1301.0 - Year Book Australia, 2006

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Contents >> Chapter 29 - 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 production over time. Tables 29.4 and 29.5 show the GDP account in current prices for a number of years between 1975-76 and 2003-04. Table 29.4 provides a series of snapshots at five-yearly intervals to 1995-96, while table 29.5 shows annual time series from 1999-2000 to 2003-04. Table 29.6 shows expenditure on GDP in real or chain volume terms.

In real terms (i.e. after the effects of price change are removed from the dollar value of Australia's production), there was a fall in production during 1990-91. Since the recession in 1990-91, GDP has grown each year. Although growth in 1991-92 was relatively low (0.3%), by 1995-96 it had accelerated to 4.3%, a growth rate which was generally maintained until 1999-2000. In 2000-01 GDP recorded a smaller growth rate of 2.1% and then increased by 3.9% the following year. In 2003-04 GDP increased by 3.8%.

29.4 GDP ACCOUNT, Current prices - five-yearly intervals
		1975-76	1980-81	1985-86	1990-91	1995-96
		$m	$m	$m	$m	$m

Final consumption expenditure
	General government	14,699	27,093	49,713	74,545	92,860
	Households	45,459	84,097	144,502	233,726	299,595
	Total final consumption expenditure	60,158	111,190	194,215	308,272	392,455
Gross fixed capital formation
	Private	13,328	29,256	45,959	67,029	88,029
	Public	6,582	9,926	19,182	23,238	23,571
	Total gross fixed capital formation	19,910	39,182	65,141	90,267	111,600
Changes in inventories		180	446	870	-1,366	-813
Gross national expenditure		80,248	150,819	260,227	397,173	503,242
Exports of goods and services		11,225	22,604	38,948	66,259	99,095
less Imports of goods and services		11,163	25,530	47,199	66,948	101,078
Statistical discrepancy(a)		-714	-2,025	-3,393	1,320	-
Gross domestic product		79,597	145,868	248,583	397,804	501,257
Compensation of employees		43,919	75,044	123,434	192,723	241,100
Gross operating surplus		17,283	36,139	68,289	118,520	152,053
Gross mixed income		10,704	19,904	28,738	42,545	49,064
Total factor income		71,906	131,087	220,461	353,788	442,217
Taxes less subsidies on production and imports		7,895	14,753	27,805	43,407	59,041
Statistical discrepancy(b)		-204	29	317	609	-
Gross domestic product		79,597	145,868	248,583	397,804	501,257

(a) Expenditure-based. (b) Income-based. Source: Australian System of National Accounts, 2003-04 (5204.0).

29.5 GDP ACCOUNT, Current prices
		1999-2000	2000-01	2001-02	2002-03	2003-04
		$m	$m	$m	$m	$m

Final consumption expenditure
	General government	113,142	119,970	127,325	136,848	145,836
	Households	372,509	401,472	424,829	453,202	484,935
	Total final consumption expenditure	485,651	521,442	552,154	590,050	630,771
Gross fixed capital formation
	Private	125,711	120,246	134,623	156,671	169,681
	Public	24,898	25,115	27,314	28,131	29,568
	Total gross fixed capital formation	150,609	145,361	161,937	184,802	199,249
Changes in inventories		1,791	1,064	510	2,173	4,676
Gross national expenditure		638,051	667,867	714,601	777,026	834,695
Exports of goods and services		126,222	153,763	153,200	148,293	143,366
less Imports of goods and services		140,811	153,205	154,573	167,169	167,169
Statistical discrepancy(a)		-	-	-	-	2,333
Gross domestic product		623,461	668,426	713,229	758,147	813,225
Compensation of employees		302,116	321,023	337,398	359,189	379,344
Gross operating surplus		193,899	209,500	225,319	244,014	267,307
Gross mixed income		54,212	55,538	64,965	61,896	67,145
Total factor income		550,227	586,061	627,682	665,099	713,796
Taxes less subsidies on production and imports		73,227	82,365	85,547	93,048	99,485
Statistical discrepancy(b)		-	-	-	-	-56
Gross domestic product		623,461	668,426	713,229	758,147	813,225

(a) Expenditure-based. (b) Income-based. Source: Australian System of National Accounts, 2003-04 (5204.0).

