NATIONAL
ACCOUNTS: SOURCES AND USES
Use of the national accounts, is a
very
broad topic covering a wide range of issues concerning almost all
economic statistics and the various ways in which the national
accounts can be used by the property industry.
The national accounts provide a
systematic summary of national economic
activity and have been developed to
facilitate the practical application of economic theory. They play a
critical role in the management of the economy through their use in
policy formulation, economic decision making and the evaluation of
economic outcomes for the property industry.
The Australian national accounts are
compiled from a wide range of data
sources. Detailed information about
the
sources and methods used to compile the Australian national accounts
is contained in the ABS publication Australian National Accounts:
Concepts, Sources and Methods (5216.0).
DATA SOURCES OF THE AUSTRALIAN
NATIONAL
ACCOUNTS
The relative size of particular
aggregates, expressed as a percentage of GDP, is a means of
highlighting which data sources have the greatest potential impact on
the national accounts. All figures quoted relate to annual current
price series for the financial year 1993-94 as published in the
1993-94 edition of Australlan National Accounts: National Income,
Expenditure and Product (ABS Cat. No. 5204.0).
The income side of the accounts is
broadly comprised of three aggregates:
- gross operating surplus (GOS)
- wages, salaries and supplement
- net indirect taxes.
By far the largest of these,
comprising
49.2% of GDP, is wages, salaries and supplements.
Wages and salaries are
mainly derived from two ABS surveys, the Survey of
Employment and Earnings (SEE) and the
Labour Force Bu ey (LFB). Due to
unavoidable delays in updating new
businesses on the ABS Business Register, SEE understates total
employment. Consequently, estimates for wages and salaries include:
- an estimate for the unrecorded sector which is calculated
combining average earnings data from SEE with an estimate for
unrecorded job based on a comparison of the number of jobs from SEE and
the LFB (including an allowance for multiple job holders).
- estimates for supplements, which relate to workers' compensation
claims and employers' contributions to superannuation, are derived
mainly from data from the Insurance and Superannuation Commissioner,
the Survey of Major Labour Costs, Commonwealth Budget Papers and ATO
taxation statistics.
Net indirect taxes amount to 11.9% of
GDP. Data are collected by the Public
Finance Section of the ABS using
administrative sources (such as government accounting records and
Commonwealth. and State Budget Papers).
Estimates of GOB are compiled
separately for the foIlowing categories:
- private corporate trading enterprises
- unincorporated trading enterprises
- dwellings owned by persons
- public trading enterprises
- general government
- financial enterprises less imputed bank service charge.
Both private corporate trading
enterprises (14.6% of GDP) an unincorporated trading enterprises
(10.7% of GDP) employ ATO taxation statistics a their principal data
source. A substantial number of adjustments are applied to the raw
ATO data in order to bring them onto the conceptual basis required
for the national accounts.
GOB of dwellings owned by persons
comprised 8.4% GDP in 1993-94.
Although a number of data sources are
used to compile estimates for this item, the most important of these
is the ABS Census of Population and Housing. The population census is
used not only to derive estimates of actual rents pa but also as the
basis for the imputed rent attributed to owner occupied dwellings.
Operating expenses relating to
dwellings owned by persons are derived from a variety of sources, for
example the ABS Household Expenditure Surveys (repairs and
maintenance ) and the Office of the Insurance and Superannuation
Commissioner (dwelling insurance). Operating expenses are deducted
from gross rent in the process of deriving GOB for dwellings
owned by persons.
GOB of public trading enterprises (4.6
% of GDP) and neral government (1.8% of GDP) are relatively minor
components of total GOB. GOB public trading enterprises is derived
mainly from financial statements attach to the annual reports of PTEs
and from Auditors'-General reports. General government GOB estimates
are equivalent to general government consumption of fixed capital
depreciation at current replacement cost) and are derived using a
perpetual inventory model.
Financial enterprises GOB (1.5% of
GDP)
is built up from a range of data
sources including information from ABS
financial enterprise surnveys, the Australian Financial Institutions
Commission, the Reserve Bank Statistics -Bulletin, the Insurance and
Superannuation Commissioner's statistics and Reports of the State
Auditors' General.
