Australian National Accounts: Supply Use Tables methodology

Australian production refers to the value at basic prices of goods and services produced in Australia.

The basic price is the amount receivable by the producer from the purchaser for a unit of a good or service produced as output minus any tax payable, and plus any subsidy receivable, on that unit as a consequence of its production or sale. It excludes any trade margins or transport charges invoiced separately by the producer. Output sold at prices that are not economically significant (see also Economically significant prices) is not valued at these prices. Rather, such output is valued at its cost of production.

Annually-reweighted chain Laspeyres volume indexes referenced to the current price values in a chosen reference year (i.e. the year when the quarterly chain volume measures sum to the current price annual values). Chain Laspeyres volume measures are compiled by linking together (compounding) movements in volumes, calculated using the average prices of the previous financial year, and applying the compounded movements to the current price estimates of the reference year. Quarterly chain volume estimates are benchmarked to annual chain volume estimates, so that the quarterly estimates for a financial year sum to the corresponding annual estimate.

Generally, chain volume measures are not additive. In other words, component chain volume measures do not sum to a total in the way original current price components do. In order to minimize the impact of this property, the ABS uses the latest base year as the reference year. By adopting this approach, additivity exists for the quarters following the reference year and non-additivity is relatively small for the quarters in the reference year and the quarters immediately preceding it. The latest base year and the reference year will be advanced one year with the release of the June quarter issue of this publication. A change in reference year changes levels but not growth rates, although some revision to recent growth rates can be expected because of the introduction of a more recent base year (and revisions to the current price estimates underlying the chain volume measures).

Changes in inventories represent the difference in value between inventories held at the beginning and end of the reference period by enterprises and general government. For national accounting purposes, physical changes in inventories should be valued at the prices current at the times when the changes occur. For these purposes, changes in inventories are obtained after adjusting the increase in book value of inventories by the inventory valuation adjustment. The need for the latter arises because the changes in the value of inventories as calculated from existing business accounting records do not meet national accounting requirements. The inventory valuation adjustment is the difference between the change in (book) value of inventories and the physical changes valued at current prices. The physical changes at average current quarter prices are calculated by applying average quarterly price indexes to the changes in various categories of inventories in volume terms.

The classification used to breakdown Household Final Consumption Expenditure by purpose or function.

Compensation of employees is the total remuneration, in cash or in kind, payable by an enterprise to an employee in return for work done by the employee during the accounting period. It is further classified into two sub-components: wages and salaries; and employers’ social contributions. Compensation of employees is not payable in respect of unpaid work undertaken voluntarily, including the work done by members of a household within an unincorporated enterprise owned by the same household. Compensation of employees excludes any taxes payable by the employer on the wage and salary bill (e.g. payroll tax).

The value of goods being imported/exported at the border of the importing country. This is equal to the f.o.b. value plus the cost of freight and shipping between the border of the exporting country and the border of the importing country. In the Supply-use tables imports are valued on a c.i.f basis.

A product may be produced by more than one industry. The coverage ratio shows what proportion of the total domestic supply of a product is produced by the industry to which the product is primary.

Estimates are valued at the prices of the period to which the observation relates. For example, estimates for 2018-19 are valued using 2018-19 prices. This contrasts to chain volume measures where the prices used in valuation refer to the prices of a previous period and to previous years' prices measures where the prices used in valuation refer to the prices of the previous period.

Prices which have a significant influence on both the amounts producers are willing to supply and the amount purchasers wish to buy.

The value of goods exported and amounts receivable from non-residents for the provision of services by residents.

Final demand is the total of all expenditure on goods and services that are not intermediate use. It is derived by aggregating Household Final Consumption Expenditure, Government Final Consumption Expenditure, Private Gross Fixed Capital Formation, Public Gross Fixed Capital Formation, General Government Gross Fixed Capital Formation, Change in inventories, Exports and Re-exports.

The value of goods being imported/exported at the border of the exporting country. This includes the value of the goods, the value of outside packaging for the goods and the costs involved in transporting goods up to the border of the exporting country. It does not involve the cost involved in shipping between the border of the exporting country and the border of the importing country. In the Supply-use tables exports are valued on a f.o.b. basis.

