In presenting statistics the Government adopts the standards established by the ABS in its Government Finance Statistics: Concepts, Sources and Methods (Cat. No. 5514.0). This standard integrates the 1968 United Nations publication A System of National Accounts (SNA) and the 1986 IMF publication A Manual on Government Finance Statistics, drawing on features of both. A revised version of the SNA standard was issued in 1993 but this has not yet been incorporated into ABS Government Finance or National Accounts statistics. The IMF standard is currently being revised.
Commonwealth financial enterprises, such as the AIDC and Reserve Bank, are currently excluded from Commonwealth government statistics in line with ABS practice.
The term government business enterprise (GBE) is not an ABS concept but is used by the Commonwealth to describe a group of companies and authorities, located mainly in the PTE and PFE sectors, which trade goods and/or services in the market with a prime objective of earning a commercial return. Government trading enterprises (GTEs) is a term used in the Council of Australian Governments context and refers to the commercial activities of the Commonwealth, States and Territories.
Transactions between budget sector agencies - such as payments of fringe benefits tax, customs duty and interdepartmental charges - are identified but net out when calculating total budget outlays or revenue. Only transactions into and out of the Commonwealth Public Account impact on budget outlays and revenue. These treatments of transactions are shown in the following diagram.
DIAGRAM D2: COMMONWEALTH BUDGET SECTOR
Excluded from the budget sector are many Commonwealth government authorities, such as CSIRO and Telstra, that operate outside the Commonwealth Public Account through their own bank accounts. Although they may depend on appropriations from the Commonwealth budget in some cases, they are classified as part of the non-budget sector. Budget payments to them are classified as transfers to the non-budget sector. The ABS refers to this budget/non-budget distinction as the administrative sector classification.
This standardised classification system facilitates direct comparisons between governments in Australia and allows the impact of total government activity to be measured relative to other sectors of the economy.
PFEs are currently regarded as outside the scope of ABS GFS. However, under the revised uniform presentation framework, historical financial enterprise statistics will be phased in by all jurisdictions once the ABS has included PFE information in GFS (currently proposed from 1998-99). This will provide a more complete coverage of the public sector associated with a proposal to reclassify State central borrowing authorities to the PFE sector.
The ABS has decided to reclassify universities from the general government sector of the relevant jurisdiction to a new multi-jurisdictional general government category. It is expected that this change will first be reflected in the 1997-98 Government Financial Estimates to be published in November 1997. The data in these Budget Papers retain the classification of universities to the relevant jurisdiction as a consistent historical series reflecting the new classification was not available at the time the data were prepared. Accordingly, the two universities within the Commonwealth's responsibility are included in the data for the Commonwealth general government sector.
In practice, the Commonwealth budget and general government sectors are very similar. Since 1989-90 effectively all budget sector activity has been classified to general government. The general government sector also includes non-commercial government agencies that operate through private sector bank accounts, such as the ABC and CSIRO (referred to as general government non-budget).
To present GFS data, Commonwealth budget statistics are supplemented by ABS data on general government non-budget and PTE sector activity. Adjustments made to Commonwealth budget statistics to derive general government data include:
In the general government context, outlays measure the economic activity of government. In particular, they measure the net cost of providing general government goods and services generally allocated through collective political choice rather than through the operation of the market. They also quantify transfers and advances (loans and equity injections) made for public policy reasons.
User charges are offset against relevant payments in calculating outlays. The alternative treatment of classifying user charges as revenue would increase both outlays and revenue and inflate the reported cost of providing public goods and services.
Two other categories of receipts are offset against payments in the calculation of outlays to align with international standards. Advances (including loans to government enterprises, provision of equity to enterprises and, for the Commonwealth, loans to the States) are classified as outlays to reflect their public policy importance. Repayments of these advances, including the purchase of equity in enterprises by the private sector, are offset against payments to determine the net impact of advances. Consistent with the United Nations treatment adopted by the ABS, receipts from the sales of physical assets are recorded as offsets within outlays to assist in the measurement of the net stock of capital assets in the economy.
For the Commonwealth, outlays transactions under the asset sales program, involving sales of equity and physical assets, are separately identified by function in the Budget Papers to enable analysts to make specific allowance for them. Those undertaken in the normal course of government activity remain classified to appropriate functional categories.
To determine the underlying deficit, however, outlays are adjusted to exclude net advances - ie net policy lending and net equity transactions.
Revenue is the primary means of funding government, with any shortfall funded through borrowings or a rundown of financial assets (financing transactions). It comprises tax receipts (net of refunds) and non-tax receipts (interest, dividends etc) but excludes receipts from user charging, sale of assets and repayments of advances (loans and equity) which are classified as outlays. Revenue therefore measures the value of the resources, other than borrowings, raised by a government to fund outlays.
Financing transactions are undertaken to finance the deficit or invest the surplus. They consist of borrowings and changes in holdings of financial assets such as cash or investments (excluding advances).
The relationship between accounting and economic concepts is shown in the following diagram for the Commonwealth.
DIAGRAM D3: COMMONWEALTH BUDGET TRANSACTIONS
Consistent with ABS practice, the current and capital deficits, in relation to the headline deficit, are separated in Tables D1 to D3. Transactions between the Commonwealth general government and PTE sectors are included in Tables D1 and D2 but are removed from Tables D3 to D5 as they are internal transactions within the Commonwealth non-financial sector. Table D3 records net operating surplus of the PTE sector as part of the revenue of the Commonwealth government sector. This is irrespective of whether that net operating surplus is actually remitted to the parent government.
Transactions between the Commonwealth non-financial and PFE sectors are included in all tables. These transactions include income transfers such as dividends paid to general government, net advances paid by general government to PFEs, and taxes paid by PFEs. Any unremitted elements of PFE net operating surplus are not included in Table D3.
The ABS general government deficit adjusted for net advances shown in Table D1 differs from the general government sector underlying deficit used elsewhere in the Budget Papers in the treatment of provisions. The ABS measure is adjusted for the increase in provisions (for superannuation payments to the PTE sector). However, in order to maintain consistency with the national accounts concept of net lending, no such adjustment is made in the general government underlying deficit measure.
Table D1: Economic Transactions of Commonwealth Government ($million)
(b) The budget sector contingency reserve is included in final consumption in this table.
Table D2: Economic Transactions of Commonwealth Government ($million)(a)
Table D3: Economic Transactions of Commonwealth Government ($million)
(a) The Consolidated Commonwealth sector is the combination of the general government and PTE sectors after elimination of transactions internal to that sector.
(a) The ABS application of the Government Purpose Classification (GPC) is used in this table. There are some differences in the application of the GPC to the budget sector component compared to the functional presentation of budget outlays elsewhere in budget statements. These differences are currently being examined and where possible will be eliminated.
(a) Data in this table do not go beyond the budget year as the elimination of PTE taxes paid to general government is not possible.
(b) Primary production taxes are treated as excises in this table while they are treated as other taxes, fees and fines in budget tables.