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Statement 8: The Public Sector

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Appendix C: Commonwealth Government Finance Statistics

The Commonwealth Charter of Budget Honesty Act 1998 requires that the budget be based on external reporting standards, and that departures from applicable external reporting standards be identified. The major external standards used in this budget are Australian Accounting Standards (AAS31) and the ABS accrual GFS framework. Statement 1, Appendix A, provides a reconciliation between the Commonwealth's general government GFS and AAS31 revenue, expenses and operating results.

The Commonwealth, States and Territories also have an agreement - the Accrual Uniform Presentation Framework (UPF) - that all jurisdictions publish a common core of GFS-consistent financial information in their budget papers. More information on this agreement, which has recently been updated to an accrual format, is available in Budget Paper No 3.

This appendix presents Commonwealth data on a GFS basis, as required by the UPF. Statistical tables are presented below, showing an operating statement, cash flow statement and balance sheet for the Commonwealth general government, PNFC and consolidated non-financial public sectors. The tables were produced by the Department of Finance and Administration (DoFA) in consultation with the ABS.

As discussed in the introduction to this Statement, the Commonwealth considers the GST to be a State tax, with GST revenue collected by the Commonwealth in an agency capacity. This approach is reflected elsewhere throughout the 2000-01 Budget. However, the technical interpretation of the GFS standards by the ABS treats the GST as a Commonwealth tax, with the transfer of GST revenues to the States treated as Commonwealth grants. In keeping with the Accrual UPF reporting requirements, the tables in this appendix are presented consistent with ABS standards, with Commonwealth revenue, outlays and expenses including GST collections.

Consistent with ABS practice, transactions between the Commonwealth general government and PNFC sectors are included in the tables produced for these sectors, but are removed from the consolidated non-financial sector tables as they are transactions internal to that sector.

Transactions between the Commonwealth non-financial sectors and the public financial corporations (PFC) sector are included in all tables. These transactions include income transfers such as dividends paid to general government, net advances paid by general government to PFCs and taxes paid by PFCs.

Comparison between GFS and Accounting Standards

There is a general consistency of treatment between GFS and accounting standards. GFS and AAS31 definitions of the scope of the public sector agree in almost all cases. AAS31 also recommends the same segmentation of the public sector into general government, PNFC and PFC.

Transactions are generally treated in a similar manner by GFS and accounting standards, however, where GFS is a framework designed to facilitate macro-economic analysis, AAS31 is designed as a standard for general purpose financial reporting. The different objectives of the two systems lead to variance in the treatment of certain items. Some of the major differences between GFS and AAS31 treatment of transactions are included in Table C1. For further information on the differences between the two systems refer to the ABS information paper Accruals-based Government Finance Statistics (Cat. No. 5517.0).

Table C1: Selected Differences between AAS31 and GFS Reporting Standards

Issue

AAS31 Treatment

GFS Treatment

Provisions for bad and doubtful debts and asset writedowns

Treated as part of operating expenses.

Treated as revaluations, except for mutually agreed writedowns, and therefore removed from operating revenues/expenses.

Profit/loss on sale of assets

Treated as part of operating revenues/expenses, possibly as abnormal gains/losses.

Treated as revaluations and therefore removed from operating revenues/expenses.

Abnormal items

Most abnormal items will be recorded below the operating result, although some (eg changes to the outstanding superannuation liability due to revised assumptions) would be recorded above the line.

Abnormal items are considered on an individual basis to ascertain whether it is an economic transaction and in which period the transaction applies.

If it is treated as an economic transaction, it impacts on GFS operating result, otherwise it is treated as a revaluation and removed from the GFS net operating balance.

Benefits to households in goods and services (social transfers in kind) component of personal benefits payments

All personal benefits payments are treated as transfers in operating expenses.

Personal benefits payments that are not paid as direct cash transfers are treated as part of other expenses in the operating statement.

Regulatory Fees

Included in non-taxation revenue.

Predominantly treated as user charges and included in the `Sales of Goods and Services' component of non-taxation revenue.

Fines

Included in non-taxation revenue.

Treated as transfer income as part of non-taxation revenue.

Public debt net interest

Under accounting standards, premia and discounts on the repurchase of debt are included in public debt net interest at the time of repurchase, regardless of whether the stock is cancelled at that time. Issue premia and discounts are amortised over the life of the stock.

Repurchase premia and discounts are treated as economic revaluations at the time the debt is repurchased (provided it is valued at historical cost). The GFS cash flow statement includes repurchase premia or discounts in the year that the repurchased stock is cancelled or matures.

Finance Leases

Treat finance leases as if an asset were purchased from borrowings ie the lease payment is split into an interest component (which is shown as an operating expense) and a principal component.

The asset and the liability are recorded on the balance sheet.

However, this convention does not apply to the cash flow statement, which does not record the acquisition of the asset or the liability.

As per the accounting standard, except that the GFS cash flow statement includes the acquisition of the asset and the liability.

