IMPLEMENTATION OF SYSTEM OF
NATIONAL ACCOUNTS 2008 AND
BALANCE OF PAYMENTS AND
INTERNATIONAL INVESTMENT
POSITION MANUAL 6TH EDITION BY
THE AUSTRALIAN BUREAU OF
STATISTICS
Michael Davies,
First Assistant Statistician,
Macroeconomics and Integration Group,
Australian Bureau of Statistics
1
The ABS…
• … is Australia’s official national statistical agency.
• … has the authority to conduct statistical
collections.
• … has obligations to publish and disseminate
compilations and analyses of statistical
information, and to maintain the confidentiality of
information.
• …ensures formulation, and compliance with,
standards for the carrying out by official bodies of
operations for statistical purposes.
2
Standards used in Australia
• The ABS is a strong contributor to the development of
international standards.
• 2008 System of National Accounts (2008SNA)
• Balance of Payments and International Investment
Position 6th edition (BPM6)
• Australian and New Zealand Standard Industrial
Classification 2006 (ANZSIC06…..consistent with
ISIC REV 4)
• Standard Economic Sector Classifications of Australia
2008 (SESCA08)
3
Management of change process
• Industry classification fundamental – integral to
ABS systems and databases
• Simultaneous implementation of
2008SNA/BPM6/SESCA08 to minimise
disruption, a ‘big bang approach’.
• Therefore, long lead times for implementation of
changes
– Need to ensure funding/resourcing
– Need to ensure business continuity
4
Standards change control
• ANZSIC Implementation Board and
Macroeconomic Statistics Review Committee set
up in 2005
– Methods board to assess and document changes
• Transition plans to identify and prioritise tasks
– Together with risks and risk mitigation strategies
• Communications plans to identify key clients and
communication mechanisms
• Implementation workshops, information sessions
and publications
5
Principles
• Standards
• Timing of implementation
• Coordination and consultation
6
Standards
• Departures from standards:
– few in number & demonstrate a significant benefit or
avoidance of an unwarranted cost
– carried through to all accounts/statistics
– enable a straightforward reconciliation with the
standard where feasible
– be implemented after extensive consultation and
publicity
• Proposed departures were discussed with major
users
7
Departures from standards
• 2008 SNA
– Repurchases agreements and securities lending
– Databases
– Change from ‘consumption of fixed capital’ to ‘depreciation’
– Goodwill and marketing assets
– Valuation of water
– Some components of illegal economy
– The debtor approach to recording interest:
1. Realistic e.g. Current market yields
2. Avoids artificial measurement e.g. indexed debt, concessional
loans.
8
Departures from standards
• BPM6
–
–
–
–
–
Repurchase agreements
Treatment of originals and copies
Treatment of patented entities
Goodwill and marketing assets
Reclassifications for exchanges in international
positions
– Treatment of holding companies
– Signage
9
Timing of implementation
• Changes resulting in changes to GDP should be
at same time
– Needs 3 year lead time for Australian National
Accounts
– Some consideration of other changes can take place
• Decided to release on the quarter that coincided
with the annual publication (Sept quarter 2009,
published in December 2009)
10
11
Timing (Big bang approach)
• ABS implemented all changes at once:
– Pros
• minimised disruption for clients
• reduced total cumulative effort:
– system, questionnaire changes
– balancing
– Cons
•
•
•
•
made it a very large task
was difficult to disentangle individual impacts
not all standards / issues finalised in time
was difficult to be responsive to change
12
Coordination and consultation
• Must be centrally coordinated
• Provide clients and stakeholders with
sufficient information to manage their own
changes.
• Consulted regularly with key clients
– In Australia these include the Reserve Bank
of Australia and The Treasury.
13
Extensive User Consultation
• A series of information papers released between 2004 and
2009
–
–
–
–
–
2004 information paper on ANZSIC development
2006 information paper on ANZSIC implementation plans
2007 information paper on introduction to revised SNA/BPM
2008 update on ANZSIC implementation
2009 information paper on implementation of revised SNA/BPM
• Consultation with key government agencies and other users
– Including road shows in each State and Territory
14
Managing a long time series under new
standards
• Implementation involved extensive changes to statistical
infrastructure
–
–
–
–
Business Register coded to ANZIC 2006 from March 2006
Creation of new survey frames
Back casting methodologies
Systems reengineering and database changes
• Parallel runs to generate ‘bridged data’ for measurement of
impact
• Progressive migration of collections
– Starting in 2006
– Culminating with the National Accounts in SQ09
15
Changes to data collections
• ABS has a strong integrated suite of economic
collections from Survey and Administrative data
• Easy changes
– Changes to in-house economic surveys
– Changes to estimation models
• Complex changes
– Changes to systems and processes
– Changes to compilation of Supply-Use tables after
changes
– Changes to external administrative collections (Tax data,
prudential information)
16
General business of statistics process map
17
Changes to data collections – financial
account
• New financial sector classification
– Separation of money-market funds and other
investment funds.