29.6 EXPENDITURE ON GDP, Chain volume measures(a)(b)
		1999-2000	2000-01	2001-02	2002-03	2003-04
		$m	$m	$m	$m	$m

Final consumption expenditure
	General government	126,921	129,027	131,724	136,848	140,252
	Households	410,685	422,800	435,762	453,202	478,429
	Total final consumption expenditure	537,565	551,806	567,485	590,050	618,681
Gross fixed capital formation
	Private	133,238	122,144	135,273	156,671	167,591
	Public	25,111	25,103	27,280	28,131	29,662
	Total gross fixed capital formation	157,231	147,401	163,022	184,801	197,254
Domestic final demand		695,891	698,464	729,783	774,853	815,934
Changes in inventories		3,773	1,396	1,696	2,173	5,887
Gross national expenditure		697,931	699,966	731,919	777,026	821,821
Exports of goods and services		140,633	151,058	149,226	148,293	150,560
less Imports of goods and services		146,762	145,126	147,855	167,169	187,895
Statistical discrepancy(c)		-	-	-	-	2,268
Gross domestic product		692,889	707,140	734,575	758,147	786,754

(a) Reference year is 2002-03. (b) Chain volume measures for years other than 2002-03 and 2003-04 are not additive. (c) Expenditure-based. Source: Australian System of National Accounts, 2003-04 (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 29.7 and 29.8 show how the shares of total factor income accruing to wages and to profits have changed since 1967-68. (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 61.5% in 1974-75. The wages share has recovered somewhat from its low value of 52.8% in 1988-89, but at 53.1% for 2003-04 it remains below the levels achieved during most of the 1970s and early-1980s. The wages share has remained stable during the 1990s, at levels similar to those during the 1960s. The profits share of total factor income of 26.7% in 2003-04 is the highest share recorded since 1959-60.

Graph 29.7: WAGES SHARE OF TOTAL FACTOR INCOME

Graph 29.8: PROFITS SHARE OF 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. Tables 29.9 and 29.10 show the income account for a number of years between 1975-76 and 2003-04. Table 29.9 provides a series of snapshots at five-yearly intervals to 1995-96, while table 29.10 shows annual time series from 1999-2000 to 2003-04.

29.9 NATIONAL INCOME ACCOUNT, Current prices - five-yearly intervals
		1975-76	1980-81	1985-86	1990-91	1995-96
		$m	$m	$m	$m	$m

INCOME

Compensation of employees		43,919	75,044	123,434	192,723	241,100
Gross operating surplus		17,283	36,139	68,289	118,520	152,053
Gross mixed income		10,704	19,904	28,738	42,545	49,064
Taxes less subsidies on production and imports		7,895	14,753	27,805	43,407	59,041
Net primary income from non-residents		-1,202	-2,397	-6,853	-17,224	-19,533
Gross national income		78,599	143,443	241,413	379,971	481,725
Net secondary income from non-residents		-287	-441	-384	453	64
Gross disposable income		78,312	143,002	241,029	380,424	481,789

USE OF DISPOSABLE INCOME

Final consumption expenditure
	General government	14,699	27,093	49,713	74,545	92,860
	Households	45,459	84,097	144,502	233,726	299,595
	Total final consumption expenditure	60,158	111,190	194,215	308,272	392,455
Net saving(a)		5,878	9,617	7,393	8,189	10,866
Consumption of fixed capital		12,276	22,195	39,421	63,963	78,468
Total use of gross disposable income		78,312	143,002	241,029	380,424	481,789

(a) Net saving is derived as a balancing item. Source: Australian System of National Accounts, 2003-04 (5204.0).

