NATIONAL INCOME, EXPENDITURE AND PRODUCT ACCOUNTS

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


GDP account

The GDP account indicates changes in Australian economic activity over time. Table 30.3 shows annual time series from 2003-04 to 2007-08. Table 30.4 shows expenditure on GDP in volume terms.

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 3.7% in 2007-08. This was higher than the 3.3% recorded in the previous year.

30.3 GDP ACCOUNT, Current prices
		2003-04	2004-05	2005-06	2006-07	2007-08
		$m	$m	$m	$m	$m
Final consumption expenditure
	General government	150 378	162 499	173 139	186 205	200 129
	Households	492 681	521 028	547 458	584 875	626 793
	Total final consumption expenditure	643 059	683 527	720 597	771 080	826 921
Gross fixed capital formation
	Private	183 059	197 385	220 823	238 948	269 851
	Public	30 701	34 354	39 939	45 758	50 201
	Total gross fixed capital formation	213 760	231 739	260 762	284 707	320 052
Changes in inventories		6 036	5 000	612	2 652	4 694
Gross national expenditure		862 854	920 266	981 972	1 058 438	1 151 668
Exports of goods and services		147 219	167 562	196 274	215 695	234 862
less Imports of goods and services		168 714	190 188	210 794	228 452	254 783
Statistical discrepancy(a)		-	-	-	-	425
Gross domestic product		841 351	897 642	967 454	1 045 674	1 132 172
Compensation of employees		400 124	431 118	464 511	501 011	539 020
Gross operating surplus		264 078	284 467	312 417	338 626	373 684
Gross mixed income		78 358	80 260	83 064	93 151	97 495
Total factor income		742 560	795 845	859 992	932 788	1 010 199
Taxes less subsidies on production and imports		98 791	101 800	107 458	112 886	121 672
Statistical discrepancy(b)		-	-	-	-	301
Gross domestic product		841 351	897 642	967 454	1 045 674	1 132 172
- nil or rounded to zero (including null cells)
(a) Expenditure-based.
(b) Income-based.
Source: ABS Australian System of National Accounts, 2007–08 (5204.0).

30.4 EXPENDITURE ON GDP, Volume measures(a)(b)
		2003-04	2004-05	2005-06	2006-07	2007-08
		$m	$m	$m	$m	$m
Final consumption expenditure
	General government	170 057	176 447	180 839	186 205	192 582
	Households	524 580	547 884	562 093	584 875	606 435
	Total final consumption expenditure	694 560	724 303	742 908	771 080	799 017
Gross fixed capital formation
	Private	198 166	209 562	227 868	238 948	263 571
	Public	35 314	38 400	42 042	45 758	48 666
	Total gross fixed capital formation	233 564	247 997	269 936	284 707	312 237
Domestic final demand		928 276	972 418	1 012 854	1 055 785	1 111 254
Changes in inventories		6 209	6 102	2 298	2 652	4 346
Gross national expenditure		933 984	977 468	1 014 831	1 058 437	1 115 600
Exports of goods and services		197 382	203 407	207 886	215 695	225 345
less Imports of goods and services		173 993	195 124	209 246	228 452	257 374
Statistical discrepancy(c)		-	-	-	-	585
Gross domestic product		956 017	982 786	1 012 269	1 045 674	1 084 156
- nil or rounded to zero (including null cells)
(a) Reference year is 2006–07.
(b) Volume measures for years other than 2006–07 and 2007–08 are not additive.
(c) Expenditure-based.
Source: ABS Australian System of National Accounts, 2007–08 (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 30.5 and 30.6 show how the shares of total factor income accruing to wages and to profits have changed since 1965-66. (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 62.4% in 1974-75. The wages share in 2007-08 was 53.4%, slightly lower than the previous year (53.7%), and one of the lowest levels recorded in time series presented. The profits share of total factor income has been growing steadily since 1998-99. In 2007-08 profits share was 26.5%, the highest share recorded.






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 30.7 shows annual time series from 2003-04 to 2007-08.