Table C2: General Government Sector Operating Statement

(a) GFS revenue is not equal to AAS31 revenue. GFS revenue includes all (mutually agreed) transactions that increase net worth. Revaluations are not considered mutually agreed transactions, and so are excluded from GFS revenue. Asset sales, which involve a transfer of a non-financial for a financial asset, are also excluded.
(b) GFS expenses is not equal to AAS31 expenses. GFS expenses includes all (mutually agreed) transactions that decrease net worth. Revaluations are not considered mutually agreed transactions, and so are excluded from GFS expenses.
(c) GFS net lending also equals net transactions in financial assets less net transactions in liabilities. The tem `fiscal balance' is not used by the ABS.

Table C3: Public Non-financial Corporations Sector Operating Statement

(a) GFS revenue is not equal to AAS31 revenue. GFS revenue includes all (mutually agreed) transactions that increase net worth. Revaluations are not considered mutually agreed transactions, and so are excluded from GFS revenue.
(b) GFS expenses is not equal to AAS31 expenses. GFS expenses includes all (mutually agreed) transactions that decrease net worth. Revaluations are not considered mutually agreed transactions, and so are excluded from GFS expenses.
(c) GFS net lending also equals net transactions in financial assets less net transactions in liabilities. The tem `fiscal balance' is not used by the ABS.

Table C4: Non-financial Public Sector Operating Statement

(a) GFS revenue is not equal to AAS31 revenue. GFS revenue includes all (mutually agreed) transactions that increase net worth. Revaluations are not considered mutually agreed transactions, and so are excluded from GFS revenue. Asset sales, which involve a transfer of a non-financial for a financial asset, are also excluded.
(b) GFS expenses is not equal to AAS31 expenses. GFS expenses includes all (mutually agreed) transactions that decrease net worth. Revaluations are not considered mutually agreed transactions, and so are excluded from GFS expenses.
(c) GFS net lending also equals net transactions in financial assets less net transactions in liabilities. The tem `fiscal balance' is not used by the ABS.

Table C5: General Government Sector Balance Sheet

Table C5:  General Government Sector Balance Sheet

(a) General government net worth equals assets minus liabilities.
(b) Net financial worth equals total financial assets minus total liabilities.
(c) Net debt equals the sum of deposits held, advances received and borrowing, minus the sum of cash and deposits, advances paid and investments, loans and placements.

Table C6: Public Non-financial Corporations Sector Balance Sheet

(a) Net worth is calculated as assets minus liabilities.
(b) Net financial worth equals total financial assets minus total liabilities.
(c) Net debt equals the sum of deposits held, advances received and borrowing, minus the sum of cash and deposits, advances paid and investments, loans and placements.

Table C7: Non-financial Public Sector Balance Sheet

(a) Net worth is calculated as assets minus liabilities.
(b) Net financial worth equals total financial assets minus total liabilities.
(c) Net debt equals the sum of deposits held, advances received and borrowing, minus the sum of cash and deposits, advances paid and investments, loans and placements.

Table C8: General Government Sector Cash Flow Statement(a)

(a) A positive number denotes a cash inflow, a negative sign denotes a cash outflow.
(b) Finance leases are shown with a negative sign as they are deducted in compiling the surplus/deficit.
(c) Conceptually, the surplus/deficit aggregate contained in the cash flow statement is the same as the deficit measure obtained under the cash UFP. However, in practice, the process of deriving these aggregates differs so that the measures are not directly comparable. Time-series data created by splicing these measures together should therefore be used with caution.

Table C9: Public Non-financial Corporations Sector Cash Flow Statement(a)

(a) A positive number denotes a cash inflow, a negative sign denotes a cash outflow.
(b) `Other payments for operating activities' includes the cash flow to the general government sector from PNFC distributions paid.
(c) `Distributions paid' comprises PNFC dividends to external shareholders.
(d) Finance leases are shown with a negative sign as they are deducted in compiling the surplus/deficit.
(e) Conceptually, the surplus/deficit aggregate contained in the cash flow statement is the same as the deficit measure obtained under the cash UFP. However, in practice, the process of deriving these aggregates differs so that the measures are not directly comparable. Time-series data created by splicing these measures together should therefore be used with caution.

Table C10: Non-financial Public Sector Cash Flow Statement(a)

(a) A positive number denotes a cash inflow, a negative sign denotes a cash outflow.
(b) `Other payments for operating activities' includes the cash flow to the general government sector from NFPS distributions paid.
(c) `Distributions paid' comprises PNFC dividends to external shareholders.
(d) Finance leases are shown with a negative sign as they are deducted in compiling the surplus/deficit.
(e) Conceptually, the surplus/deficit aggregate contained in the cash flow statement is the same as the deficit measure obtained under the cash UFP. However, in practice, the process of deriving these aggregates differs so that the measures are not directly comparable. Time-series data created by splicing these measures together should therefore be used with caution.

Table C11: General Government Sector Expenses by Function(a)

(a) Inclusive of GST payments to States and Territories.

Table C12: General Government Sector Taxation Revenue by Source(a)

(a) Inclusive of GST revenue.

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