The imputed bank service charge (-
2.7%
of GDP) is simply that intermediate
consumption relating to financial
services for which no explicit charge has been levied by financial
institutions. Because of the difficulty involved in allocating this
item to individual industries and institutional sectors, it is
presently simply allocated to the nominal industry (ie, a "dummy"
industry).
SNA93 requires that the imputed bank
service charge be allocated to industries and sectors. Data sources
are the same as those used for estimating financial enterprises GOS.
On the expenditure side of the
domestic
production account, GOP is calculated as the sum of:
- final consumption expenditure
- gross fixed capital expenditure
- increase in stocks
- net exports of goods and services.
Final consumption expenditure is
broken
down into private tin consumption
expenditure (PECE) and government
final consumption expenditure.
PFCE equivalent to 61.7% of GDP)
comprises a wide range of goods and services purchased by households.
A wide array of data sources, both periodic and regular, are used to
compile estimates for this aggregate.
However, by far the most important
data
sources are the periodic retail census (to provide a benchmark for
mo of the goods components of PECE) and the monthly Retail Survey
(used to interpolate between, and extrapolate from, the benchmark
estimates). Other data sources include the Census of
Population and Housing, the Household
Expenditure Survey and the Survey of Motor Vehicle Usage. Government
final consumption expenditure (equivalent to 18.2% of GDP) is
derived from administrative sources such as Commonwealth and State
budget papers, Department of Finance ledgers and a joint
ABS/Commonwealth Grants Commission annual return from local
government bodies.
Private gross fixed capital
expenditure
(private -GFCE) comprises four
components: dwellings, nondwelling
construction, equipment, nd real estate transfer expenses. Private
GFCE represents 15.9% of GDP. Private CE on equipment (7.0% of GDP)
is mainly derived from ATO taxation statistics, though data from the
ABS's quarterly survey of new capital expenditure are used to
extrapolate from the latest ATO benchmark.
The ABS Engineering Construction
survey
and Building Activity Survey provide the main source data for
estimates of GFCE nondwelling
construction. Private GFCE on
dwelling
construction is calculated using information from the ABS quarterly
Survey of Building Activity. Taxation statistics, the periodic ABS
survey of real estate agents and lawyers and information from the
State Stamp Duties Offices provide the main sources of data used in
deriving GFC of real estate transfer expenses.
Public GFCE is shown separately for
public enterprises and general
government, with each contributing
2.1%
to GDP in 1993-94. Public GFCE is estimated from the same sources
used to compile estimates of government final consumption
expenditure.
Increase in stocks represented only
0.2% of GDP in 1993-94, though the volatility of this item makes it a
much more important influence on movements in GOP than this
proportion would otherwise suggest. The principal sources of data
are: the ABS quarterly Survey of Stocks Owned by Private Enterprises;
information provided via returns of the commodity marketing
authorities; and estimates ken from the ABS Government Finance
System.
Exports and imports of goods and
services amounted to 9.3 per cent and
(minus) 19.5 per cent of GDP
respectively in 1993-94. Both of these items are
produced through the ABS Balance of
Payments System. Data, are derived principally via foreign trade
statistics from records maintained by the Australian Customs Service
(ACS), though a substantial number of adjustments are made to account
for factors relating to timing, coverage and valuation.
In summary, taxation statistics are
used principally in relation to GOS of
incorporated enterprises and non-farm
unincorporated enterprises and also for private GECE on equipment.
0. NATIONAL ACCOUNTS USE OF AGGREGATE
A OlNOOME TAX DATA
FOR BUSINESSES
18. The Nationai Accounts use
Branch of the ABS
e tax data Supplied by the -
ATO for Corn anies,
Partnership8 and Trusts, and lndividu Is to provide annual
benchmarks or ustralia for the
following aggregates:
* gross operating surplus
of private corporate trading - terprises (in total and by
industry);
- gross operating surplus
of non4arm Uninqorporated t - ding enterprises (in total
and by industry);
* private gross fixed
capital expenditure on equipmdnt n total, by industry and by
institutional sector);
- corporate income tax
payable (separately for corpora - trading enterprises and
finanUal enterprises);
- dividends paid by
cQrporate trading enterprises and fi ncial enterprises;
- dividends received by
corporate trading enterprises a households;
* interest receipts and
Payments by industry for corpora trading enterprises and
unincorporated
enterprises;
* lease payments in total
and by industry (ideally this sh uld only be those relating - --
to finance leases) useq
in calculating GOS for corpora trading enterprises and
unincorporated
enterprises;
½ * business income for
certain "professional" industries, 5 ch as real estate
agents,
lawyers and medical
practitioners, is used to estimate r extrapolate
- benchmarks from other
sources in respect of) some co ponents of private final
consumption expenditure
and real estate transfer expe ses.