• Only those investment funds investing
predominantly in financial assets are
treated as financial corporations.
– Small divergence from standards.
18
Changes to data compilation –
Input-Output
• Made complex from changes to industry
classification
• Divergence from 2008SNA use of
Producer Prices
– Users prefer Basic Prices since Transport is
an important consideration
– Continued use of 1968SNA methodology
19
Impacts from implementing new
standards
• Level shift in GDP aggregate
• Minimal change to growth rates
• Minimal change to Current Account
Balance
• Minimal change to International
Investment Position
• Minimal change to Net Foreign Debt
20
GDP SEASONALLY ADJUSTED SERIES, CVM—%change
GDP SEASONALLY ADJUSTED SERIES, CVM—Levels
%change
2
2008SNA
1993SNA
SNA08
SNA93
million
320000
300000
1
280000
0
260000
–1
Sep
2004–05
Mar
Sep
2005–06
Mar
Sep
2006–07
Mar
Sep
2007–08
Mar
Sep
2008–09
Mar
240000
Sep
2004–05
REVISIONS TO GDP GROWTH, Seasonally adjusted CVM
Mar
Sep
Mar
2005–06
Sep
2006–07
Mar
Sep
2007–08
Mar
Sep
2008–09
Mar
CURRENT ACCOUNT SEASONALLY ADJUSTED SERIES, Levels
mean revision
latest revision
%
0.6
$m
–6000
BPM6
BPM5
0.4
–9000
0.2
–12000
0
–15000
–0.2
–18000
–0.4
Jun
2008–09
Sep
2009–10
Dec
Mar
Jun
Sep
2010–11
Dec
Mar
–21000
Sep
Mar
Sep
Mar
Sep
Mar
Sep
Mar
Sep
Mar
Sep
2004–05
2005–06
2006–07
2007–08
2008–09
2009–10
21
NET FOREIGN DEBT, Original series—Levels
BPM6
BPM5
$m
700000
600000
500000
400000
300000
Sep
Mar
Sep
Mar
Sep
Mar
Sep
Mar
Sep
Mar
Sep
2004–05
2005–06
2006–07
2007–08
2008–09
2009–10
NET IIP AT END OF PERIOD, Original Series—Levels
BPM6
BPM5
$m
800000
700000
600000
500000
400000
Sep
Mar
Sep
Mar
Sep
Mar
Sep
Mar
Sep
Mar
Sep
2004–05
2005–06
2006–07
2007–08
2008–09
2009–10
22
Challenges from implementing new
standards
• R&D
• FISIM
• These will be described in more detail
later
23
User response to implementing
new standards
• Global Financial Crisis influenced user views on
new standards
– Calls for a delay to the publication release
– Problems with coherence in accounts were of
concern
• Little user response to 2008SNA/BPM6
changes were the result of a good
communication plan
24
Areas of user concern
• Unfunded pension liabilities was not a
problem as they were already done.
• Little impact on productivity measures post
capitalisation of Research & Development.
• Financial Intermediation Services Indirectly
Measured (FISIM) performed badly during
crisis.
• Change to performance indicators which
relied on GDP.
25
Implementing Research &
Development case study
• Principles:
– Treat expenditure on R&D as capital formation.
• Should be in terms of future economic benefit.
• Practically, this is difficult to measure.
– Value R&D output at market prices.
• Most R&D is own account and there is no recognised market price
• ABS valued R&D at cost.
• Difficulty in assigning an asset life for depreciation
– Assume international trade in R&D is covered by trade in
services collection.
• Makes little difference to productivity story
26
International reporting obligations
• Problems with early adoption – out of step with other
countries.
