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Australian National Accounts: Finance and Wealth

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National, public and private corporations, government and household financial and capital accounts, and household balance sheets.

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Reference period
September 2020
Released
17/12/2020
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Key statistics

  • Household wealth increased $186.8b (1.7%) to a record $11,351b
  • Demand for credit was $154.9b, exceeding last quarter's record funding by $3.8b 
  • Australia's net lending position fell by $7.7b to $9.1b
  • Capital investment as a proportion of GDP fell to 22.1%

Main features

Financing resources and investment table

Financial market summary table

Flow of funds diagrams

National investment

National investment fell by $0.9b to $107.1b in the September quarter. 

General government investment decreased by $8.3b to $18.0b driven by a fall in state and local capital investment.  

Non-financial corporations' investment increased by $6.5b to $50.6b. This was driven by a $3.3b build up of inventories, as the retail trade industry sought to replenish inventory stock levels in preparation for end of year sale events and eased restrictions.  

Household investment rose to $35.8b, up from $34.9b in the last quarter.

Financial investment

Australia was a net lender of $9.1b, the sixth consecutive quarter of net lending. The main contributors were: 

  • $30.0b in net maturities of debt securities (one name paper and bonds) issued by authorised deposit-taking institutions (ADIs) and held by rest of world (ROW)
  • $55.5b investment in ROW equities driven by non-money market funds and pension funds

The availability of low-cost funding offered by the RBA’s term funding facility has reduced ADI’s need to seek new debt funding from overseas. Non-money market funds and pension funds sought increased returns in overseas markets as economic conditions improved.

Households

Households' $76.9b net lending position was the result of a $82.4b acquisition of assets and a $5.5b incurrence of liabilities, driven by:

  • $63.9b increase in deposits
  • $8.2b increase in loan liabilities

The increase in deposits reflects increased household saving, and continuing government income support packages such as JobKeeper, economic support payments, and early access to superannuation. The increase in loan liabilities is consistent with the draw down of new housing loans commitments from early in the quarter, as easing social distancing measures boosted housing market activity.

Non-financial corporations

Non-financial corporations' $43.1b net lending position was due to a $47.7b acquisition of financial assets and a $4.6b increase in liabilities. The increase in assets was driven by:

  • $18.6b increase in deposits
  • $13.4b increase in equity investments offshore

Deposits increased as non-financial corporations continued to maintain high levels of liquidity. With overseas financial markets recovering, non-financial corporations also took advantage of investment opportunities, increasing their equity holdings offshore

General government

General government's $118.0b net borrowing position was due to a $156.1b increase in liabilities, driven by:

  • $117.7b record net issuance of debt securities (one name paper and bonds)
  • $29.4b increase in loan liabilities

The increases in debt security issuance and loan liabilities reflect the continued raising of funds to finance COVID-19 related economic support policies.

Demand for credit

Demand for credit table

Demand for credit was a record $154.9b in the September quarter, of which:

  • general government borrowed $147.0b
  • households borrowed $7.7b
  • other private non-financial corporations paid back $7.6b

Credit market outstanding grew $174.7b (2.3%) due to the record demand for credit and $19.7b in revaluation gains. This was mainly recorded through $16.5b in revaluation gains in shares of private non-financial corporations in the domestic share market.

General government

General government's demand for credit surpassed the record amount in the June quarter, with significant amounts of funds continuing to be raised to finance COVID-19 policies. The funds were acquired through:

  • $117.2b in net bond issuances by national general government
  • $29.7b in loan borrowings by state and local general government

Households

Easing of COVID-19 social distancing measures in most states boosted housing market activity and demand for new housing loans, particularly for owner-occupiers and first home buyers. Demand for short term borrowing continued to slow as households paid off credit card debt. This translated to:

  • $12.6b of long term loan borrowings
  • $4.4b repayment of short term loans

Private non-financial corporations

Demand for credit remained low for other private non-financial corporations as businesses continued to repay lines of credit that had been drawn upon in the March quarter. Some businesses showed a preference for sourcing funds through equity raisings. These are reflected as:

  • $9.3b repayment of loans and placements
  • $13.1b raised through shares and other equity

Households

Balance sheet

Financial assets

Liabilities

Household wealth rose $186.8b (1.7%) to a record $11,351.1b in the September quarter, driven by the largest growth in deposit accounts on record and an increase in residential assets.

