Part C - Relationship to the Australian System of National Accounts (ASNA)

The conceptual framework of the Australian System of National Accounts (ASNA) is based on the 2008 SNA. The IMF standard for GFS is closely ‘harmonised’ with the 2008 SNA, and it follows that Australia’s GFS system is harmonised with the ASNA. Indeed, the use of common concepts, items and classifications in the ASNA and Australia’s GFS system is essential because the GFS system is the main provider of data for compiling ASNA information about the general government sector and public non-financial corporations. The following section provides a broad analysis of the links between the ASNA and the GFS system.

The ASNA is designed to provide information about the Australian economy in total and similar supporting information about individual institutional sectors within the economy. The scope of the ASNA is the whole of the Australian economy. The scope of Australia’s GFS system is the public sector, which comprises the general government sector and the public non-financial and financial corporations. Although the ASNA does not provide consolidated information about the public sector as such, it provides information about the following institutional sectors: 

• Non-financial corporations sector;
• Financial corporations sector;
• General government sector;
• Households (incorporating non-profit institutions serving households); and
• Rest of the world sector.

The scope of the general government sector in the ASNA is exactly the same as in the GFS system. In the ASNA, public non-financial corporations form part of the non-financial corporations sector and public financial corporations form part of the financial corporations sector. As previously discussed, the public sector defines the scope of the GFS system, which consists of the general government sector, the public non-financial corporations and the public financial corporations.

The ASNA distinguishes between the public and private corporations within the non-financial and financial corporations sectors. When the distinction is made, the scope of the public corporations in ASNA coincides with the scope of the public corporations in the GFS system. Therefore, it is possible to directly compare common ASNA and GFS information about general government, public non-financial corporations and public financial corporations.

The ASNA presents information on economic flows and stocks using a framework of linked accounts that differs from the GFS framework of financial statements, but includes many common links. The differences arise because of the different objectives of the two systems. In the national accounts, emphasis is placed on economic concepts of production, income, consumption, saving, capital accumulation and wealth, with the aim of measuring the economic performance of the whole economy. In the GFS system, emphasis is placed on fiscal concepts such as revenues, expenses, and financing, with the aim of measuring the financial performance of the public sector.

The ASNA framework includes the following set of accounts:

• Production account;
• Income account;
• Capital account;
•  Financial account;
• Balance sheet;
• Revaluation account; and
• Other changes in the volume of assets account.

In broad terms, the production account records production, the income generated from production and the expenditure of income on final consumption and capital formation. The income account records the disposable income of residents (i.e. after taxes and other current transfers), the current use of that income and the resultant saving, which can be positive or negative. The capital account records the sources (net saving and net capital transfers) of funds available for the acquisition of non-financial assets on one side and the actual net acquisition of non-financial assets on the other. The balance of the account can be positive (net lending) or negative (net borrowing). The financial account records the net transactions in financial assets, liabilities and equity that occur as a result of net lending or borrowing. The balance sheet records the opening and closing values of assets and liabilities. The revaluation and other changes in the volume of assets accounts record changes to net worth arising from revaluations and events other than transactions and revaluations. The closing values of assets and liabilities in ASNA are equal to selected transactions from the capital and financial accounts, plus net revaluations, plus net other changes in the volume of assets.

Each of the ASNA accounts includes information that can be directly related to GFS data. Information in the gross domestic product, income and capital accounts can be linked to information included in the GFS statement of operations; the balance sheet information can be linked to information included in the GFS balance sheet; and information in the revaluation and other changes in volume of assets accounts can be linked to information included in the GFS statement of stocks and flows. The items in the accounts and the links to GFS items are discussed in the next section. There is no equivalent of the GFS statement of sources and uses of cash in the ASNA, although the change in cash balances is recorded in the system.

The major aggregates and balancing items included in the main ASNA accounts and the corresponding GFS items and the statements in which they are recorded are shown in Table 17.10 below. In the table items that do not appear in the GFS system but are derived for national accounting purposes are labelled ‘derived’. The symbol * against an entry in the right-hand column indicates that the item is identical in concept to the ASNA item, but is measured from different sources with the result that values recorded for the item in the two systems are not identical. The content of the table is explained in the following paragraphs.

The Australian System of National Accounts (ASNA) records gross domestic product (GDP, the economy’s production), the income generated by GDP (comprising mainly taxes, compensation of employees and the gross operating surplus and gross mixed income of producers) and the expenditure of GDP on final consumption, inventories, gross fixed capital formation and net exports.

