National Accounts (Income and Expenditure): Year ended March 2013

Period-specific information Expanded set of provisional estimates This release contains provisional estimates of income, expenditure, and saving for each of the six sectors of the economy for the year ended March 2012. This is the first time we are publishing provisional estimates for the following sectors: producer enterprises, financial intermediaries, and non-profit institutions serving households. Complete sector account tables are available for the March 2013 year for these sectors: government, household, and rest of the world. Provisional estimates of gross operating surplus and compensation of employees for the March 2013 year are provided for producer enterprises, financial intermediaries, and non-profit institutions serving households. We were unable to compile full March 2013 year sector account tables for these three sectors due to the limited availability of data. As the next section highlights, provisional estimates will be revised in future releases. Transactions related to the Canterbury earthquakes In the National Accounts: Year ended March 2011, capital stock estimates were adjusted to reflect the destruction of assets caused by the Canterbury earthquakes. We review this adjustment each year as more information becomes available. To confront the adjustment we used new and updated data, which gave no reason to alter the adjustment. As a result, no alterations were made to the capital stock adjustment this year. After the Canterbury earthquakes, Christchurch was divided into zones. The red-zone was declared unstable, and building on it would be difficult. The government purchased red-zoned land and properties (subject to the option chosen by the property owner). As a result, capital transfers can be seen flowing from government to households. This is also reflected in increased net purchases of land by government. These transactions have mostly affected the 2012 March year. The March 2013 year has also been affected to a lesser extent. See Accounting for the economic effects of the 2010/11 Canterbury earthquakes in New Zealand’s national accounts for more information on the capital stock adjustment and other economic effects of the Canterbury earthquakes. Published figures Figures for the March 2012 and 2013 years are provisional. Note that data may not sum to stated totals due to rounding. National Accounts (Income and Expenditure): Year ended March 2014 will provide provisional estimates for the March 2014 year and revised estimates for March 2012 and 2013 years. The revisions will result from more up-to-date information becoming available, including updated data from the Annual Enterprise Survey: 2012 financial year (provisional) and initial inclusion of detailed results from the 2013 Annual Enterprise Survey. Statistics for the years up to 2011 are consistent with National Accounts (Industry Benchmarks): Year ended March 2011. Improved presentation In addition to the 12 sector account tables published in November 2012, and the summary sector account tables for the 2010 to 2012 March years (see section Summary analysis tables by institutional sector), this release also includes a new table on household spending. ‘Household final consumption expenditure by item’ (table 2.12) contains a further breakdown of household final consumption expenditure. This table shows household final consumption expenditure split into 12 types of consumption (eg clothing and footwear, transport, communication). Revisions This release contains revisions arising from new and more up-to-date information. It incorporates the National Accounts (Industry Benchmarks): Year ended March 2011 statistics and new and improved information, which has resulted in revisions to the entire time series. Major changes in this release were signalled in the information paper Revisions to New Zealand's macroeconomic accounts to December 2013. The key changes are: spending by international visitors to New Zealand imports of low-value goods purchased directly by households. Spending by international visitors to New Zealand We have improved our methodologies for estimating expenditure by international visitors to New Zealand. The changes are: moving the International Visitors Survey (IVS) to an online collection from a face-to-face interview improving the coverage of the IVS incorporating improved estimates of international students’ living costs. Statistics NZ has worked closely with the Ministry of Business, Innovation and Employment (MBIE), the Ministry of Education, and Education New Zealand to come up with results that can be agreed across government. This means all government organisations will publish consistent data. These improvements will result in revisions to New Zealand’s current account, household consumption expenditure, and household saving. We estimate exports of education-related travel using tuition-fee data from the Export Education Levy, combined with an estimate for international students’ living costs. Business and other personal travel are estimated using data from the IVS, which MBIE runs. Methodology changes to the International Visitors Survey The IVS has changed from a face-to-face interview conducted at airport departure gates, to an online survey emailed to visitors once they return home. Research suggests that expenditure is often under-reported in face-to-face surveys. Changes were made to both the questionnaire and the survey coverage. Respondents are now asked to estimate their total expenditure by cash, credit card, and debit card, rather than by compiling a total estimate based on spending on different items like food, accommodation, and activities. The survey also now includes expenditure by travellers using business and first class lounges, and those departing from Queenstown airport (alongside Auckland, Wellington, and Christchurch). MBIE conducted a dual run of the face-to-face and online methodologies for the IVS from January 2013 to July 2013. We’ve used results from this dual survey and revised data back to 1983. Quarterly data will be released with the balance of payments and quarterly GDP publications on 18 and 19 December 2013, respectively. See MBIE’s IVS commentary for more information on the effect of changes to the IVS. Spending by international students in New Zealand Education New Zealand commissioned a study into the economic impact of export education during 2012/13. This study followed a similar study in 2008, the results of which we did not fully implement at the time. We have used the benchmarks produced as part of the 2008 and 2012/13 studies to revise our exports of education related travel series back to 2004. This incorporates the