Net expenditure on goods and services by public authorities, other than those classified as public corporations, which does not result in the creation of fixed assets or inventories or in the acquisition of land and existing buildings or second-hand assets. It comprises expenditure on compensation of employees (other than those charged to capital works, etc.), goods and services (other than fixed assets and inventories) and consumption of fixed capital. Expenditure on repair and maintenance of roads is included. Fees, etc., charged by general government bodies for goods sold and services rendered are offset against purchases. Net expenditure overseas by general government bodies and purchases from public corporations are included. Expenditure on defence assets is classified as gross fixed capital formation.

Gross domestic product is the total market value of goods and services produced in Australia within a given period after deducting the cost of goods and services used up in the process of production, but before deducting allowances for the consumption of fixed capital. Thus gross domestic product, as here defined, is 'at market prices'. It is equivalent to gross national expenditure plus exports of goods and services less imports of goods and services.

Expenditure on new fixed assets plus net expenditure on second-hand fixed assets by the general government sector. This includes both additions and replacements.

Gross operating surplus is a measure of the surplus accruing to owners from processes of production before deducting any explicit or implicit interest charges, rents or other property incomes payable on the financial assets, non-produced non-financial natural resource assets (such as land) required to carry on the production and before deducting consumption of fixed capital. However, GOS is measured after the deduction of financial intermediation services indirectly measured and the insurance service charge. It excludes gross mixed income which is the surplus accruing to owners of unincorporated enterprises. Gross operating surplus is also calculated for general government, where it equals general government's consumption of fixed capital.

Gross value added is defined as the value of output at basic prices minus the value of intermediate consumption at purchasers' prices. The term is used to describe gross product by industry and by sector. Basic prices valuation of output removes the distortion caused by variations in the incidence of commodity taxes and subsidies across the output of individual industries.

Net expenditure on goods and services by persons and expenditure of a current nature by private non-profit institutions serving households. This item excludes expenditures by unincorporated businesses and expenditures on assets by non-profit institutions (included in gross fixed capital formation). Also excluded are maintenance of dwellings (treated as intermediate expenses of private enterprises), but personal expenditure on motor vehicles and other durable goods and the imputed rent of owner-occupied dwellings are included. The value of 'backyard' production (including food produced and consumed on farms) is included in household final consumption expenditure and the payment of wages and salaries in kind (e.g. food and lodging supplied free to employees) is counted in both household income and household final consumption expenditure.

The value of goods imported and amounts payable to non-residents for the provision of services to residents.

IOIGs are based on the Australian and New Zealand Standard Industrial Classification (ANZSIC) and the Input-output tables are published at this level of industry.

The IOPC is the detailed level product classification, organised according to the industry to which each product is primary. Input-output tables are compiled at this level of product classification.

IOPGs are groups of IOPCs aggregated to the IOIGs to which they are primary. Input-output tables are published at this level of product classification.

Intermediate use consists of the value of the goods and services consumed as inputs by a process of production, excluding the consumption of fixed capital.

Intra-industry flows refer to the production by units in an industry and use of that production by other units within the same industry. Australian input-output tables include the values of these flows.

Inventories consist of stocks of outputs that are held at the end of a period by the units that produced them prior to their being further processed, sold, delivered to other units or used in other ways, and stocks of products acquired from other units that are intended to be used for intermediate consumption or for resale without further processing.

When a good or service is purchased by a business and sold again at a higher price, without the product being substantially transformed, it is considered to be a margin transaction. The value of the margin is derived as the difference between the purchase price and the sale price of the product. This margin can be split into multiple categories (e.g. retail margin and transport margin). If the transactions are valued at basic prices, the margins are recorded as intermediate consumption (e.g. transport, wholesale trade) of the intermediate users or final buyers. If transactions are valued at purchasers’ prices the value of margins in included, along with taxes less subsidies on products with the purchasers’ price of the good to which the margin relates.

Other subsidies on production consist of all subsidies, except subsidies on products, which resident enterprises may receive as a consequence of engaging in production. Other subsidies on production include: subsidies related to the payroll or workforce numbers (including subsidies payable on the total wage or salary bill), on numbers employed, or on the employment of particular types of persons, e.g. persons with disabilities or persons who have been unemployed for a long period.