Fringe benefits tax daja are
used to estimate the value of frin - benefits provided to
employees (included in wages
and salaries).
19.
ATO income tax data for
Individuals and Partnerships a d Trusts, by State and
Territory, are also used in
compiling State and Territory estim 5 for gross operating
surplus of Unincorporated
enterprises, and various component of household income
and income tax paid which are
published in the annual publica n Auskallan National
Accounts: State Accounts (ABS
Catalogue No. 5220.0).
20. Data from Company income
tax returns. For the cor rate sector the ABS
has generally had access to
unit record data although, until the hanges to the Tax Act
in 1986, companies were not
identified by name. Unit record d ta in respect of
corupanies are requir9d for
many purposes including:
* to distinguish data
relating to public trading=enterprise5 ( ese need to be
excluded as data from
Public Finance Section are used i preference to ATO
data for these
enterprises);
* to distinguish data
relating to financial enterprises since ta from other sources
are more suitable for
national accounts compilation;
- to enable adjustments
to capital expenditure on equi ment to fully account for
finance leasing (which
is not recorded by the lessee ATO data and not always
¼ by the lessor either);
- balance date adjustment;
- to estimate for
significant missing returns;
- to adjust for large
capital losses and/or gains for part ular enterprises.
21. Data from Individuals and
Partnerships and Trus income tax returns. For
non-farm unincorporated
enterprises, aggregate data only h ve been used
(Partnerships and Trusts and
Individuals), although special bulations are required to
obtain separate information
for partnerships and trusts in w - h the partners and unit
holders are predominantly
companies. The data in respect such partnerships and -
trusts must be excluded from
estimates for the unincorporat - enterprises sector as
they will be already included
in respect of corporate trading 1nterprises or financial
enterpnses.
22. There are a number of
issues relating to the use of in Qme tax data in compiling
national accounts aggregates,
namely;
(a) The quality of industry
coding and its consistency wit ABS industry coding are
obvious concerns to the
National Accounts Branch. cent moves by ATO to
adopt ANZSIG industry
coding are welcomed.
(b) Adjustments are made to
income tax data to allow for- - nderstatement of income
(or overstatement of
expenses) by business taxpayer - when compiling national
accounts estimates.
Ml- - (c) The national accounts
estimates for the farm sector a based mainly on ABS
data (principally from
the annual Agricultural Census wid the Agricultural Finance
Survey) rather than
income tax data. This avoids ha g to make explicit
allowances for
understatement of income for tax purp sos for this sector of the
economy. A further
advantage of this approach is th it ensures consistency
between the current and
constant price estimates for a farm sector.
(d) - The inclusion of capital
gains/losses in the profits dat-available from income taxreturns from companies
is a significant problem for national accounts
compilailon.
(e) For purchases and
disposals of depreciable assets th National Accounts Branch
only wants capital
equipment since data from ABS su eys are used to estimate
capital expenditure on
dwellings and nondwelling co truction.
(f) The treatment of
finance leasing has been a significa complication because
lessees have not been
required (in fact, not allowed)- report finance lease
payments as capital
expenditure while various arrangments have applied for
lessors. In some cases
lessors have also not been r- uired to report capital
expenditure on assets
which they have purchased as e lessor in a finance
lease arrangement.
(g) In various areas, tax
data are potentially a useful sou a of data (in each case in
total and by industry),
eg, wages and salaries; emplo - r contributions to
superannuation; bad
debts; and changes in inventorie.
(h) The compilation of
separate estimates for the non-pro t institutions sector is a
requirement of SNA93.
Hence there is considerable i erest in being able to enable adjustments to
capital expenditure on equipm t to fully account for
finance leasing (which is
not recorded by the lessee in 0 data and not always
by the lessor either);
balance date adjustment;
to estimate for
significant missing returns;
to adjust for large capital
losses and/or gains for particu r enterprises.