Average household wealth increased $6,850 (1.6%) to $441,649 per person. 

Financial assets

Financial assets of households rose $106.5b (1.9%), driven by a:

  • $63.7b rise in household deposits
  • $33.1b rise in superannuation reserves

The increase in household deposit accounts was the largest on record. Growth was boosted by ongoing government income support packages and the second round of early access to superannuation, in addition to tax refunds which typically contribute to growth in September quarters. Household consumption only partly recovered from the fall in the June quarter as households continued to experience some reduced spending opportunities due to COVID-19 related restrictions, particularly in Victoria. 

Non-financial assets

Non-financial assets owned by households increased $85.4b (1.1%), fully recovering the losses experienced in the June quarter. Driving the recovery was a:

  • $86.8b rise in land and dwellings 

Holding gains on land and dwellings reflected a rebound in property prices as housing market activity increased, with auctions and open home inspections resuming as social distancing measures eased across most of Australia.

Liabilities

Household liabilities increased $5.0b (0.2%), driven by a:

  • $12.5b rise in housing loans

The increase in loan balances is consistent with the increase in new loan commitments, with easing social distancing measures boosting housing market activity and demand for new housing loans, particularly for owner-occupiers and first home buyers.

This was partly offset by a:

  • $4.4b reduction of short-term debt

Credit cards and personal loans were the biggest contributors to the reduction in short term debt as households continued to pay down their outstanding debts, in addition to lower levels of spending, particularly on services such as transport and accommodation.

Private non-financial corporations

Financial assets

Liabilities

Private non-financial corporations increased their liabilities by $13.3b, driven by:

  • $16.6b equity raising
  • partly offset by a $7.8b net maturity of debt securities, and $7.9b repayment of loans

Private non-financial corporations chose equity rather than debt funding due to the extension of temporary emergency capital raising measures implemented by the Australian Stock Exchange. This resulted in:

  • debt to equity ratio (adjusted for price changes) falling from 0.66 to 0.65

Private non-financial corporations increased their deposit assets by $19.0b, with 

  • $25.4b deposited with authorised deposit taking institutions
  • partly offset by a $6.4b withdrawal of deposits with rest of world

Deposit accounts of private non-financial corporations continued to grow as businesses increased their liquidity positions through equity raising and receipt of government subsidy payments. This resulted in private non-financial corporations maintaining a net lending position of $34.4b.

Financial corporations

Financial assets and liabilities

Authorised deposit-taking institutions (ADIs)

Financial assets

Liabilities

With access to increasing deposits and the Reserve Bank of Australia's (RBA) term funding facility, ADIs' share of funding acquired from debt securities continued to decline.
In the September quarter, ADIs' funding compared to the previous quarter comprised of:

  • 61.2% from deposits, an increase from 58.7%
  • 11.5% from bonds, a decrease from 12.0%
  • 10.2% from shares and other equity, a decrease from 10.6%
  • 6.1% from short term debt securities, a decrease from 6.6%

ADIs' funding from deposits grew $75.0b with a:

  • $63.8b increase from households
  • $22.1b increase from other private non-financial corporations    
  • offset by a $14.9b decrease from pension funds and a $10.2b decrease from rest of world.

ADIs' funding from short term debt securities and bonds fell $56.1b. ADIs allowed existing debt securities to mature without replacement, resulting in a net maturity of $55.2b, the largest in the time series. This was driven by maturities of:

  • $29.2b in bonds
  • $24.9b in one name paper
  • $1.2b in bills of exchange

By the end of September, ADIs had accessed the full initial allowance of the RBA's term funding facility (a form of low cost funding), exchanging debt securities acquired through internal securitisation as collateral. In addition, ADIs have begun unwinding some internal securitisation activity from the past two quarters. This resulted in a:

  • $85.1b increase in RBA's holdings of bonds issued by securitisers
  • $122.2b decrease in ADIs' holdings of bonds issued by securitisers

Pension (superannuation) funds

Financial assets

Liabilities

Total financial assets of pension (superannuation) funds increased $36.1b, and continued to recover losses suffered in the March quarter, with a

  • $58.7b increase in shares and other equity
  • partly offset by a $14.3b decrease in deposits

Favourable conditions in the domestic and overseas share markets drove valuation gains of $33.6b, with pension funds investing an additional $25.1b in shares and other equity. Deposit levels decreased as pension funds accommodated withdrawals related to the early access to superannuation scheme during the quarter.

