,301	141,564	150,328	162,993
	Households	411,024	434,552	462,095	493,287	522,551
	Total final consumption expenditure	536,288	566,853	603,659	643,615	685,544
Net saving(a)		26,709	33,452	34,405	42,384	41,698
Consumption of fixed capital		107,638	115,794	122,029	128,249	134,771
Total use of gross disposable income		670,635	716,099	760,093	814,248	862,013

(a) Net saving is derived as a balancing item.

Source: Australian System of National Accounts, 2004-05 (5204.0).

Graph 29.8 shows net saving by institutional sector as a proportion of GDP for the years 1968-69 to 2004-05. Household net saving as a percentage of GDP generally rose between 1968-69 and 1974-75. Since then it has fallen from a high of 11.4% in 1974-75 to a position in 2002-03 where consumption by households exceeded income and, consequently, household net saving was negative for the first time. In 2004-05 consumption exceeded household income, by $18.4 billion (b) (table 29.9).

General government net saving was negative from 1974-75 to 1996-97 (except for 1988-89). In 2004-05 it was positive at 2.4% of GDP ($21.4b). In 2004-05 net saving of non-financial corporations was 1.6% of GDP ($14.1b). Net saving of financial corporations was negative from 1981-82 to 1986-87, the only period for which this sector has recorded negative net saving. In 2004-05 net saving of financial corporations was 2.8% of GDP ($24.6b).

NATIONAL CAPITAL ACCOUNT

The national capital account shows how the saving from the national income account and consumption of fixed capital (depreciation) are used to finance gross fixed capital formation. If, as is currently the case for Australia, the nation's saving and consumption of fixed capital are not sufficient to pay for all the fixed capital needed for Australian production, the shortfall must be borrowed from overseas. The amount borrowed from overseas is shown in the national capital account as a negative entry for net lending to non-residents. Table 29.9 shows annual time series from 2000-01 to 2004-05.

29.9 NATIONAL CAPITAL ACCOUNT, Current prices
		2000-01	2001-02	2002-03	2003-04	2004-05
		$m	$m	$m	$m	$m

Net saving
	Non-financial corporations	1,788	12,275	13,190	19,095	14,135
	Financial corporations	12,413	9,040	14,579	19,667	24,557
	General government	2,206	6,652	16,870	18,951	21,413
	Households	10,303	5,486	-10,235	-15,329	-18,416
	Total net saving	26,709	33,452	34,405	42,384	41,698
Consumption of fixed capital		107,638	115,794	122,029	128,249	134,771
Net capital transfers receivable from non-residents		1,182	1,186	1,103	1,167	1,203
Gross saving and capital transfers		135,529	150,432	157,537	171,800	177,672
Gross fixed capital formation
	Private	126,443	141,152	165,081	181,019	193,320
	Public corporations	8,763	10,126	10,939	11,655	13,917
	General government	16,268	17,553	17,769	19,048	19,673
	Total gross fixed capital formation	151,474	168,831	193,788	211,722	226,910
Changes in inventories
	Private non-farm	1,342	-300	3,347	6,281	1,940
	Farm and public authorities	-524	198	-518	-337	182
	Total changes in inventories	818	-102	2,829	5,944	2,123
Acquisitions less disposals of non-produced non-financial assets		73	170	112	72	3
Statistical discrepancy(a)		-	-	-	-	4,383
Net lending to non-residents		-16,837	-18,470	-39,193	-45,938	-55,747
Total capital accumulation and net lending		135,529	150,432	157,537	171,800	177,672

(a) Expenditure-based discrepancy less income-based discrepancy.

Source: Australian System of National Accounts, 2004-05 (5204.0).

Graph 29.10 shows gross fixed capital formation (investment) by institutional sector as a proportion of GDP. For non-financial corporations this proportion has generally been in the range 10-12% of GDP since 1968-69. In 2004-05 investment by non-financial corporations was 11.5% of GDP. Household investment has generally remained at around 9% of GDP since the mid-1970s. However, over the past three years household investment has risen to over 10% of GDP. In 2004-05 the ratio of household investment to GDP was 10.8%. General government investment as a proportion of GDP peaked at 4.6% in 1975-76. It has generally fallen since and was 2.2% of GDP in 2004-05. Financial corporations investment peaked in 1989-90 at 2.0% of GDP, and was 0.9% of GDP in 2004-05.