29.10 NATIONAL INCOME ACCOUNT, Current prices
		1999-00	2000-01	2001-02	2002-03	2003-04
		$m	$m	$m	$m	$m

INCOME

Compensation of employees		302,116	321,023	337,398	359,189	379,344
Gross operating surplus		193,899	209,500	225,319	244,014	267,307
Gross mixed income		54,212	55,538	64,965	61,896	67,145
Taxes less subsidies on production and imports		73,227	82,365	85,547	93,048	99,485
Net primary income from non-residents		-18,249	-18,702	-19,300	-21,469	-23,301
Gross national income		605,205	649,724	693,929	736,678	789,980
Net secondary income from non-residents		218	32	-17	-214	-29
Gross disposable income		605,423	649,756	693,912	736,464	789,951

USE OF DISPOSABLE INCOME

Final consumption expenditure
	General government	113,142	119,970	127,325	136,848	145,836
	Households	372,509	401,472	424,829	453,202	484,935
	Total final consumption expenditure	485,651	521,442	552,154	590,050	630,771
Net saving(a)		22,447	23,230	28,165	27,006	33,198
Consumption of fixed capital		97,325	105,085	113,593	119,407	125,982
Total use of gross disposable income		605,423	649,756	693,912	736,464	789,951

(a) Net saving is derived as a balancing item. Source: Australian System of National Accounts, 2003-04 (5204.0).

Graph 29.11 shows net saving by institutional sector as a proportion of GDP for the years 1967-68 to 2003-04. Household net saving as a percentage of GDP generally rose between 1967-68 and 1974-75, but has fallen subsequently from its high of 9.8% 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 2003-04 consumption further exceeded household income, by $15.2 billion (b) (table 29.13). General government net saving was negative from 1975-76 to 1996-97 (except for 1988-89 and 1989-90). In 2003-04 it was positive at 1.0% of GDP ($8.5b). In 2003-04 net saving of non-financial corporations was 2.7% of GDP ($22.1b). 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 2003-04 net saving of financial corporations was 2.2% of GDP ($17.8b).

Graph 29.11: NET SAVING, By sector - share of GDP

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.

Tables 29.12 and 29.13 show the national capital account for a number of years between 1975-76 and 2003-04. Table 29.12 provides a series of snapshots at five-yearly intervals to 1995-96, while table 29.13 shows annual time series from 1999-2000 to 2003-04.

29.12 NATIONAL CAPITAL ACCOUNT, Current prices - five-yearly intervals
		1975-76	1980-81	1985-86	1990-91	1995-96
		$m	$m	$m	$m	$m

Net saving
	Non-financial corporations	-1,681	43	1,367	-9,222	4,116
	Financial corporations	747	341	-1,796	4,772	3,194
	General government	-734	-3,144	-9,106	-6,269	-11,642
	Households	7,547	12,377	16,928	18,909	15,198
	Total net saving	5,878	9,617	7,393	8,189	10,866
Consumption of fixed capital		12,276	22,195	39,421	63,963	78,468
Net capital transfers receivable from non-residents		-27	167	830	2,071	1,045
Gross saving and capital transfers		18,127	31,979	47,644	74,223	90,379
Gross fixed capital formation
	Private	13,328	29,256	45,959	67,029	88,029
	Public corporations	2,790	5,584	10,664	12,271	11,322
	General government	3,792	4,342	8,518	10,967	12,249
	Total gross fixed capital formation	19,910	39,182	65,141	90,267	111,600
Changes in inventories
	Private non-farm	91	115	882	-1,125	-487
	Farm and public authorities	89	331	-12	-241	-326
	Total changes in inventories	180	446	870	-1,366	-813
Acquisitions less disposals of non-produced non-financial assets		-	-	-	-7	-25
Statistical discrepancy(a)		-510	-2,053	-3,710	711	-
Net lending to non-residents		-1,454	-5,597	-14,658	-15,382	-20,382
Total capital accumulation and net lending		18,127	31,979	47,644	74,223	90,379

(a) Expenditure-based discrepancy less income-based discrepancy. Source: Australian System of National Accounts, 2003-04 (5204.0).

