Data Characteristics
Data Characteristics Other data characteristics Other data characteristicsThis publication presents information using an "indicator" approach, focusing on cross-country comparisons; the aim being to make the accounts more accessible and informative, whilst, at the same time, taking the opportunity to present the conceptual underpinning of, and comparability issues inherent in, each of the indicators presented.
The publication is broken down into six chapters: The first provides a general introduction focusing on indicators of GDP. The second focuses on income and presents a number of important indicators such as savings and net lending/net borrowing rates. The third chapter looks at indicators related to the expenditure approach to GDP estimation, with information on the key components of demand and imports. The fourth chapter looks at indicators from a production perspective. Fifth and sixth Chapters focus on General Government and Capital respectively. Finally the annex provides important reference indicators, important in their own-right but also because they are used in the construction of many of the indicators presented elsewhere in the publication. It also provides further background on the new 2008 System of National Accounts, which will eventually be the basis of data published here. Indeed the indicators presented for Australia follow the 2008 SNA. For all other countries indicators are presented on the basis of the 1993 System of National accounts.It's important to note however that differences between the 2008 SNA and the 1993 SNA do not have a significant impact on the comparability of indicators presented in this publication. The annex at the end of this publication describes the key changes from the 1993 SNA that impact on the indicators presented here and, for Australia, it also provides an indication of the size of the impact for the most important changes.
Concepts & Classifications Concepts & Classifications Other manipulations Other manipulationsFor all OECD countries except Australia, the indicators presented in this publication are based on the 1993 SNA. The 2008 SNA has recently been finalised and includes a number of changes to the 1993 SNA. Although it will be a number of years (2014 for most countries) before the national accounts and this publication reflect these changes, it is all the same instructive to present the key changes (those that will eventually impact on the indicators presented in this publication) here. For Australia, an indication of the size of the changes for the two most significant items (R&D and weapons system) that impact on the indicators is also presented below. A full description of the impact of the 2008 SNA on Australia's accounts can be found at:www.ausstats.abs.gov.au/Ausstats/subscriber.nsf/0/ 8DD6B1990BCE6806CA25765D0004DD3F/$File/5310055002_September%202009.pdf.
Changes affecting whole economy levels of income, etc.
Research and experimental development: R&D is recognised for the first time as a produced asset. This also means that payments for the acquisition of patents, treated as acquisition or disposal of non produced, non-financial assets in the 1993 SNA, will be treated as transactions in produced assets, R&D. This also has implications for sectoral GVA as the 2008 SNA also recommends that a separate establishment is distinguished for R&D producers when possible. See also the OECD Handbook on Deriving Capital Measures of Intellectual Property Products. For Australia the direct inclusion of R&D as a capital asset raises GDP by between 1 and 1¼ per cent in the most recent years. This is lower than the share of R&D investment as a share of GDP since some investment in R&D is conducted by general government (which amounts to about ¼ per cent of GDP). Under the 1993 SNA expenditure on R&D by government already adds to government output (which is estimated on a sum of costs basis) and subsequently as general government final consumption. So, for government the direct impact of the capitalisation merely involves a reclassification of expenditure from government final consumption to government gross fixed capital formation. Indirectly however government output and, so GDP, will increase as part of the costs of government include an imputation for depreciation; which now includes a component for the capital stock of R&D by government. This increases government output and general government final consumption by about ¼ per cent of GDP. The total direct and indirect increase to GDP because of the capitalisation of R&D therefore is between 1¼ and 1½ per cent.
Weapons systems: Military weapons systems such as vehicles, warships, etc. used continuously in the production of defence (and deterrence) services are recognised as fixed assets in the 2008 SNA (the 1993 SNA recorded these as fixed assets only if they had dual civilian use and as intermediate consumption otherwise). Some single-use items such as certain types of ballistic missiles with a highly destructive capability, but which provide ongoing deterrence services, are also recognised as fixed assets in the 2008 SNA. Because most if not all of these expenditures are carried out by government (whose output is typically valued by summing costs) GDP will only increase by the related new consumption of fixed capital. In recent years for Australia this increase amounts to less than ¼ per cent of GDP.