Graph 29.11 shows net lending by institutional sector as a proportion of GDP. A positive percentage for a sector indicates that it is a net lender to other sectors; a negative percentage indicates that it is a net borrower.

The household sector has been a net lender for most years. As a proportion of GDP, net lending by households peaked in 1974-75 at 8.3%. Since then it has trended downwards and the household sector has changed from a net lender to a net borrower. In 2004-05 household lending was -7.1%. Non-financial corporations have been net borrowers over the whole period from 1967-68 to 2004-05 (except for 1993-94), and the amounts borrowed have fluctuated significantly from year to year. As a proportion of GDP, their net borrowing was 2.9% in 2004-05.

In 2004-05 financial corporations net lending represented 2.5% of GDP, the highest recorded level. After recording a record level of borrowing as a proportion of GDP in 1992-93 (5.9%), general government borrowing steadily declined. From 1997-98 to 1999-2000 the sector was a net lender and in 2000-01 and 2001-02 general government was a net borrower before returning to being a net lender in 2002-03. In 2004-05 general government net lending represented 1.7% of GDP.

EXTERNAL ACCOUNT

The external account is derived from the detailed balance of payments current and capital accounts (see the International accounts and trade chapter). It shows Australia's exports and imports, incomes and transfers received by Australian residents from non-residents, and incomes and transfers payable to non-residents by Australian residents. The balance on the external account is net lending to non-residents. This is the same as the balance in the national capital account. Table 29.12 shows the external account for the last five years.

29.12 EXTERNAL ACCOUNT, Current prices

			2000-01	2001-02	2002-03	2003-04	2004-05
			$m	$m	$m	$m	$m

INCOME ACCOUNT

Income of non-residents
	Imports of goods and services		153,910	154,580	167,170	167,706	189,156
	Primary income receivable
		Compensation of employees	1,057	1,196	1,324	1,619	1,743
		Property income receivable	33,958	34,057	36,666	38,901	49,991
		Total primary income receivable	35,015	35,253	37,990	40,520	51,734
	Secondary income receivable		4,421	4,297	4,447	4,542	4,689
	Total income of non-residents		193,346	194,130	209,607	212,768	245,579
Uses of income of non-residents
	Exports of goods and services		154,669	154,778	149,691	144,676	163,845
	Primary income payable
		Compensation of employees	912	902	900	989	1,108
		Property income payable	15,366	14,684	14,599	15,797	19,410
		Total primary income payable	16,278	15,586	15,499	16,786	20,518
	Secondary income payable		4,453	4,280	4,233	4,273	4,269
	Balance on external income account		17,946	19,486	40,184	47,033	56,947
	Total use of income of non-residents		193,346	194,130	209,607	212,768	245,579

CAPITAL ACCOUNT

Balance on external income account			17,946	19,486	40,184	47,033	56,947
Capital transfers receivable			1,260	1,357	1,301	1,404	1,546
less Capital transfers payable			2,442	2,543	2,404	2,571	2,749
Total net capital transfers			-1,182	-1,186	-1,103	-1,167	-1,203
Gross saving and capital transfers			16,764	18,300	39,081	45,866	55,744
Acquisitions less disposals of non-produced non-financial assets			-73	-170	-112	-72	-3
Net lending (+) / net borrowing (-)			16,837	18,470	39,193	45,938	55,747
Total capital accumulation and net lending (+) / net borrowing (-)			16,764	18,300	39,081	45,866	55,744

Source: Australian System of National Accounts, 2004-05 (5204.0).

Australia has generally been a net borrower of funds from overseas. The only exception to this pattern was in 1972-73. Net borrowing from non-residents (i.e. negative net lending to non-residents), expressed as a proportion of GDP, increased significantly during the early-1980s and has remained at relatively high levels since then. Graph 29.13 shows net lending to non-residents as a proportion of GDP since 1968-69.

29-13 NET LENDING TO OVERSEAS, Relative to GDP

The importance of foreign trade to the Australian economy is illustrated by graph 29.14, which shows the ratios of imports and exports of goods and services to GDP. In 2004-05 the import ratio was 21.2% and the export ratio, which had fallen for the previous three years, was 18.4%.

29.14 EXPORTS AND IMPORTS, Relative to GDP