APPENDIX B: STATISTICAL NOTES
of the Underlying Deficit
The underlying deficit used throughout this Statement
is the headline deficit adjusted for net advances.
The latter comprise transactions in financial assets
undertaken for policy purposes - ie net policy lending
(new policy loans and advances less repayments) and
net equity transactions (injections/purchases of equity
less equity sales). The underlying deficit is broadly
consistent with the net lending concept in the national
accounts and thus closely approximates the relevant
sector's direct contribution to the national saving/investment
imbalance (current account deficit).
To maintain consistency with the net lending concept
in the national accounts, the measure of the general
government sector underlying deficit used in the Budget
Papers is not adjusted for increases in provisions.
This is the only source of difference between the measure
used here and the ABS general government deficit adjusted
for net advances (as published in the GFS and GFE).
It mainly affects the data for the Commonwealth, which
makes significant provisions for superannuation payments
to the PTE sector.
A GFS table for the Commonwealth general government
sector, incorporating an adjustment for the increase
in provisions, is included at Appendix
The adjusted measure of Commonwealth general government
own-purpose outlays used in this Statement comprises
outlays excluding net advances, adjusted mainly to
exclude Commonwealth payments to the States other than
specific purpose payments made 'through' the States.
This differs from the published ABS measure (Cat. No.
5501.0) which does not remove all net advances and
excludes all payments to the States.
More specifically, the ABS measure excludes all payments
to other levels of government and PTEs, such as general
revenue assistance, specific purpose payments and advances
and subsidies, together with interest payments on borrowings
undertaken on their behalf. The adjusted measure adds
back in to Commonwealth outlays specific purpose payments
'through' the States (other than those for local government
purposes) as these payments - for example in the area
of higher education - are generally not for State-like
purposes. A corresponding adjustment is made to the
State/local series. The adjusted measure also removes
State fiscal contributions from the data on grants
to the States.
The adjusted measures for both the Commonwealth and
the State/local levels abstract from all net advances.
They are thus consistent with measures of the underlying
deficit in, for example, removing the impact of equity
asset sales which would otherwise be included as offsets
The net debt series used in this Statement incorporates:
Treasury estimates for the period 1972 to 1987 were
first incorporated in last year's Budget Statement
6. As discussed in Appendix
B to that Statement, comparable data on net debt
have been collected by the ABS only since 1988. The
earlier series was constructed by deducting estimated
annual net borrowing - defined as the ABS headline
deficit less net advances - from the ABS measure of
the stock of net debt at end June 1988. Net advances
include both equity and policy lending transactions.
Ideally, the estimates should only abstract from policy
lending transactions, since they represent an asset
for the lender government. Total net advances were
used because separate data on equity transactions were
not available. This data limitation is not considered
significant, however, as asset sales were relatively
small until the late 1980s and are reflected in the
ABS net debt series from end June 1988 and in the Treasury
- Treasury estimates for the period 1972 to 1987;
- Published ABS data for the period 1988 to 1996 (Public
Sector Financial Assets and Liabilities, Cat. No. 5513.0);
- Treasury estimates for the period 1997 to 2001.
The derivation of the historical net debt series is
discussed in more detail in the Spring 1996 edition
of the Commonwealth Treasury's Economic Round-up.