Gross fixed capital formation

21.102    This includes dwelling and non-dwelling construction, both for the public and private sectors. Fixed physical capital is allocated directly to the state in which it resides.

21.103    Private sector estimates are sourced from the Building Activity Survey (BACS); Engineering Construction Survey (ECS); and the publication. Private New Capital Expenditure and Expected Expenditure, Australia. Public sector capital formation is sourced from Government Finance Statistics.

21.104    Machinery and equipment is allocated to the state in which the equipment is based. This is sourced from the ABS publication, Private New Capital Expenditure and Expected Expenditure, Australia, as well as GFS data.

21.105    Very large items such as weapons systems and commercial aircraft are not allocated to a single state. These are for the protection of all Australian citizens and are allocated to states based on ERP shares. A similar treatment is used for civil aircraft.

21.106    Cultivated biological resources are allocated to state based on location of livestock and orchards. This is sourced from ABS' agricultural surveys and Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) data.

21.107    Intellectual property products include computer software, research and development, and mineral exploration as well as entertainment, literary and artistic originals. These are allocated to the states as follows:

• mineral exploration – is allocated to the state in which the exploration occurs and is sourced from the ABS publication, Mineral and Petroleum Exploration, Australia;
• research and development – is allocated to the location of the primary research institution using data from the publication, Research and Experimental Development, Businesses, Australia;
• computer software – is allocated based on primary location of purchase or production, largely based upon historic weights; and
• entertainment, literary and artistic originals – are allocated to state using estimated resident population.

21.108    International trade relates to imports and exports of goods and services of a state with a destination or source outside Australia.  This is divided into merchandise goods trade, and services trade. In the state accounts, merchandise goods trade is produced annually and quarterly, and services trade is produced annually.

21.109    Trade in merchandise goods measures goods that cross the Australian customs barrier. These are allocated to state based on the location of where the customs barrier is crossed. If the goods are transported to another state this is treated as an interstate re-export, which is included in the balancing item.  In the national accounts, trade in goods is produced on a Balance of payments (BOP) basis which adjusts for goods which are not captured sufficiently in customs data.

21.110    International trade in services is collected as part of the ABS publication, International Trade in Services by Country, by State and by Detailed Services Category. State allocation is based on the state location of units sampled as part of this survey.

21.111    Quarterly household final consumption is largely allocated to states using the top-down approach by using indicators and price deflators. It is compiled according to the COICOP classification. Dwelling rent is the main exception to this and is compiled using the bottom-up approach using data from Census of Population and Housing every five years. Adjustments for interstate and international household consumption are also made.

21.112    Annual estimates for all COICOP categories are produced as the sum of four quarters, with differences in annual and quarterly estimates due mostly to timing differences.

21.113    Imputed and actual rent of owner-occupiers are obtained by multiplying the stock of dwellings by the average rent paid by state. Splits between owner-occupied and imputed rent are estimated using data from the Census of Population and Housing. The stocks of dwellings and the rents paid for dwellings by state are obtained from the Population Census. Imputed rent paid for owner-occupied dwellings is calculated by matching average rents reported in the Population Census for detailed level of region and housing type and multiplying this by numbers of owner-occupied dwellings.

21.114    For inter-censal and post-Census periods, the dwelling stock is moved forward using the number of dwelling unit completions by state from Building Activity, Australia. This is then modified by a factor to take account of other changes to the stock of dwellings. Values for average rent paid is updated using data from the Consumer Price Index (CPI) for privately-owned dwelling rents modified by a factor for undercoverage. This methodology is undertaken quarterly with annual estimates produced by summing quarterly estimates.

21.115    Household consumption undertaken overseas or interstate by state residents is added to total HFCE.  Consumption by non-state residents (international and interstate) are removed from total state HFCE. This is to ensure that HFCE is representative of state resident household consumption. This is estimated in two parts, using net visitor numbers for interstate as well as international trade in services estimates:

1. International net expenditure is split to states using data from the ABS publication, International Trade in Goods and Services, Australia; and
2. Interstate net expenditure is based on net interstate visitor day and night estimates which are produced by Tourism Research Australia (TRA). This is combined with average day and night rates of expenditure to produce a value.

21.116    Both these adjustments are undertaken quarterly with annual estimates produced by summing quarterly estimates.

21.117    The table below lists the three elements required to produce state indicators for HFCE.