29.13 NATIONAL CAPITAL ACCOUNT, Current prices
		1999-00	2000-01	2001-02	2002-03	2003-04
		$m	$m	$m	$m	$m

Net saving
	Non-financial corporations	-6,489	-1,186	13,242	12,382	22,120
	Financial corporations	5,231	10,021	8,412	14,608	17,778
	General government	17,530	2,307	3,191	12,600	8,527
	Households	6,175	12,087	3,320	-12,584	-15,227
	Total net saving	22,447	23,230	28,165	27,006	33,198
Consumption of fixed capital		97,325	105,085	113,593	119,407	125,982
Net capital transfers receivable from non-residents		1,136	1,182	1,186	1,103	1,230
Gross saving and capital transfers		120,908	129,497	142,944	147,517	160,410
Gross fixed capital formation
	Private	125,711	120,246	134,623	156,671	169,681
	Public corporations	9,018	8,811	10,092	10,781	11,243
	General government	15,879	16,304	17,222	17,350	18,325
	Total gross fixed capital formation	150,609	145,361	161,937	184,802	199,249
Changes in inventories
	Private non-farm	1,864	1,601	284	2,691	5,240
	Farm and public authorities	-73	-537	226	-518	-564
	Total changes in inventories	1,791	1,064	510	2,173	4,676
Acquisitions less disposals of non-produced non-financial assets		83	73	170	112	31
Statistical discrepancy(a)		-	-	-	-	2,388
Net lending to non-residents		-31,567	-17,003	-19,674	-39,568	-45,934
Total capital accumulation and net lending		120,908	129,497	142,944	147,517	160,410

(a) Expenditure-based discrepancy less income-based discrepancy. Source: Australian System of National Accounts, 2003-04 (5204.0).

Graph 29.14 shows gross fixed capital formation (investment) by institutional sector as a proportion of GDP. For non-financial corporations this proportion generally fell during the 1970s, then rose to a peak of 13.1% in 1981-82. It has subsequently been above 10% except for the years 1991-92 to 1993-94. In 2003-04 investment by non-financial corporations was 10.7% of GDP. Household investment has generally remained at around 9% of GDP since the mid-1970s. In 2003-04 the ratio to GDP was 10.7%. General government investment as a proportion of GDP peaked at 4.6% in 1975-76. It has generally fallen since and was 2.3% of GDP in 2003-04. Financial corporations investment peaked in 1989-90 at 1.9% of GDP, and was 0.8% of GDP in 2003-04.

Graph 29.14: GROSS FIXED CAPITAL FORMATION, By sector - share of GDP

Graph 29.15 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 8.4%. Since then it has trended downwards, and in 2003-04 household lending was -6.3%. Non-financial corporations have been net borrowers over the whole period from 1967-68 to 2003-04, and the amounts borrowed have fluctuated significantly from year to year. As a proportion of GDP, their net borrowing was 1.4% in 2003-04. After being a net borrower throughout the 1980s, the financial corporations sector returned to being a net lender in 1990-91 and has remained so in all years since except for 1998-99. In 2003-04 financial corporations net lending represented 2.0% of GDP. After recording a record level of borrowing as a proportion of GDP in 1992-93 (6.4%), 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 2003-04 general government net lending represented 0.4% of GDP.

Graph 29.15: NET LENDING, By sector - share 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.

Tables 29.16 and 29.17 show the external account for a number of years between 1975-76 and 2003-04. Table 29.16 provides a series of snapshots at five-yearly intervals to 1995-96, while table 29.17 shows annual time series from 1999-2000 to 2003-04.