21. Data from Individuals and
partnerships and Trusts come tax returns. For
nonftarm unincorporated
enterprises. aggregate data only ha -been used
(Partnerships and Trusts and
Individuals), although special ta lations are required to
obtain separate information for
partnerships and trusts in whic the partners and unit
-holders are predominantly
companies. The data in respect of - uch partnerships and -
trusts must be excluded from
estimates for the unincorporate nterprises sector as
they will be already included in
respect of corporate trading e erprises or financial
enterprises.
22. There are a number of
issues relating to the use of inc e tax data in compiling
national accounts aggregates.
namely:
(a) The quality of industry
coding and its codsistency with BS industry coding are
obvious concerns to the
National Accounts Branch. Recent moves by ATO to
adopt ANZSlG industry
coding are welcomed.
(b) Adjustments are made to
income tax data to allow for nderstatempnt of income
(or overstatement of
expenses) by business taxpayer hen compiling national
accounts estimates.
(c) The national accounts
estimates for the farm sector a- based mainly on ABS
data (principally from the
annual Agricultural Census- d the Agricultural Finance
survey) rather than income
tax data. This avoids hav - g to make explicit
allowances for
understatement of income for tax purp~ sos for this sector of the
economy. A further
advantage of this approach is th it ensures consistency
between~the current and
constant price estimates for e farm sector.
(d) - The inclusion of capital
gains/losses in the profits dat available from income tax
returns from companies is a
significant problem for national accounts
compilation.
(e) For purchases and disp£sals
of depreciable assets t National Accounts Branch
only wants capital
equipment since data from ABS 5 veys are used to estimate
capital expenditure on
dwellings and non-dwelling co struction.
(f) The treatment of finance
leasing has been a signific t complication because
lessees have not been
required (in fact, not allowed)o report finance lease
payments as capital
expenditure while various arran ments have applied for
lessors. In some cases
lessors have also not been quired to report capital
expenditure on assets which
they have purchased athe lessor in a finance
lease arrangement
(g) In various areas, tax data
are potentially a useful so ce of data (in each case in
-total and by industry), eg,
wages and salaries; empl er contributions to
-superannuation; bad debts;
and changes in invento - 5=
-(h) The compilation of
separate estimates for the non-p fit institutions sector is a
requirement of 3NA93. Hence
there is considerabl interest in being able to
identity non-profit
institutions in ATO income tax statis os and in ATO coverage
sources which could be
used for updating the ABS bu iness register.
-(i) In the past. incomplete
processing of income tax retur s, particularly for non-
taxable companies and
partnerships and trusts, has b en a significant problem.
23. Several years ago the ABS
embarked on a strategy t both improve the source
data available for the
national accounts and to provide more omprehensive annual
industry statistics for the
whole economy. This strategy invo ed the development of an
annual economy wide collection
- the Economic Activity Su {y (LAS). LAS-has two
elements - a completely
enumerated large business sector a d a sample of smaller
businesses, A fundamental
element of the strategy to impro the national accounts
involves using LAS data for
large business in preference to t xation data. The LAS
data are considered to be
preferable for the following reason
- (a) Income tax data are
only available in respect 0 legal entities, whereas the
LAS data are
available for management units ( roducing units delineated
-with the aim of
maximising industry homogenei at the 2-digit level of -
ANZSlG for which
activity should be largely co ined to a single industry).
This distinction is
important for large businesse which typically have
operations spanning
a number of industries an a complex structurq of
legal entities.
(b) The definitions of
items on the LAS form can b specified to suit national
accounts
compilation as far as this is practicab . Although significant
progress has been
made towards ensuring tha the statistical data items
on income tax forms
are as close as possible t the corresponding items
on the EAS form
complete uniformity has not y 1 been achieved. Hence
the LAS provides a
better basis for collecting i ormation according to
national accounts
requirements.
-\(c) Data from LAS
should be more timely than tho - from ATy sources.
9
(d) Data from LAS can
be subjected to more rigou us editing than applied by
the ATO and, where
necessary, unusual respo ses to LAS questions
could be queried
with the respondent.
* 24. For medium and small
businesses the arguments in f our of ABS collected data
-are not so strong. In fact,
studies undertaken indicate that d-ta reported by these
businesses in ABS surveys
align reasonably well with data r orted to the ATO. In
- addition, minimising
reporting load for these businesses pro des a compelling
-argument in favour of~using
ATO data if practicable.