Most income components for general government and public corporations can be linked to expense items in the GFS statement of operations or can be derived from items in the statement of operations. Gross operating surplus of public corporations is not recorded in the GFS statement of operations but, in the case of public non-financial corporations, the ASNA information is derived from data recorded in the GFS system. It is defined as the excess of gross output over the sum of intermediate consumption, compensation of employees, and taxes less subsidies on production and imports. In the general government sector, most output is not marketed and is valued in the national accounts at its cost of production. The ASNA 'grosses up' certain items such as payroll taxes paid by units to others within the same jurisdiction. These transactions are consolidated out in the GFS system but the source of 'grossing up' is GFS counterparty data. The gross operating surplus of general government is equal to general government consumption of fixed capital, which is the only cost of production not deducted in the derivation of gross operating surplus, less sales. However, because many of the ASNA items do not use GFS data, but are derived through supply use tables, the ASNA values for general government gross operating surplus are not the same as those that can be derived from GFS data. Gross mixed income does not apply to public sector entities.

The expenditure components included in the production account that can be linked to GFS statement of operations items are government final consumption expenditure, gross fixed capital formation of general government and public corporations, and changes in inventories. Government final consumption expenditure is current expenditure by general government bodies on services to the community. Because these are provided free of charge or at charges which cover only a small proportion of costs, the government is considered to be the consumer of its own output. This output has no directly observable market value and so is valued in the national accounts at its cost of production. Property income (e.g. interest payments on government debt and social assistance benefits) is not included. The major part of government final consumption expenditure is derived from GFS data but the item is not included in the GFS system because it includes imputed expenses that are not derived in the GFS system. For example, it includes ‘financial intermediation services indirectly measured’ (FISIM), which is an imputed part of the output of financial institutions and part of the final consumption expenditure of general government units that use the financial institutions’ services.

Gross fixed capital formation is defined and measured in the same way in the GFS system and the ASNA. The ASNA data for general government and public non-financial corporations are derived directly from GFS data. In the ASNA, capitalised wages and salaries are included in gross fixed capital formation as well as in compensation of employees (no duplication is involved because of the linked structure of the national accounts).

In general, the income items included in the ASNA income and use of income account can be related to GFS revenue items. Each of the items is discussed in the following paragraphs.

Gross operating surplus is discussed in paragraph 17.45 of this manual.

Property income comprises interest, dividends, reinvested earnings on direct foreign investment, and rent on natural assets. The data for interest income that are recorded in the ASNA are not comparable with the data recorded in the GFS system because the ASNA data are adjusted to exclude FISIM (see paragraph 6.129 of this manual). All other items of property income are defined and measured in the ASNA in the same way as in the GFS system, which provides the ASNA data for general government and public nonfinancial corporations.

Taxes on production and imports represents taxation revenue of general government, and the ASNA values are derived directly from GFS data. The GFS categories of revenue included in the item are taxes on products and other taxes on production. Because some of these taxes are payable by non-producers as well as producers, adjustments (based on non-GFS data) are made to eliminate tax payments made by nonproducers. Taxes are reported using either the Tax liability method (TLM) (cash accounting) or the Economic Transaction Method (ETM) (closer to an accruals basis). For some tax items in GFS which are reported on TLM basis, these are adjusted to get back to an accruals basis for taxes in ASNA.

Taxes on income and wealth receivable is an item that is unique to general government, and the ASNA data are derived directly from GFS data. The GFS revenue categories included in the item are taxes on income (which comprise all taxes included in the tax item ‘taxes on income, profits and capital gains’) and other current taxes (which comprise all taxes included in the tax items ‘motor vehicle taxes’ (except road transport and maintenance taxes) and ‘departure tax’). Because some of these taxes when paid by producers are classifiable as taxes on production and imports, other non-GFS information is used to identify and eliminate such tax payments made by producers. Therefore, the ASNA data for this item cannot be related directly to the GFS data.

Other current transfer revenue that are relevant to the public sector include current grants and subsidies receivable by public corporations (which are defined and measured in the ASNA as in the GFS system); and regulatory fees and fines collected by general government (which are also defined and measured as in the GFS system). ASNA data for these components are derived from GFS data.

The use of income items included in the ASNA income account can be related to GFS expense items in general. They are discussed in the following paragraphs.

Property expenses includes the same components as property expenses and the discussion relating to property income receivable applies equally here. That is, all property expenses except interest expense is recorded in the same way in ASNA and the GFS system and interest expense in ASNA is not comparable with GFS interest expense for the same reasons as in relation to interest income.

Subsidies and social assistance benefits in cash to residents are items unique to general government that are defined and measured in the ASNA in the same way as in the GFS system, which provides the data that are included in the ASNA. In the GFS system, social benefits in cash to residents is called ‘current monetary transfers to households’ and is included in expenses under current transfer expenses.