Other taxes on production consist of all taxes that enterprises incur as a result of engaging in production, except taxes on products. Other taxes on production include: taxes related to the payroll or workforce numbers excluding compulsory social security contributions paid by employers and any taxes paid by the employees themselves out of their wages or salaries; recurrent taxes on land, buildings or other structures; some business and professional licences where no service is provided by the Government in return; taxes on the use of fixed assets or other activities; stamp duties; taxes on pollution; and taxes on international transactions.

Estimates are valued at the prices of the period prior to the period to which the observation relates. For example, estimates for 2018-19 are valued using 2017-18 prices. This contrasts to current price measures where the prices used in valuation refer to the prices of the current period. Previous Years' Price measures are used in the compilation of chain volume measures.

Primary inputs include compensation of employees, gross operating surplus and gross mixed income, taxes less subsidies on products, other taxes less subsidies on production and imports.

Expenditure on new fixed assets plus net expenditure on second-hand fixed assets by private corporations. This includes both additions and replacements.

Expenditure on new fixed assets plus net expenditure on second-hand fixed assets by public corporations. This includes both additions and replacements.

The purchasers' price is the amount paid by the purchaser, excluding any deductible tax, in order to take delivery of a unit of a good or service at the time and place required by the purchaser. The purchaser’s price of a good includes any transport charges paid separately by the purchaser to take delivery at the required time and place.

Re-exports are goods imported into Australia and then exported without having been used or transformed in any way.

The difference between the final sale price of a good or service by a retailer and the costs involved in stocking the good or service (including purchasing the good or service and transporting the good or service to the point of sale). Retail margins are differentiated from wholesale margins as retailers sell products for final use.

An industry may produce a number of products, some of which may be primary to that industry and some of which may be primary to other industries. The specialisation ratio shows the proportion of an industry’s output that is primary to that industry.

A subsidy on a product is a subsidy payable per unit of a good or service. The subsidy may be a specific amount of money per unit of quantity of a good or service, or it may be calculated ad valorem as a specified percentage of the price per unit. A subsidy may also be calculated as the difference between a specified target price and the market price actually paid by a purchaser. A subsidy on a product usually becomes payable when the product is produced, sold or imported, but it may also become payable in other circumstances, such as when a product is exported, leased, transferred, delivered or used for own consumption or own capital formation.

SUICs are based on the Australian and New Zealand Standard Industrial Classification (ANZSIC) and the supply-use tables are published at this level of industry.

The SUPC is the detailed level product classification, organised according to the industry to which each product is primary. Supply-use tables are compiled at this level of product classification.

SUPGs are groups of SUPCs aggregated to the SUICs to which they are primary. Supply-use tables are published at this level of product classification.

A tax on a product is a tax that is payable per unit of some good or service. The tax may be a specific amount of money per unit of quantity of a good or service (quantity being measured either in terms of discrete units or continuous physical variables such as volume, weight, strength, distance, time, etc.), or it may be calculated ad valorem as a specified percentage of the price per unit or value of the goods or services transacted. A tax on a product usually becomes payable when it is produced, sold or imported, but it may also become payable in other circumstances, such as when a good is exported, leased, transferred, delivered, or used for own consumption or own capital formation.

Trade margin is defined as the difference between the actual or imputed price realised on a good purchased for resale and the price that would have to be paid by the distributor to replace the good at the time it is sold or otherwise disposed of.

Transport margins include any transport charges invoiced separately. In the supply-use tables, if the producer agrees to deliver the product to the purchaser without explicit charge the cost of delivery is included in the basic price, and only if the purchaser is explicitly invoiced for the delivery is there a specific transportation margin that is part of the purchaser’s price. This differs from the treatment in the input-output tables, where the costs arising through the transport of goods from a producer to a purchaser by a third party even without a separate invoice is recorded as a transport margin and excluded from the basic price of the good being transported.

The difference between the final sale price of a good or service by a wholesaler and the costs involved in stocking the good or service (including purchasing the good or service and transporting the good or service to the point of sale). Wholesale margins are differentiated from retail margins as wholesalers sell products for intermediate use by other businesses.