For Australia, the total impact of the changes made for R&D and weapons systems as a per cent of total GFCF on a 1993 SNA basis increase GFCF by about 5½ per cent.
FISIM: The method recommended in the 2008 SNA for the calculation of FISIM implies several changes from that in the 1993 SNA. For example it explicitly recommends that FISIM only applies to loans and deposits provided by/deposited with financial institutions, and that for financial intermediaries all loans and deposites are included, not just those of intermediated funds. In addition, the 2008 SNA no longer allows countries to record FISIM as a notional industry.
Financial services: The 2008 SNA defines financial services more explicitly to ensure that services such as financial risk management and liquidity transformation, are captured.
Ouput of non-life insurance services: The methodology used to indirectly estimate this activity in the 1993 SNA (the balance of premiums, premium supplements, and claims) could lead to extremely volatile (and negative) series in cases of catastrophic losses. The 2008 SNA recommends a different indirect approach to measurement that better reflects the pricing structures used by insurance companies and the underlying provision of insurance services per se. The approach can be simply described as an ex ante expectation approach. Output is equal to premiums plus expected premium supplements minus expected claims. The 2008 SNA also recommends that exceptionally large claims, following a catastrophe, are recorded as capital, rather than current, transfers which will have an impact on (particularly sectoral) estimates of disposable income.
Output of Central Banks: The 2008 SNA has provided further clarification on the calculation of FISIM in calculating the output of Centrals Banks. Where Central Banks lend or borrow at rates above or below the effective market lending/borrowing rate the 2008 SNA recommends the recording of a tax or subsidy from the counterpart lender/borrower to/from government to reflect the difference between the two rates. Correspondingly a current transfer (the counterpart to the tax/subsidy) is recorded between government and the Central Bank. These flows will have an impact on the distribution of income in national income compared to the 1993 SNA treatment.
Valuation of output for own final use: The 2008 SNA recommends that estimates of output for own final use should include a component for the return to capital as part of the sum of costs approach when comparable market prices are not available. However no return to capital should be included for non-market producers.
Costs of ownership transfer: The 1993 SNA recommended that these costs (treated as GFCF in the accounts) should be written off over the life of the related asset. The 2008 SNA instead recommends that these costs be written off over the period the asset is expected to be held by the purchaser. This will impact on measures of net income and only marginally on gross measures, reflecting the calculation of output for own final use and government output (which is calculated as the sum of costs including depreciation).
Re-allocating income etc across categories
Goods sent abroad for reprocessing: The 2008 SNA recommends that imports and exports are recorded on a strict ownership basis. This means that the values of a flow of goods moving from one country (that retains ownership of the goods) to another providing processing services should not be recorded. Only the charge for the processing service should be recorded in the trade statistics. The 1993 SNA imputed an effective change of ownership.
(Pensions) Defined benefit schemes: The 1993 SNA stated that actual social contributions by employers and employees should reflect the amounts actually paid. The 2008 SNA differs, recognising that the amounts actually set aside may not match the liability to the employees. As such the 2008 SNA recommends that the employer's contribution should reflect the increase in the net present value of the pension entitlement plus costs charged by the pension fund minus the employee's own contributions. This change will result in a shift of income between gross operating surplus and compensation of employees and between institutional sectors (corporations/government and households).
Ancillary activities: The 2008 SNA recommends that if the activity of a unit undertaking purely ancillary activities is statistically observable (separate accounts, separate location) it should be recognised as a separate establishment.
Holding companies: The 2008 SNA recommends that holding companies should always be allocated to the financial corporations sector even if all their subsidiary corporations are non-financial corporations. The 1993 SNA recommended that they were assigned to the institutional sector in which the main group of subsidiaries was concentrated.
Exceptional payments from public corporations: The 2008 SNA recommends that these should be recorded as withdrawls from equity when made from accumulated reserves or sales of assets. The 1993 SNA treated such transactions as dividends.
Exceptional payments from governments to quasi public corporations: The 2008 SNA recommends that these should be treated as capital transfers to cover accumulated losses and as additions to equity when a valid expectation of a return in the form of property income exists. The 1993 SNA treated all such payments as additions to equity.