D. THE NATIONAL ACCOUNTS AND
THE UNDEROR UND ECONOMY
The National Accounts Branch is keen
to
quantify the understatement of income (or overstatement of expenses)
in taxation statistics. Howe r, this item represents just
one component of the so-called
"hidden" or underground ec omy. To put
understatement of income into
its national accounts context, t is necessary to outline
what is meant by the hidden
economy. Broadly speaking, t hidden economy
represents all of those
production activities that should be in uded in GOP, but which
may be missed because one or
more of the parties involved - -ries to hide them from the relevant
public authority. More specifically, the hidden econ my could be
thought of as comprising the following activities:
--(a) economic
activities that are legal in their own ht but which are
deliberately
concealed from the authorities so 5 to avoid paying tax or government
charges;
(b) production of
illegal goods and services; and
(c) employee theft (which
should be- recorded as wage and salaries rather than as intermediate
consumption).
A failure to cover these activities
will result in measure lOP falling short of-
the ideal concept of GOP, that is,
as it is defined in 8NA93. Suc - a fdilure will lead to national
accounts aggregates which understate the size and pos ibly the growth
rate of the economy, which contain biased saving ratios, and which
pre nt a misleading picture of the structure of the economy. In terms
of the three cat ~gories aboo'e, income
tax statistics will not record the
activiW in relation to (a). They wi probably not record a
great deal of income relating to
item (b) but they will probably tre t most employee theft
(item (c)) as current business
expenses rather than as wages a salaries.
There are a number of approaches to
measuring undecla d legal activity (item
(a) above). However, the most
common method used world wid is to compare estimates of GOP derived
from independent sources, that is, to mpare GDP(l), GDP(E) and, if
produced, GlOP(P). It is usually assumed that th - income flow
generated by an-unrecorded (but
legal) transaction will be conc led by the recipient
but the expenditure will usually
be reported by the purchaser. nsequently, some or
all of the excess of GDP(E) over
GDP(l) can be attributed to unr corded legal
transactions. This approach has
been used in Australia in conj ction with more direct
estimates of understatement (see
paragraph 34 below).
Another approach is to use statistics
from income tax au ts. If the audit system
is based on a random sample of
taxpayers the under-reporting vealed by the audit
can be applied to the national
population of taxpayers. Audits sed on non-random
samples are less useful for this
purpose since they are likely to rovide a biased
estimate of the level of
understatement. For example, audits th I target a particular
industry or group of taxpayers who
are identified as likely to be nderstating their
income are not random sample
audits.
29. There have been numerous
attempts to determine the e ent of the hidden
economy in various countries by
examining the nature of the u of currency within the
economy. At the most basic level
this approach involves consi ring the ratio of the
volume of currency in circulation,
0, to demand deposits, 0. A increasing 0/10 ratio is
argued to reflect a greater
relative use of cash as the hidden e nomy grows. Of
course, such an approach is
sensitive to the base year chosen nd cash holdings may
increase relative to money supply
for a number of reasons, not ecessarily connected
with the hidden economy. (Works on
this approach include Gu ann (1977) in the UAA
and Tucker (1982) in Australia.)
Although a variety of more so histicated econometric
models has been constructed using
this particular approach to easure the hidden
economy, such models typically
rest heavily on assumptions t t are difficult or
impossible to test (examples of
such work include Hepburn (1 2) in Australia and Tanzi (1982),
lsachsen et al (1982), and Bhattacharyya (1990) - verseas).
30. A further option is one best
described as the "expenditu - approach". it was
used in a paper by N.W.F. Fisher
of the Bureau of Labour Mar ;et Research (1983). -
Fisher examined only the
expenditure side of the national acc nts. He assumed that
unrecorded transactions in the
public sector are likely to be ne ligible in a country like Australia.
This allowed him to concentrate on private final con
umption expenditure,
private gross fixed capital
expenditure and increase in stocks old by the private sector
as potential areas for the
"hidden" economy to be exposed. F r each of these three
items (but particularly private
final consumption expenditure a d private gross fixed
capital expenditure) the
aggregates were dissected as far as ssible. The approach
then involved building up an
intimate knowledge of each of th categories for which
esfimates were produced so that
judgements could be made out the likely extent of
understatement for each category.
