PUBLIC/PRIVATE SECTOR CLASSIFICATION PRINCIPLES

8 Australian resident units (ie enterprises/legal entities) such as Telstra are classified as being public sector if the units are part of the general government sector or are controlled by units of the general government sector. All other resident units are classified as private sector.

9 More specifically the public sector comprises:

1. all resident units classified to the general government sector, including all government units and nonprofit institutions controlled by government;
2. all residents units that are classified to the non-financial corporations sector and are controlled by government units (public non-financial corporations); and
3. all resident units that are classified to the financial corporations sector and are controlled by government units (public financial corporations).

The second and third categories include quasi-corporations and market nonprofit institutions as well as corporations.

10 Central to the classification of units to the public sector is the issue of control by units of the general government sector. For the purposes of ABS statistics, control is determined using the United Nations System of National Accounts, 1993 (SNA 93) definition of control ie "the ability to determine general corporate policy by appointing appropriate directors, if necessary. Owning more than half the shares of a corporation is evidently a sufficient, but not a necessary condition for control" (para 4.30)".

11 Following the T1 and T2 sales the Australian Government owned 51.8% of Telstra shares. Using the above definition, Telstra was, for ABS statistical purposes, classified as a public non-financial corporation and all activities of Telstra were regarded as being part of the public sector.