29.16 EXTERNAL ACCOUNT, Current prices - five-yearly intervals
				1975-76	1980-81	1985-86	1990-91	1995-96
				$m	$m	$m	$m	$m

Income account
	Income of non-residents
		Imports of goods and services		11,163	25,530	47,199	66,948	101,078
		Primary income receivable
			Compensation of employees	44	110	164	429	458
			Property income receivable	1,587	3,147	8,879	20,552	26,215
			Total primary income receivable	1,631	3,257	9,043	20,981	26,673
		Secondary income receivable		773	1,264	1,797	2,422	3,228
		Total income of non-residents		13,567	30,051	58,039	90,351	130,979
	Uses of income of non-residents
		Exports of goods and services		11,225	22,604	38,948	66,259	99,095
		Primary income payable
			Compensation of employees	59	119	165	432	610
			Property income payable	370	741	2,025	3,325	6,530
			Total primary income payable	429	860	2,190	3,757	7,140
		Secondary income payable		486	823	1,413	2,875	3,292
		Balance on external income account		1,427	5,764	15,488	17,460	21,452
		Total use of income of non-residents		13,567	30,051	58,039	90,351	130,979
Capital account
	Balance on external income account			1,427	5,764	15,488	17,460	21,452
	Capital transfers receivable			203	320	486	653	907
	less Capital transfers payable			176	487	1,316	2,724	1,952
	Total net capital transfers			27	-167	-830	-2,071	-1,045
	Gross saving and capital transfers			1,454	5,597	14,658	15,389	20,407
	Acquisitions less disposals of non-produced non-financial assets			-	-	-	7	25
	Net lending (+) / net borrowing (-)			1,454	5,597	14,658	15,382	20,382
	Total capital accumulation and net lending (+) / net borrowing (-)			1,454	5,597	14,658	15,389	20,407

Source: Australian System of National Accounts, 2003-04 (5204.0).

29.17 EXTERNAL ACCOUNT, Current prices
				1999-00	2000-01	2001-02	2002-03	2003-04
				$m	$m	$m	$m	$m

Income account
	Income of non-residents
		Imports of goods and services		140,811	153,205	154,573	167,169	167,169
		Primary income receivable
			Compensation of employees	963	1,057	1,196	1,324	1,616
			Property income receivable	31,055	33,923	33,776	35,455	37,516
			Total primary income receivable	32,018	34,980	34,972	36,779	39,132
		Secondary income receivable		4,407	4,421	4,297	4,447	4,302
		Total income of non-residents		177,236	192,606	193,842	208,395	210,603
	Uses of income of non-residents
		Exports of goods and services		126,222	153,763	153,200	148,293	143,366
		Primary income payable
			Compensation of employees	826	912	902	900	986
			Property income payable	12,943	15,366	14,770	14,410	14,845
			Total primary income payable	13,769	16,278	15,672	15,310	15,831
		Secondary income payable		4,625	4,453	4,280	4,233	4,273
		Balance on external income account		32,620	18,112	20,690	40,559	47,133
		Total use of income of non-residents		177,236	192,606	193,842	208,395	210,603
Capital account
	Balance on external income account			32,620	18,112	20,690	40,559	47,133
	Capital transfers receivable			1,199	1,260	1,357	1,301	1,399
	less Capital transfers payable			2,335	2,442	2,543	2,404	2,629
	Total net capital transfers			-1,136	-1,182	-1,186	-1,103	-1,230
	Gross saving and capital transfers			31,484	16,930	19,504	39,456	45,903
	Acquisitions less disposals of non-produced non-financial assets			-83	-73	-170	-112	-31
	Net lending (+) / net borrowing (-)			31,567	17,003	19,674	39,568	45,934
	Total capital accumulation and net lending (+) / net borrowing (-)			31,484	16,930	19,504	39,456	45,903

Source: Australian System of National Accounts, 2003-04 (5204.0).

Australia has generally been a net borrower of funds from overseas. In the Australian national accounts, this situation is reflected by a negative value for net lending to non-residents. 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 29.18 shows net lending to non-residents as a proportion of GDP since 1967-68.

Graph 29.18: NET LENDING TO NON-RESIDENTS, Share of GDP

The importance of foreign trade to the Australian economy is illustrated by graph 29.19, which shows the ratios of imports and exports of goods and services to GDP for the financial years 1967-68 to 2003-04. In 2003-04 the import ratio was 20.6% and the export ratio, which has fallen for the past three years, was 17.6%.