• Evolution of new standards and reporting obligations
outside of a formal framework
– G20 finance ministers
– Basel III developments
– Globalisation indicators (for example: Ultimate
beneficiaries/owner, foreign affiliates)
• Delay in some complementary manuals development
(eg. Government Finance, Trade in Services)
27
Timeline for Standards and Disasters
Bear Stearns
falls
Lehman Bros
falls
Planning and funding bid
development
Market
bottoms
Funding
granted
ANZSIC
2006
Cyclone
Floods
Tsunami - Japan
Sovereign debt crisis
Development of A06
ANZSIC
released
Implementation
Industry collection project
board established
Dual coding
of
units ceases
Industry surveys
Funding
migrated to ANZSIC ceases
Decision to proceed
with implementation
of standards
Release of NA/BOP
on new standards
Development of Standards
SNA08/BPM6
/SESCA 08
Implementation
Steering com'tte
established
Jan-2002
Jan-2003
Jan-2004
Jan-2005
NPP funding
granted
Jan-2006
Funding ceases
Jan-2007
Jan-2008
Jan-2009
Jan-2010
Jan-2011
28
The Financial Crisis
•
Global Financial Crisis hits in December 2008 following the collapse of
Lehman Bros
– Prior to this it was difficult to anticipate the full scale of the crisis and its impact on
transmission mechanisms
•
By this stage a number of critical implementation milestones had been
passed
– Dual coding of the units frame ceased in June 2008
– Migration of the annual industry collections in August 2008
•
•
•
Government funding for SNA implementation ceased at the end of 2009.
FISIM estimates became unstable impacting on financial industry output
and consumer prices index.
Statistics on derivatives, the main transmission mechanism for the GFC,
are a significant data gap in Australia.
29
Some economic phenomena during volatile times
MINING GVA AND ALL EXPORTS TO CHINA, Seasonally Adjusted and Orginal
TERMS OF TRADE, Seasonally adjusted
index
120
Mining GVA
Exports to China
$m
40000
100
30000
80
20000
60
10000
0
40
Mar
Sep
Mar
2005–062006–07
Mar
Mar
Mar
Mar
Mar
Mar
Mar
Mar
Mar
1993–94 1995–96 1997–98 1999–00 2001–02 2003–04 2005–06 2007–08 2009–10
FINANCE GVA, Seasonally Adjusted
Sep
Mar
Sep
2007–08
2008–09
Mar
Sep
Mar
Sep
2009–10
2010–11
Mar
FINANCE SECTOR GROSS OPERATING SURPLUS, Seasonally adjusted
Finance A93
Finance A06
$m
35000
$m
18000
Finance Sector GOS S98
Finance sector GOS S08
15000
30000
12000
25000
9000
20000
6000
15000
3000
10000
Jun
1995–96
Jun
1997–98
Jun
1999–00
Jun
2001–02
Jun
2003–04
Jun
2005–06
Jun
2007–08
Jun
2009–10
0
Jun
1995–96
Jun
1997–98
Jun
1999–00
Jun
2001–02
Jun
2003–04
Jun
2005–06
Jun
2007–08
30Jun
2009–10
Managing national accounts in a volatile
environment and lessons learned
• Long period of stable growth in Australia from 1992 to mid-2000’s.
o There is a tendency for complacency after an extended period of
relative market stability
Exacerbated by staff turnover: many staff have not been through a full business cycle
• Generally most series performed well until 2007.
• Statistical discrepancy emerged as a problem after December
quarter 2009.
o Effective measurement in times of crisis requires statistical
infrastructure in place BEFORE the crisis
For example, measurement of the financial services industry
Full set of accounts, including balance sheets and financial accounts are an advantage.
31
Managing national accounts in a volatile
environment and lessons learned - continued
• Government measures to stimulate the economy
introduced in 2009.
• Onset of natural disasters from 2009 onwards
• Sovereign debt issues emerged in 2010 and
continue to disrupt markets.
o Implementation of the full set of accounts helps to
manage through crisis events.
These problems were faced by many NSOs.
32
FISIM
• FISIM performed unpredictably in a financial
crisis.
– Was influencing CPI and headline inflation rates and
National Accounts aggregates.
• Responses
–
–
–
–
Forced a review of the FISIM model.
Removal of FISIM from headline CPI (inflation)
Implemented a revised Balance of Payments model
Improved data sources for National Accounts.
33
Future developments
• Revised Government Finance Statistics
Manual
• Emergence of new practices around
2008SNA and BPM6 from implementation
in USA (2013), Canada (2013) and
Eurostat (2014).
34