Government

National general government financial assets

National general government liabilities

State and local general government financial assets

State and local general government liabilities

Financial assets of general government (national, and state and local) increased $17.5b (1.5%), driven by deposits with a:

  • $32.3b increase in deposits with the RBA
  • $6.1b increase in deposits with ADIs

The record increase in deposits was due to excess funds raised by the Commonwealth government being placed with the RBA, and state government funds being placed with ADIs for future expenditure. 

Liabilities of general government increased $155.4b (9.0%), driven by a:

  • $117.2b issuance of bonds
  • $29.4b increase in loans

The record increase in bonds was due to the issuance of Treasury bonds by the Commonwealth government to fund COVID-19 policies and expenditure. Similarly, central borrowing authorities raised $32.4b through issuance of semi-government bonds and passed on this record amount through loans to state governments to meet their increased funding requirements.

Capital investment

Figures in the capital investment section are in seasonally adjusted current prices.

Net lending (+) / borrowing (-)

Australia's net lending position declined by $6.4b to $9.8b this quarter. This was driven by a: 

  • $5.3b increase in inventories
  • $1.3b decline in national net savings

National net lending as a proportion of GDP fell this quarter driven by a fall in net saving as household final consumption expenditure rebounded due to easing of restrictions and an improvement in consumer confidence. 

  • Households' net lending decreased by $9.1b to $56.8b 
  • General government net borrowing decreased by $11.5b to $90.3b
  • Financial corporations' net lending decreased by $7.4b to $10.7b 
  • Non-financial corporations' net lending increased by $3.2b to $33.5b

Notable drivers for households and general government were: 

  • Household primary income receivable increased driven by a rise in both compensation of employees and gross mixed income as business activity rebounded following the easing of COVID-19 restrictions. 
  • General government taxes on production and imports rose due to a bounce back in GST revenue, excise tax and payroll tax. This was driven by the easing of restrictions, increase in household consumption and a reduction in COVID-19 taxation support packages for businesses.

Capital Investment

National capital investment decreased to 22.0% as a proportion of GDP, the lowest proportion in the history of the timeseries. This was driven by a fall in capital investment combined with the largest increase in nominal GDP since June 2010. 
Relative to GDP: 

  • Non-financial corporations' investment declined to 9.9%
  • General government investment declined to 4.1%
  • Household investment remained at 7.6%
  • Financial corporations' investment remained at 0.6%

Non-financial corporations' investment fell, as project completions outstripped commencements. Businesses continued to reduce capital expenditure in response to COVID-19. 
General government investment fell, driven by a fall in state and local capital investment. 
Household investment rose, despite remaining flat as a proportion of GDP. Ownership transfers costs recovered, as restrictions on auctions and open homes were eased. Households increased investment on home improvements, which is reflected by the rise in alterations and additions

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Time series spreadsheets

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Previous catalogue number

This release previously used catalogue number 5232.0

Revisions and changes

Future changes to the publication

In December quarter 2020, TABLE 51. Financial Accounts Summary of Bank Deposits and Lending Split by Household Subsectors ($ million) will be renamed TABLE 51. Financial Accounts Summary of Authorised Deposit taking Institution Deposits and Lending Split by Household Subsectors ($ million)

Revisions in this issue

There have been revisions to previously published aggregates due to:

  • Quality assurance reviews affecting the published aggregates after September quarter 2018, in addition to amendments to data collected in the ABS Survey of Financial Information, ABS Survey of International Investment and to data derived from Australian Prudential Regulation Authority (APRA) administrative data sets.
  • Revisions to the sectoral capital accounts are due to more up-to-date data being incorporated and concurrent seasonal adjustment.

Methodology

Australian National Accounts: Finance and Wealth methodology, September 2020

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