This publication presents information using an "indicator" approach, focusing on cross-country comparisons; the aim being to make the accounts more accessible and informative, whilst, at the same time, taking the opportunity to present the conceptual underpinning of, and comparability issues inherent in, each of the indicators presented.
The publication is broken down into six chapters: The first provides a general introduction focusing on indicators of GDP. The second focuses on income and presents a number of important indicators such as savings and net lending/net borrowing rates. The third chapter looks at indicators related to the expenditure approach to GDP estimation, with information on the key components of demand and imports. The fourth chapter looks at indicators from a production perspective. Fifth and sixth Chapters focus on General Government and Capital respectively. Finally the annex provides important reference indicators, important in their own-right but also because they are used in the construction of many of the indicators presented elsewhere in the publication. It also provides further background on the new 2008 System of National Accounts, which will eventually be the basis of data published here. Indeed the indicators presented for Australia follow the 2008 SNA. For all other countries indicators are presented on the basis of the 1993 System of National accounts.It's important to note however that differences between the 2008 SNA and the 1993 SNA do not have a significant impact on the comparability of indicators presented in this publication. The annex at the end of this publication describes the key changes from the 1993 SNA that impact on the indicators presented here and, for Australia, it also provides an indication of the size of the impact for the most important changes.
For all OECD countries except Australia, the indicators presented in this publication are based on the 1993 SNA. The 2008 SNA has recently been finalised and includes a number of changes to the 1993 SNA. Although it will be a number of years (2014 for most countries) before the national accounts and this publication reflect these changes, it is all the same instructive to present the key changes (those that will eventually impact on the indicators presented in this publication) here. For Australia, an indication of the size of the changes for the two most significant items (R&D and weapons system) that impact on the indicators is also presented below. A full description of the impact of the 2008 SNA on Australia's accounts can be found at:www.ausstats.abs.gov.au/Ausstats/subscriber.nsf/0/ 8DD6B1990BCE6806CA25765D0004DD3F/$File/5310055002_September%202009.pdf.
Changes affecting whole economy levels of income, etc.
Research and experimental development: R&D is recognised for the first time as a produced asset. This also means that payments for the acquisition of patents, treated as acquisition or disposal of non produced, non-financial assets in the 1993 SNA, will be treated as transactions in produced assets, R&D. This also has implications for sectoral GVA as the 2008 SNA also recommends that a separate establishment is distinguished for R&D producers when possible. See also the OECD Handbook on Deriving Capital Measures of Intellectual Property Products. For Australia the direct inclusion of R&D as a capital asset raises GDP by between 1 and 1¼ per cent in the most recent years. This is lower than the share of R&D investment as a share of GDP since some investment in R&D is conducted by general government (which amounts to about ¼ per cent of GDP). Under the 1993 SNA expenditure on R&D by government already adds to government output (which is estimated on a sum of costs basis) and subsequently as general government final consumption. So, for government the direct impact of the capitalisation merely involves a reclassification of expenditure from government final consumption to government gross fixed capital formation. Indirectly however government output and, so GDP, will increase as part of the costs of government include an imputation for depreciation; which now includes a component for the capital stock of R&D by government. This increases government output and general government final consumption by about ¼ per cent of GDP. The total direct and indirect increase to GDP because of the capitalisation of R&D therefore is between 1¼ and 1½ per cent.
Weapons systems: Military weapons systems such as vehicles, warships, etc. used continuously in the production of defence (and deterrence) services are recognised as fixed assets in the 2008 SNA (the 1993 SNA recorded these as fixed assets only if they had dual civilian use and as intermediate consumption otherwise). Some single-use items such as certain types of ballistic missiles with a highly destructive capability, but which provide ongoing deterrence services, are also recognised as fixed assets in the 2008 SNA. Because most if not all of these expenditures are carried out by government (whose output is typically valued by summing costs) GDP will only increase by the related new consumption of fixed capital. In recent years for Australia this increase amounts to less than ¼ per cent of GDP.
