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Tuesday, 19 August 1980
Page: 360

Underlying the classifications of information in the Budget Statements are national accounting conventions used by the Australian Bureau of Statistics in producing data for the Commonwealth sector and for the economy as a whole. While there are some differences between the treatment of data in the Budget Statements and the treatment in Australian Bureau of Statistics publications (see below), the basic principles are generally the same and are those set out in the 1968 United Nations publication A System of National Accounts, which provides a widely accepted international standard. The use of national accounting conventions allows a consistent treatment of Budget transactions, other public sector transactions, and the transactions of the private sector. Their use thus facilitates an assessment of the interrelationship between the Budget and rest of the economy.

A basic distinction is made in the Budget Statements between 'above the line' transactions - outlays and receipts, the difference between which is the deficit - and 'below the line' transactions - transactions undertaken to finance the deficit. Budget financing transactions are transactions in, or giving rise to, financial assets or liabilities and consist of borrowings and changes in holdings of financial assets such as cash and investments recorded in the Public Account, but excluding advances to other sectors. Such advances are more akin to direct expenditures and transfer payments in their impact and are accordingly classified above the line as outlays.

Budget outlays consist of expenditure on goods and services, transfer payments (such as cash benefits, grants and interest) , and advances. Budget receipts consist of taxes together with interest, dividends, gross operating surpluses of Budget sector business enterprises, and proceeds from sales of existing assets. These categories are used in the National Accounts presentation of information in the Budget Statements.

The adoption of national accounting conventions requires that the receipts and outlay figures in the Statements show the net transactions of the Budget sector with the rest of the economy. Some important implications of this treatment are as follows:

(a)   The transactions of the three Funds forming the Commonwealth Public Account (the Consolidated Revenue Fund, Trust Fund and Loan Fund) are consolidated and inter-fund transfers are eliminated. For example, an appropriation of the Consolidated Revenue Fund paid to a Trust Account through which ordinary government expenditure is channelled (e.g. the Housing and Construction Services and Decentralisation Advisory Board Trust Accounts and various research funds) and the receipt of that transfer from Consolidated Revenue by the Trust Account are netted and not themselves shown as part of either aggregate receipts or outlays; rather the expenditure of the Trust Account is shown in outlays. Thus only transactions between the Budget sector and the rest of the economy are presented.

(b)   Budget outlays are intended to show the net extent to which resources are directed through the Budget to other sectors of the economy. Therefore, recoveries and repayments (usually recorded as Consolidated Revenue Fund receipts) are normally offset against the relevant outlays to arrive at net figures. For example, air navigation charges paid by airlines are offset against outlays on the provision of civil aviation services. Similarly, repayments of principal on advances are offset against the corresponding advances.

(c)   Budget tax receipts are shown net of refunds. Thus income tax receipts, for example, are shown net of refunds of PAYE deductions. Similarly, remissions and reimbursements of import duties and sales tax are offset against taxation collections. Budget receipts include gross operating surpluses from activities in the Budget sector which are carried out as business-type enterprises, i.e. operating revenues less operating expenses other than depreciation. Dividends, etc. from Commonwealth business enterprises outside the Budget sector (which are usually paid into the Consolidated Revenue Fund) are also included in Budget receipts.

(d)   Some Consolidated Revenue Fund transactions are classified as financing transactions. For example, some loan redemptions are met by appropriations of the Consolidated Revenue Fund.

(e)   Certain transactions which are netted in published totals of the receipts and payments of the Public Account are shown in gross form. The more important of these are interest on loans raised by the Commonwealth Government for State works programs and for the Australian National Airlines Commission and Qantas Airways Ltd. Interest paid on these loans is included under the outlay heading 'Public Debt Interest', while interest received on advances made to the relevant authorities is included as a receipts item. This has the effect of making the coverage of interest in the Statements the same as the coverage of the debt to which it relates.

Areconciliation between total outlays shown in Statement No. 3 and the appropriations of the Consolidated Revenue Fund is set out in Tables 1 and 2 of Budget Paper No. 4, Estimates of Receipts and Summary of Estimated Expenditure.

Afuller account of the principles and methods used in the national accounting presentation of Budget data is set out in the Appendix to the supplement to the Treasury Information Bulletin entitled National Accounting Estimates of Receipts and Expenditure of Australian Government Authorities, September 1974.

As mentioned earlier, the principles are essentially conceptually consistent with those used by the Australian Statistician in his publications. However, two significant differences should be noted. First, outlays on primary industry assistance are shown in the Budget Statements net of the relevant primary industry levies and charges but are shown by the Statistician on a gross basis. Secondly, net proceeds from the sale of uranium from the Commonwealth stockpile under arrangements made with certain companies are shown in the Budget Statements as revenues from sales of existing assets; in the Statistician's publications these transactions are treated as reductions in stocks and are netted off outlays.

It should also be noted that in the Statistician's publications separate data are not provided on transactions of the Commonwealth Budget sector and transactions of the Commonwealth Non-Budget sector; the two sectors are aggregated to show the transactions of the Commonwealth sector as a whole.

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