2. The Australian Approach to the Production Based Measurement of GDP Ian Ewing Deputy Australian Statistician Macroeconomics and Integration Group June 2009

3. Topics The statistics ABS produces What the statistics are used for The methods used to compile them The data sources used The resources required Challenges for the future

4. Statistics Produced: Quarterly Industry Value Added

5. Statistics Produced: Gross State Product by Industry New South Wales VictoriaQueenslandSouth Australia Western Australia TasmaniaNorthern Territory Australian Capital Territory Australia Agriculture, forestry and fishing (A); Total factor income: Current prices 434366767112265732581047356725456 Mining (B);Total factor income: Current prices 1078553721973326574246645344411986109 Manufacturing (C);Total factor income: Current prices 34009296911800085801129224861130299105488 Electricity, gas and water (D); Total factor income: Current prices 6601697537152182352983520750824551 Construction (E);Total factor income: Current prices 2464415891179654252146091081803188481129 Wholesale trade (F); Total factor income: Current prices 159011454490502754462559921731948009 Retail trade (G); Total factor income: Current prices 18124134821346038045921120550986357368 Accommodation, cafes and restaurants (H); Total factor income: Current prices 7422399951721317162248835241520787 Transport and storage (I); Total factor income: Current prices 16955100601265430066485108365053351425 Communication services (J); Total factor income: Current prices 8027689037551206233035730638623256 Finance and insurance (K); Total factor income: Current prices 3482422121963144595169124248780378736 Property and business services (L); Total factor income: Current prices ; 50650341242115063581641110079022544133145 Government administration and defence (M); Total factor income: Current prices 11795645585712829303410861036734942156 Education (N); Total factor income: Current prices 13894125768054295342761122479113044484 Health and community services (O); Total factor income: Current prices 209281523612315494468991707638117463843 Cultural and recreational services (P); Total factor income: Current prices 5575415224181022149925620856315692 Personal and other services (Q); Total factor income: Current prices 6528471939661663226037432965720495 Ownership of dwellings; Gross operating surplus and gross mixed income: Current prices 3101020060171005965922214221318197488071 Total all industries; Total factor income: Current prices ; 322013233022193823627911449071785014367214281010199 Total all industries; Taxes less subsidies on production and imports: Current prices 3783133492223191058310513349912752160121672 Total all industries; Statistical discrepancy (I); Current prices 9671572041646301 Total all industries; Gross operating surplus: Current prices; 11114874518729982083174984565476765877373684

6. Statistics Produced: GDP(P) Time-series

7. Uses of Statistics Industry contribution to growth Measuring structural change Measuring productivity Informing and evaluating public policy Economic and business analysis Forecasting

8. Uses of Statistics: Industry Contributions Growth

9. Uses of Statistics: Structural Change in the Economy

10. Uses of Statistics: Measuring productivity

11. Uses of Statistics: Informing Policy Change in Australian sectoral growth rates (percentage points lost or gained) due to net mitigation costs under the 550 parts per million CO2 equivalent scenario, compared to no mitigation, 2013-2100. From the Garnaut review Figure 11.5.

12. Uses of Statistics: Economic and Business Analysis

13. Uses of Statistics: Economic Forecasting Table 3.2: Domestic economy forecasts(a)

14. Uses of Statistics: Policy Evaluation

15. Methods Used The SNA Framework Three estimates: Income, Expenditure, Production Supply & Use Tables Deflation (Chain Volume Indexes) Agriculture Owner Occupied Housing International Comparability Seasonal Adjustment Financial Intermediation Services

16. Methods Used: The SNA Accounting Framework

17. Methods Used: Three ways to measure GDP GDP(P): The production measure that calculates the total value added by producer enterprises in the economy: i.e. the difference between the value of outputs produced and the value of goods and services consumed in production (intermediate inputs) adjusted for taxes and subsides on those products. GDP(E): The expenditure based measure which calculates what government and households spend on the acquisition of those products. GDP(I): The income based measure which sums the earnings which households derive from providing labour and capital services for use in generating production.

18. Methods Used: Three ways to measure GDP

19. Methods Used: Supply and Use Tables Output of Industries at basic prices ImportsTotal supply at basic prices (output of industries plus imports) Trade and transport margins Taxes less subsidies on products Total supply at purchasers’ prices Industry A Industry B Industry C Product A Product B Product C Product D Total Supply Table 1. Supply of products at basic prices and purchasers’ prices

20. Methods Used: Supply and Use Tables Intermediate use by industries Total inter- mediate use Final demand ExportsChange in inventories Total use of products supply at purchasers’ prices Industry AIndustry BIndustry C Product A Product B Product C Product D Total use at purchasers’ prices Compensation of employees Gross operating surplus Other taxes less subsidies on production Industry output at basic prices Table 2. Use of products at purchasers’ prices

21. Methods Used: Supply and Use Tables Output – Intermediate Use + margins + taxes on products – subsidies = Compensation of Employees + gross operating surplus + other taxes on production – subsidies on production GDP(P) = GDP(I) Supply=Use Output + margins + Imports + Taxes on products – Subsidies on products = Intermediate Use + Domestic Final Use + Inventory changes + exports Output – Intermediate Use + Margins + net taxes on products = Domestic Final Use + Inventory Change + Exports – Imports GDP(P) = GDP(E)

22. Methods Used: Supply and Use Tables Reconciles the three measures of GDP Provides a systematic framework for identifying sources of error

23. Methods Used Deflation (Chain Volume Indexes) Agriculture Owner Occupied Housing Financial Intermediation Services International Comparability Seasonal Adjustment

24. Data Sources Classification Business Register Administrative data sources Business Surveys Price Indexes

25. Data Sources

26. Data Sources: Classification Industry: ANZSIC (ISIC Rev3) Commodity: ANZSPC (CPC) ANZSISC (ISISC)

27. Data Sources: Business Register Built on Tax Administration Unduplicated Comprehensive “Profiling” largest/complex firms Core Classifications Births/deaths Size Measures

28. Data Sources Administrative data sources Business Surveys Prices Indexes

29. Resources Compiling Macro Economic Statistics:220 Person Years Compiling National Accounts:64 Person Years Compiling Annual and Quarterly GDP:43 Person Years Compiling GDP(P):11 Person Years Infrastructure and Source Data:292 Person Years

30. Resources FunctionUsed for which approach?Cost (2007-08) Business RegisterP, I and E$3.7m Economic standards and classificationsP, I and E$1.2m Annual Economy Wide StatisticsP, I and E (inventories)$2.5m Labour Employer SurveysI$3m Supply-Use TablesP, I and E$1.3m Quarterly business indicatorsP, I and E (inventories + capex)$3m Retail TradeE$1m International Trade dataE$1.6m ConstructionP and E$2.1m Government Finance StatsP, I and E$2.4m Financial StatisticsP, I$1.8m Consumer Price IndexesE (indirectly I)$2.8m Producer Price IndexesP and E (indirectly I)$2.3m Compilation systemsP, I and E$0.2m Production estimates compilation teamP$0.5m

31. Challenges for the Future Scope Issues New Industry Classification Updated System of National Accounts (SNA 08) Service Industry Output Measurement Global Financial Crisis Maintaining Professional Capability

32. Challenges for the Future: Scope Issues

33. Challenges for the Future: New Industry Classification

34. Challenges for the Future: Updated System of National Accounts (SNA 08) Service Industry Output Measurement Global Financial Crisis Maintaining Professional Capability

35. Thank you & Questions