Graph 30.8 shows net saving by institutional sector as a proportion of GDP for the years 1965-66 to 2007-08. Household net saving as a percentage of GDP generally fluctuated between 6% and 8% between 1965-66 and 1971-72. It then rose to a peak of 11.5% in 1974-75. The series then gradually decreased, eventually reaching its lowest at -1.8% of GDP in 2003-04. Household net saving as a proportion of GDP remained negative until 2004-05 and since then has turned positive and in 2007-08 it was 0.4% of GDP, and household income exceeded consumption by $4.0 billion (b) (table 30.9).

General government net saving as a proportion of GDP was positive from 1965-66 to 1973-74 before turning negative from 1974-75 to 1996-97 (except for 1988-89). It has remained positive since 1997-98. In 2007-08 general government net saving was positive at 2.9% of GDP ($32.9b). In 2007-08 net saving of non-financial corporations was 0.1% of GDP ($0.6b). Net saving of financial corporations has been positive at about 1% to 2% of GDP for virtually all of its history. In 2007-08 net saving of financial corporations was 3.8% of GDP ($43.0b).

30.7 NATIONAL INCOME ACCOUNT, Current prices
		2003-04	2004-05	2005-06	2006-07	2007-08
		$m	$m	$m	$m	$m
Income
Compensation of employees		400 124	431 118	464 511	501 011	539 020
Gross operating surplus		264 078	284 467	312 417	338 626	373 684
Gross mixed income		78 358	80 260	83 064	93 151	97 495
Taxes less subsidies on production and imports		98 791	101 800	107 458	112 886	121 672
Net primary income from non-residents		-23 840	-33 330	-37 670	-45 903	-50 197
Gross national income		817 511	864 315	929 780	999 771	1 081 674
Net secondary income from non-residents		-255	-369	-649	-296	-141
Gross disposable income		817 256	863 946	929 131	999 475	1 081 533
Use of gross disposable income
Final consumption expenditure
	General government	150 378	162 499	173 139	186 205	200 129
	Households	492 681	521 028	547 458	584 875	626 793
	Total final consumption expenditure	643 059	683 527	720 597	771 080	826 921
Net saving(a)		45 847	45 491	62 407	69 293	82 306
Consumption of fixed capital		128 350	134 927	146 126	159 102	172 306
Total use of gross disposable income		817 256	863 946	929 131	999 475	1 081 533
(a) Net saving is derived as a balancing item.
Source: ABS Australian System of National Accounts, 2007–08 (5204.0).

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 30.9 shows the annual time series from 2003-04 to 2007-08.

Graph 30.10 shows gross fixed capital formation (investment) by institutional sector as a proportion of GDP. Investment by non-financial corporations generally fell during the late 1970's but stablised in the 1980s and 1990s (it has generally been above 10% of GDP). In 2007-08 investment by non-financial corporations was 14.7% of GDP. Household investment as a proportion of GDP remained steady at around 10% of GDP throughout the time series and in 2007-08 the ratio to GDP was 10.3%. General government investment as a proportion of GDP peaked at 4.6% in 1975-76 and 1986-87, and has generally fallen since then to around 2.5% of GDP. It was 2.6% of GDP in 2007-08. The highest ever level of Financial corporations investment, expressed as a proportion of GDP, was recorded in 1989-90 (2.0%). It has generally fallen since and was 0.7% of GDP in 2007-08.

Graph 30.11 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.

30.9 NATIONAL CAPITAL ACCOUNT, Current prices
		2003-04	2004-05	2005-06	2006-07	2007-08
		$m	$m	$m	$m	$m
Net saving
	Non-financial corporations	23 011	14 016	11 689	4 882	609
	Financial corporations	21 660	22 205	21 033	24 277	42 975
	General government	16 546	21 094	29 522	28 651	32 894
	Households	-15 380	-10 497	138	11 093	4 007
	Total net saving	45 847	45 491	62 407	69 293	82 306
Consumption of fixed capital		128 350	134 927	146 126	159 102	172 306
Net capital transfers receivable from non-residents		1 444	1 523	1 729	1 960	2 250
Gross saving and capital transfers		175 641	181 942	210 263	230 355	256 862
Gross fixed capital formation
	Private	183 059	197 385	220 823	238 948	269 851
	Public corporations	11 957	14 038	16 941	18 756	20 675
	General government	18 744	20 316	22 999	27 002	29 526
	Total gross fixed capital formation	213 760	231 739	260 762	284 707	320 052
Changes in inventories
	Private non-farm	6 204	4 761	-386	2 923	4 625
	Farm and public authorities	-168	239	998	-271	69
	Total changes in inventories	6 036	5 000	612	2 652	4 694
Acquisitions less disposals of non-produced non-financial assets		72	-71	3	-423	-8
Statistical discrepancy(a)		-	-	-	-	124
Net lending to non-residents		-44 218	-54 731	-51 113	-56 573	-68 001
Total capital accumulation and net lending		175 641	181 942	210 263	230 355	256 862
- nil or rounded to zero (including null cells)
(a) Expenditure-based discrepancy less income-based discrepancy.
Source: ABS Australian System of National Accounts, 2007–08 (5204.0).