While such judgements a - necessarily subjective,
they are likely to be more
accurate when applied to individual ems of private final consumption
expenditure and capital expenditure than wh n applied at the broad
- - economy level. An advantage of
this
method is that estim tes for all components of the
hidden economy (ie; items (a)
to (c) above) can be jointly stimated.
In relation to item (b) above, SNA93
specifically recommends that production of illegal goods and services
be included within the producti - boundary, that is, they
should form pad of GOP.
Intuitively, this would include pr uction relating to illegal
drngs, illegal prostitution
and illegal gambling. A lack of 5 rce data prevents most
countries from explicitly
including illegal production in thei - ational accounts, Those
countries which have tried to
measure illegal production u ally employ somewhat
dubious methodologies in
attempting to measure a subset] - f total illegal production. For
example, estimates relating
to the illegal importation- and bsequent domestic
distribution of cigarettes
have been included in the Italian tional accounts, Imports,
wholesale and retail trade
and private final consumption e - enditure in the Italian
national accounts have all
been adjusted to include the e -cts of the illegal cigarette
trade. However, these
estimates have been based mainl n records of seizures of
contraband cigarettes by
customs authorities - records th - would intuitively not provide
the means to accdrdtely
measure the extent of illegal distr - ution.
Employee theft includes direct theft
of
materials an supplies by employees from the place of work and office
fraud, for example, falsificatio of expense accounts and
the use of employers'
property for private purposes. The fect of these activities is to -
understate GOP because goods
and services stolen by e - loyees are mistakenly
treated in the employers'
accounts (and therefore the nati ial accounts) as intermediate
consumption rather than as
wages and salaries. There ar no reliable national statistics
on the extent of employee
theft.
UNDERSTATEMiENT OF INCOME IN TAXATION
TATISTICS
This section narrows the focus to deal
specifically th the understatement of
income (and overstatement of
expenses) in ATO taxation atistics. National accounts
estimates of gross operating
surplus for the private sector of the economy depend
mainly on income tax data
from the ATO (as outlined in P - 5 8 and 0 above).
Consequently any
understatement of
income in the aggre te income tax statistics will
flow on to the
national
accounts unless the national accou tants make explicit
adjustments for such
understatement. Understatement of- come in the data used to
compile gross
operating
surplus estimates for private corp rate trading enterprises and
non-farm
unincorporated
enterprises in the national accou ts can arise from any of the
following three possibilities;
(a) understatement
of
income or overstatement f expenses in respect of
- taxpayers that are
included in the data provi d to the ABS; -
(b) omission of
information for some taxpayers cause the data are not
included in the
tabulations/files supplied to th ABS (eg, data reported to
the ATO but not
included in statistical extrac- ns, or late returns not
lodged by the time
the statistics are extracte; and
(c) omission of
information for some businesses ecause they do not comply
with the
requirement to lodge taxation return
34. The ABS has
applied an
upward adjustment factor the estimates of nonftarm
-unincorporated
enterprise
income and company income si ce the 1g84-85 issue of the
annual accounts
(5204.0). The
current system used to adj St for the understatement of
business income in
taxation
statistics evolved from initial e timates of the revenue
foregone through
understatement of business income in t returns which were
produced by the ATO
and
included in the June 1085 Draft hite Paper "Reform of the Australian
Tax System" - business non-compliance. It would be
enormously beneficial fo - the ABS to nave access to such data as a
means of updating the estimates of uh erstatement of business income
in the taxation statistics.
USE OF NATIONAL
ACCOUNTS DATA IN
MEASURIN NON~COMPLIANCE
38 For internal
management purposes the
ATO would need 0 regularly estimate the
extent of
non-compliance in the
business sector in relation to in ome tax and other
taxes such as sales
tax and fringe
benefits tax- Similarly, esti tes would be required of the extent of
non-compliance by individuals in relation to inc e tax. Obviously the
ABS would be
interested in those
estimates of understatement f business income
relating to both
companies and non-farm
unincorporated busin ses. If ATO estimates
of business
non-compliance are directly
or indirectly derived us g national accounts
estimates for
incorporated and
unincorporated enterprises inco e, then there could be
a problem. Since the
ABS derives its
estimates of incorporat and unincorporated
enterprises income
from taxation
statistics and since these esti ates are adjusted upwards to counter
inherent understatement of income (on the asis of factors that are
either dated, or at
least partially
subjective) any attempt by AT - to use national
accounts data to
estimate
non-compliance in the business sec r will necessanly involve a degree
of tirculan'V It is therefore important that due allow - - ce is made
for the way
in which the national
accounts
estimates of incorporated and u incorporated enterprises
income are compiled,
when preparing
estimates of the extent non-compliance by businesses in- relation to
income tax.