improved estimates of international students’ living costs. See the Economic impact of international education 2012/13 for more information. Impact of changes to the IVS and improved estimates of international student living costs The main effect of the updated IVS and improved estimates of international student living costs is an increase in exports of travel services, which will increase the current account balance and household saving. Exports of travel services are split between business travel and personal travel (which includes education-related travel). Revisions to business travel are lower than those to personal travel and increase industry output and the production measure of GDP. The increase in exports of personal travel results in a decrease of household expenditure and therefore and increase in household saving. Imports of low-value goods purchased directly by households A time series for low value imports of goods purchased directly by households is included in this release, from 2000 to 2013. Household imports of goods have increased in recent years as a result of consumers changing their spending patterns towards online purchasing, including direct purchases from overseas businesses. Spending on imports of goods valued at less than $1,000 has been an area of known undercoverage in balance of payments and national accounts data. There is limited information available from NZ Customs administrative data on the value of imports under $1,000, and a high level of misreporting. The series for low-value imports directly purchased by households is in table 2.12 of this release. Impact of the low-value estimate throughout the accounts The revision to low-value imports will have a flow-on effect to other variables, particularly household consumption and saving. By including these activities, that were previously not included in the national accounts or balance of payments data, imports of goods increases. This upwards revision has a negative effect on the current account balance. This also flows through as an increase in the expenditure measure of GDP, with an increase for household consumption expenditure (HCE). This increase in HCE results in a decrease in household savings and subsequently national saving. Supply-use balancing is unaffected, as the increase for goods imported is balanced with an increase in HCE. Methodology for calculating imports of low-value goods The 2013 estimate for low-value goods purchased directly by households is based on the New Zealand Online Importation of Goods and Services survey conducted by Inland Revenue in May and June 2013. We used the results of this survey to derive an economy-wide estimate for online household imports of tangible goods. It is envisaged that IR will publish the full results of their survey early in 2014. We took the 2013 estimate as a benchmark to create a current-price time series of this spending back to the March 2000 year. The current price time series of this household activity was compiled using changes in the number of low-value parcels, and we applied a customised price index to the 2013 benchmark of this activity. We sourced parcel time series data from the New Zealand Customs Service. It includes the number of parcels that were valued at less than $1,000 and imported across the following parcel types: simplified import entries electronic cargo information parcels and express mail. The customised price index used information about the top four countries that goods were imported from. This included price indexes from these countries on the types of goods purchased, along with exchange rates for those countries. The Inland Revenue survey also included imports of intangibles, such as software and other downloads, which was estimated at $265 million for 2013. We will be conducting further work to include intangibles in future releases. Low-value exports continue to be excluded from the national accounts and the balance of payments. These are very small in volumes and expected to be significantly smaller in value than low-value imports. Improvements to net capital stock measurement We have revised the net capital stock chain-volume series by asset type and by sector. The revisions are small and represent an improvement to the chaining method, as the chain-volume totals are now consistent across all tables (by asset type, sector and industry). Improved methodology for measuring investment in residential building Following the Canterbury earthquakes the level of non-consented residential building work is likely to have increased. However, our previous method for measuring investment in residential buildings using building consent data did not adequately capture non-consented residential building activity. In order to better capture this rebuild activity an adjustment has been made to the March 2012 year provisional estimate for investment in residential buildings. This adjustment has been compiled using initial Annual Enterprise Survey (AES) data for 2012, confronted in a supply use framework. The result is an $800 million adjustment to increase private residential building investment in the March 2012 year. We will continue to apply this adjustment in future years as updated AES data becomes available. This is likely to result in revisions to provisional estimates in this series going forward. For information on the effect of this improvement on growth rates in the construction industry, see Improvements to gross domestic product in 2013. Revisions to capital transfers relating to the Canterbury earthquakes We have revised our data on capital transfers in the sector accounts in 2011 and 2012 to include updated information on insurance relating to the Canterbury earthquakes. Updated information was sourced from the Earthquake Commission, Canterbury Earthquake Recovery Authority, and the Treasury’s central government financial reporting system. Revisions to National Accounts (Industry Benchmarks) The revisions result from balancing the production and expenditure estimates of gross domestic product (GDP) within a supply and use framework. Before balancing, updated and new benchmarks (mainly based on the 2010 and 2011 annual economic surveys) were adopted for the production-based estimates. In addition, updated and new information from other data sources was included. Revisions to balance of payments The Balance of Payments and International Investment Position: June 2013 quarter release included revisions to overseas investment income, which are included in this release. Revisions of note were: updated Inland Revenue data from the latest tax returns for companies, individuals, and other relevant units changes to the economic measurement of business profit. en-NZ