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 the household sector changed from a net lender to a net borrower in 1988-89,1994-95 and 1997-98. Since 1997-98 it has been a net borrower and in 2007-08 household net borrowing was 4.1%. Non-financial corporations have been net borrowers over the entire period 1965-66 to 2007-08 (except for 1993-94), and the amounts borrowed have fluctuated significantly from year to year. As a proportion of GDP, their net borrowing was 7.4% in 2007-08.

In 2007-08 net lending of financial corporations represented 3.7% of GDP, the highest recorded level. After recording a record level of borrowing as a proportion of GDP in 1992-93 (5.7%), general government borrowing steadily declined. From 1997-98 to 1999-2000 the sector was a net lender and in 2000-01 general government was a net borrower before returning to being a net lender from 2001-02 to 2007-08. In 2007-08 general government net lending represented 1.6% 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 30.12 shows the external account for the last five years.

Australia has generally been a net borrower of funds from overseas. In the 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, expressed as a proportion of GDP, increased significantly in the early-1980s and has remained at relatively high levels since then. The ratio of net borrowing from overseas to GDP in 2007-08 was 6.0%, up from 5.4% in 2006-07. Graph 30.13 shows net lending to non-residents as a proportion of GDP since 1965-66.

30.12 EXTERNAL ACCOUNT: Current prices
			2003-04	2004-05	2005-06	2006-07	2007-08
			$m	$m	$m	$m	$m
Income Account
Income of non-residents
	Imports of goods and services		168 714	190 188	210 794	228 452	254 783
	Primary income receivable
		Compensation of employees	1 906	1 331	1 563	1 863	2 302
		Property income receivable	38 935	53 740	62 581	80 028	88 524
		Total primary income receivable	40 841	55 071	64 144	81 891	90 826
	Secondary income receivable		4 446	4 637	5 251	5 451	5 400
	Total income of non-residents		214 001	249 896	280 189	315 794	351 009
Uses of income of non-residents
	Exports of goods and services		147 219	167 562	196 274	215 695	234 862
	Primary income payable
		Compensation of employees	1 024	1 127	1 220	1 309	1 382
		Property income payable	15 977	20 614	25 254	34 679	39 247
		Total primary income payable	17 001	21 741	26 474	35 988	40 629
	Secondary income payable		4 191	4 268	4 602	5 155	5 259
	Balance on external income account		45 590	56 325	52 839	58 956	70 259
	Total use of income of non-residents		214 001	249 896	280 189	315 794	351 009
Capital Account
Balance on external income account			45 590	56 325	52 839	58 956	70 259
Capital transfers receivable			1 127	1 151	944	1 035	1 132
less Capital transfers payable			2 571	2 674	2 673	2 995	3 382
Total net capital transfers			-1 444	-1 523	-1 729	-1 960	-2 250
Gross saving and capital transfers			44 146	54 802	51 110	56 996	68 009
Acquisitions less disposals of non-produced non-financial assets			-72	71	-3	423	8
Net lending (+) / net borrowing (-)			44 218	54 731	51 113	56 573	68 001
Total capital accumulation and net lending (+) / net borrowing (-)			44 146	54 802	51 110	56 996	68 009
Source: ABS Australian System of National Accounts, 2007–08 (5204.0).

The growing importance of international trade to the Australian economy is illustrated by graph 30.14 which shows the ratios of exports and imports of goods and services to GDP in current prices since 1965-66. In 2007-08 the imports ratio was 22.5% and the exports ratio was 20.7%. Since 2000-01 imports increased 91.8.% in volume terms compared with a 15.0% growth in volume of exports.

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