National Accounts
Branch
-Australian Bureau of
Statistics
NATIONAL ACCOUNTS
National accounts are
designed to
provide a system ie summary of national
economic activity and
have been
developed to facilitate the practical application of economic theory.
At their summary level, the national income, expenditure and product
accounts reflect the key economic flows of the Keynesian system:
production, income, consumption, investment and saving.
At their more
detailed level they are
designed to present a statistical picture of the structure of the
economy and the detailed processes that make up domestic production
and its distribution.
The national accounts
show key account
aggregates which are generally
accepted as
indicators of the state of
the economy. Trend in national income and in related aggregates such
as gross domestic product give an immediate indication of how-the
economy fared in the past year and provide a basis for predicting
what is hoped to be achieved in the coming year.
PURPOSES OF NATIONAL
ACCOUNTS
Within the
constraints of the
principles and practice of business and government accounting,
national accountants attempt to construct a statistical picture of
the key economic processes centred around the measurement of
market-based activity (ie activity associated with the production of
goods and service resulting in income generation, sales to overseas
markets, domestic consumption and capital formation).
National income and
other indicators of
economic growth measure an important aspect of a country's
well-being. However, they do not necessarily provide an indicator of
the ultimate (but less quantifiable) objectives relating to the
improvement of the welfare or `quality of life' status of the people.
USE OF NATIONAL
ACCOUNTS IN DECISION
MAKING
National Accounts are
powerful tools of
policy . In one form or another they
find their way into
activities such as
the following;
-
Quarterly national accounts are well
established in Australia as a central organising framework for
monitoring the current performance of the economy (eg, in regard to the
pattern of inc me flows, the strength and composition of demand,
capital formation a d output).
-
In terms of short-term forecasting
of economic activity, the quarterly and annual national income,
expenditure and product accounts provide and anticipate impending
crisis situations.
-
The national accounts provide the
general setting for planning and property investment.
-
The models for forecasting economic
activity and for simulating the effects of policy on the behaviour of
the economy are heavy users of the disciplined data available in the
national accounts.
-
Studies of the structure of income,
of the imposition of demand, and of the industrial composition of
production a necessarily based on national income, expenditure and
product accounts and input-output studies. The accounts can tell the
property professional a great deal about this directly and provide a
framework for the more detailed supporting statistics.
-
contributions to international
organisations (eg, the United Nations) and eligibility for
international aid depend on national accounting measures, such as gross
national product per capita. Investigations by aid agencies invariably
begin with a study of the economy in ter of standard national
accounting presentations.
INDIRECT USES OF
NATIONAL ACCOUNTS
There are many other
areas of
application of national accounts in planning and management.
-
In a sense, all uses of economic
statistics are made against the
background of the economic
relationships exhibited a system of national accounts. This is true
even where the national accounts of a country are not well developed in
terms of the number and detail the accounts and tables presented, or
where the estimates have a considerable element of conjecture because
of the poor quality of the supporting basic statistics. In such cases,
the accounts at least show the logical relationships between the
various economic flows and provide orders of magnitude which may set
the particular use of economic statistics into a broad perspective and
guard against gross misunderstanding of their meaning.
-
In addition to the direct use of
national accounts est ates in economic planning and management at
various levels, the accounts have indirect but important uses. Thus the
accounts are also in demand as a tool for illustrating economic theory.
In fact, much of the treatment of national accounts in economics
textbooks has tended to concentrate on using them to illustrate
macro-economic theory rather than to teach national accounting as such.
In the development of the national accounts the identities of Keynes'
General Theory of Employment, Interest and Money have been a strong
influence on their design.
a powerful force in
the
integration of statistical collections.