For information on the institutional environment of the Australian Bureau of Statistics (ABS), including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.

Supply-use tables are a part of the Australian national accounts. The standards governing national accounts are agreed internationally and detailed in the "System of National Accounts 2008" (SNA08). SNA08 is endorsed by the five major international economic organisations: the United Nations, the International Monetary Fund, the OECD, the World Bank and the European Commission. The complete version of SNA08 is available online, System of National Accounts, 2008.

The Australian national accounts differ from the recommendations in the SNA08 in some instances where the data is not available to meet these requirements, or it is not considered practical to adhere to the standards. For more information on the differences between the Australian national accounts and the SNA08, see Australian National Accounts: Concepts, Sources and Methods (cat. no. 5216.0).

The annual supply-use tables are published sixteen months after the reference period because of the need to acquire an extensive range of data sources, which are of varying quality and frequency. These range from, for example, data on merchandise trade, to data on product supply or intermediate usage which may, depending on the product and industry, are based on annual or occasional ABS surveys or non-ABS sources.

Accuracy remains the main focus of ABS quality control. However, in the case of the supply-use tables, it is recognised internationally that an objective accuracy measure in the sense of proximity to the ‘true value’ is impossible to produce. The supply-use tables are a highly complex set of economic statistics. They combine a substantial number of internal and external data sources, differing quality and frequency, covering various aspects of the economy to compile the supply-use tables.

Given the variety of data used, and the transformations and aggregations used in the national accounts process, an assessment of accuracy is necessarily subjective and indirect. It involves an evaluation of the national accounts process, the input data and the transformations used to produce the national accounts. The ABS aims to achieve best practice in each of these facets of national accounts compilation. An analysis of revisions can objectively measure the concept of reliability, but a reliable series is not necessarily accurate if it is based on poor quality data.

The limitations surrounding the data sources, the age of data, the availability of detailed product level supply and use data mean that to a greater or lesser extent a significant part of the detailed supply-use data is extrapolated from previous information. These estimates are then confronted, reallocated and balanced against other cells within the supply-use table framework, with more credence being given to some data sources over others.

These processes result in individual components being modelled and adjusted, and this is particularly true for those with relatively small values. Users should, therefore, be cautious when considering isolated fragments of the tables, especially details at the product level and or when looking at the supply or use of products that may be related to an activity or industry but are being analysed outside the economic structure of the supply-use tables.

For a more in-depth discussion of the accuracy of the national accounts including an analysis of revisions, please see the Information Paper: Quality Dimensions of the Australian National Accounts (cat. no. 5216.0.55.002).

A major unifying feature within the Australian System of National Accounts is the application of the supply and use framework to confront the data and balance the components of GDP in annual terms. The supply-use tables show inter-industry flows of goods and services, and at the time of release, the Gross Domestic Product (GDP) measure reported in the supply-use tables matched that which was published in the most recent Annual National Accounts publication, Australian System of National Accounts (cat. no. 5204.0) available at the time of compilation.

The ABS publishes a large amount of data on many aspects of the economy, both periodically and in the form of occasional surveys of particular industries or activities. Many of these, especially annual publications and occasional product surveys, are used in the supply-use tables. However, the data as presented in the supply-use tables may differ in detail from the source data due to the supply-use data confrontation and balancing processes, scope and coverage differences between individual publications and the national accounts and adjustments and additions due to economic activity not generally collected in industry surveys such as gross fixed capital formation and use of financial services.

Supply-use tables disaggregate and describe the gross domestic product account regarding the flows through the economy of the supply of goods and services from producers (domestic and non-resident) to their users and uses. They present a detailed analysis of the process of production, the use of goods and services of that production at basic, as well as producer prices, along with details on taxes, subsides and various types of margins.

For links to all national accounts related data and publications, recent national accounts changes and forthcoming events, relevant websites and a range of other information about the Australian National Accounts, please see the National Accounts Statistics homepage.

For more detailed information about the quality dimensions of the Australian National Accounts please see the Information Paper: Quality Dimensions of the Australian National Accounts (cat. no. 5216.0.55.002).

The supply-use tables time series are available from the ABS.Stat website. The supply-use tables in Excel spreadsheets can be downloaded from the Data downloads section.