In the GFS system, current taxes on income and wealth payable are payable only by public non-financial and financial corporations (any taxes payable by general government units are eliminated in the consolidation of GFS output). The ASNA data for current taxes payable by all sectors are derived from GFS data for taxation revenue and distinguish taxes payable by public non-financial corporations.

Items in the ASNA capital account correspond to items recorded in the GFS statement of operations, mainly in the section relating to net acquisition of non-financial assets.

The balancing item net saving is the balance of the income account and is carried forward to the capital account. Net saving is not recorded in the GFS financial statements but can be derived, albeit with measurement differences compared with the ASNA.

Consumption of fixed capital is also not recorded in the GFS system, which uses instead the accounting measure of depreciation.

Capital transfers (receivable and payable) in the ASNA capital account are defined and measured in the same way as in the GFS system. They include capital grants between levels of government directly from the GFS system. Also included are so-called ‘capital taxes’. In Australia, these are confined to the GFS tax classification category ‘estate, inheritance and gift taxes’, which is the sole source of information for the ASNA capital taxes item.

Gross fixed capital formation, changes in inventories and acquisitions less disposals of non-produced nonfinancial assets are defined and measured in the ASNA in the same way as in the GFS system. ASNA data for general government and public non-financial corporations are derived directly from the GFS system. Gross fixed capital formation comprises the following: acquisitions less disposals of new and second-hand produced assets, whereas acquisitions less disposals of non-financial non-produced assets relates to assets, such as mineral deposits and virgin forests, that have not been produced.

The net lending (+) / borrowing (–) in the ASNA is conceptually equal to the balancing item of the same name in the GFS system. However, in practice these items are different due to the use of different data sources and benchmarking.

Similarly, the ASNA item gross saving and capital transfers is equivalent, apart from minor measurement differences, to the GFS net operating balance plus depreciation (sometimes referred to as the ‘gross operating balance’). The measurement differences affecting the equivalence are those (discussed in previous paragraphs) that affect comparability of common components of gross saving and the gross operating balance.

The ASNA financial account records all changes to financial assets and liabilities arising from transactions. It corresponds to the financial assets and liabilities section of the transactions column in the GFS statement of stocks and flows. Net acquisition of financial assets refers to acquisition less disposal of financial assets and net acquisition of liabilities refers to acquisition less disposal of liabilities and equity. These items are equivalent in concept to the GFS items relating to net transactions in financial assets and net transactions in liabilities and equity, respectively. However, the GFS system is not the source of data for the ASNA financial account, with the result that these items are unlikely to carry exactly the same values in ASNA and the GFS system. There are also differences between ASNA and the GFS system in the way that these broad items are broken down into financial instrument categories. The ASNA financial instrument classification is more detailed, but does not include the GFS distinction between acquisition of financial assets for policy and liquidity management purposes.

The balancing item net change in financial position in the ASNA financial account is identical conceptually to net lending / borrowing, but is derived differently. As a result of the different methods of derivation, recorded values for the two items are usually quite different. In the ASNA, the difference between the two items is recorded in an item called ‘errors and omissions’. Thus, although GFS values for net lending / borrowing should be equal to the ASNA values for change in financial position, in practice they are not.

The ASNA balance sheet records the value of assets and liabilities (including equity) and is identical in concept to the GFS balance sheet. However, GFS data are not used in the compilation of the ASNA balance sheet and the values recorded are not likely to be identical. Most of the ASNA data are compiled using the perpetual inventory method in relation to the estimation of consumption of fixed capital whereas the GFS data are obtained directly from public sector accounting records. The classification of assets and liabilities in the two systems has points of concordance at a broad level, but the ASNA classification is generally more detailed than the GFS classification.

The ASNA accumulation and revaluation accounts record net capital formation, financial transactions, and changes to the balance sheet values of assets, liabilities and equity arising from revaluations (i.e. price changes) and events other than transactions and revaluations. The accounts record the same information (albeit in a different format) to that recorded respectively in the columns relating to transactions, revaluations and other changes in the volume of assets in the GFS statement of stocks and flows. The item net capital formation is equal to net acquisition of non-financial assets less consumption of fixed capital and cannot be derived exactly in the GFS system because it uses depreciation in lieu of consumption of fixed capital. The item financial transactions refers to net acquisition of financial assets and liabilities and can be derived in the GFS system, but will carry different values due to the use of different data sources. The ASNA data relating to revaluations and other changes in the volume of assets are identical in concept to the GFS items of the same name, but the data for the items are derived from different sources and the recorded values are unlikely to be the same. As well, revaluations arising from interest rate changes to marketed securities are not captured in the GFS system).