For Australia, the total impact of the changes made for R&D and weapons systems as a per cent of total GFCF on a 1993 SNA basis increase GFCF by about 5½ per cent.
FISIM: The method recommended in the 2008 SNA for the calculation of FISIM implies several changes from that in the 1993 SNA. For example it explicitly recommends that FISIM only applies to loans and deposits provided by/deposited with financial institutions, and that for financial intermediaries all loans and deposites are included, not just those of intermediated funds. In addition, the 2008 SNA no longer allows countries to record FISIM as a notional industry.
Financial services: The 2008 SNA defines financial services more explicitly to ensure that services such as financial risk management and liquidity transformation, are captured.
Ouput of non-life insurance services: The methodology used to indirectly estimate this activity in the 1993 SNA (the balance of premiums, premium supplements, and claims) could lead to extremely volatile (and negative) series in cases of catastrophic losses. The 2008 SNA recommends a different indirect approach to measurement that better reflects the pricing structures used by insurance companies and the underlying provision of insurance services per se. The approach can be simply described as an ex ante expectation approach. Output is equal to premiums plus expected premium supplements minus expected claims. The 2008 SNA also recommends that exceptionally large claims, following a catastrophe, are recorded as capital, rather than current, transfers which will have an impact on (particularly sectoral) estimates of disposable income.
Output of Central Banks: The 2008 SNA has provided further clarification on the calculation of FISIM in calculating the output of Centrals Banks. Where Central Banks lend or borrow at rates above or below the effective market lending/borrowing rate the 2008 SNA recommends the recording of a tax or subsidy from the counterpart lender/borrower to/from government to reflect the difference between the two rates. Correspondingly a current transfer (the counterpart to the tax/subsidy) is recorded between government and the Central Bank. These flows will have an impact on the distribution of income in national income compared to the 1993 SNA treatment.
Valuation of output for own final use: The 2008 SNA recommends that estimates of output for own final use should include a component for the return to capital as part of the sum of costs approach when comparable market prices are not available. However no return to capital should be included for non-market producers.
Costs of ownership transfer: The 1993 SNA recommended that these costs (treated as GFCF in the accounts) should be written off over the life of the related asset. The 2008 SNA instead recommends that these costs be written off over the period the asset is expected to be held by the purchaser. This will impact on measures of net income and only marginally on gross measures, reflecting the calculation of output for own final use and government output (which is calculated as the sum of costs including depreciation).
Re-allocating income etc across categories
Goods sent abroad for reprocessing: The 2008 SNA recommends that imports and exports are recorded on a strict ownership basis. This means that the values of a flow of goods moving from one country (that retains ownership of the goods) to another providing processing services should not be recorded. Only the charge for the processing service should be recorded in the trade statistics. The 1993 SNA imputed an effective change of ownership.
(Pensions) Defined benefit schemes: The 1993 SNA stated that actual social contributions by employers and employees should reflect the amounts actually paid. The 2008 SNA differs, recognising that the amounts actually set aside may not match the liability to the employees. As such the 2008 SNA recommends that the employer's contribution should reflect the increase in the net present value of the pension entitlement plus costs charged by the pension fund minus the employee's own contributions. This change will result in a shift of income between gross operating surplus and compensation of employees and between institutional sectors (corporations/government and households).
Ancillary activities: The 2008 SNA recommends that if the activity of a unit undertaking purely ancillary activities is statistically observable (separate accounts, separate location) it should be recognised as a separate establishment.
Holding companies: The 2008 SNA recommends that holding companies should always be allocated to the financial corporations sector even if all their subsidiary corporations are non-financial corporations. The 1993 SNA recommended that they were assigned to the institutional sector in which the main group of subsidiaries was concentrated.
Exceptional payments from public corporations: The 2008 SNA recommends that these should be recorded as withdrawls from equity when made from accumulated reserves or sales of assets. The 1993 SNA treated such transactions as dividends.
Exceptional payments from governments to quasi public corporations: The 2008 SNA recommends that these should be treated as capital transfers to cover accumulated losses and as additions to equity when a valid expectation of a return in the form of property income exists. The 1993 SNA treated all such payments as additions to equity.