National accounts (income, saving, assets, and liabilities): June 2021 Quarter

National accounts (income, saving, assets, and liabilities): June 2021 quarter – changes and revisions Introduction National accounts (income, saving, assets, and liabilities) for New Zealand have been produced from the June 2016 quarter and is updated each quarter. The series in these accounts are in current (nominal) price, in both actual and seasonally adjusted terms. The National accounts (income, saving, assets, and liabilities): Sources and methods are thoroughly documented. The data used to compile our estimates of quarterly income, saving, assets, and liabilities are the best that we have available at the point of publishing. As a result, the latest published estimates are considered more accurate. However, trade-offs between the timeliness and the data quality as well as its coverage are present. These statistics are experimental and may be subject to greater revision than other releases as we improve methodologies or include more comprehensive data. Part of the rationale for releasing estimates on an experimental basis is to allow users an opportunity to comment on methods and details of published series. If you have any feedback or comments that you’d like to pass on, you can do so by emailing [email protected]. Data Collection and Methodology changes Data revisions Revisions to Balance of Payments data Revisions to Balance of Payments (BOP) data are made annually to stay in line with international best practices. Revisions can be due to new or updated information becoming available, new or updated annual benchmarks, and conceptual or methodical changes. The largest revisions are to the export and import of services, and these have flow on impacts to components of household consumption expenditure and gross fixed capital formation. The revisions to primary income items dividends and interest are due to a combination of survey respondents updating previously reported data and annual update of tax data received from Inland Revenue (IR). See 2021 revisions to balance of payments and national accounts for further information. Revision to Business Financial Data Updated survey and tax data from the business financial data (BFD) collection has led to some revisions where our current methodology uses the BFD data collection as indicators (see Business financial data: June 2021 quarter for further information). This affected compensation of employees, gross operating surplus and gross mixed income. Revisions to Quarterly Local Authority Statistics Each June quarter, we reconcile recent provisional Quarterly Local Authority Statistics (QLAS) data with the latest available Local Authority Finance Statistics (LAFS) annual data to enhance the accuracy of the QLAS collection. In the June 2021 quarter, this involved reconciling September 2019 to June 2020 quarters to annual LAFS data for the year ended June 2020. QLAS has not collected data from small councils since 2014 and instead values are modelled. Improvements to the modelling for small councils were introduced in the June 2020 quarter alongside the annual benchmark update, which caused revisions throughout the time series used. The new form of the model is more responsive to the sharp changes in activity observed through COVID-19 affected quarters. Dividends received by the local government sector is the series which has seen the largest revisions from the combination of including the latest annual benchmarks and the improvements to the small council modelling. Revisions to the sectoral classification of IR4K resident withholding tax paid on dividends The IR4K tax data sourced from IR is one of the primary indicators for the quarterly dividends methodology. Improvements to the sectoral classification of the IR4K data has resulted in minor revisions to both dividends paid and received which affect most sectors and quarters but have minimal impact on key aggregates such as saving and net lending/borrowing. Revisions to land Quarterly land estimates are derived by using annual land estimates from CoreLogic property values by property type and using movements in the CoreLogic House Price Index (HPI). In addition, we also use the Reserve Bank of New Zealand (RBNZ) household balance sheet housing and land estimates (including rental properties) as a control total for residential dwellings. This series has a quarter lag, so doesn’t have a value available for the most recent quarter. So, the latest quarter estimates use the HPI to estimate total housing and land. The HPI has been revised from a provisional 5% to 7.8% in March 2021. Revisions to land due to these changes impact on all sectors in the balance sheets. Revisions to interest matrix The interest matrix bases interest flows for many sectors on the balance sheet stocks of interest-bearing assets and liabilities. So, revisions to balance sheets caused by various sources such as BOP and QLAS also cause revisions to interest estimates. We see these revisions spread out through the sub-sectors due to counterparty and flow-on impacts. The revisions seen in the interest are minor and have minimal impact on saving. Methodology changes Seasonal adjustment outlier treatment Sharp changes in activity, such as those caused by COVID-19 lockdowns, pose challenges for our usual seasonal adjustment process. The process first uses historic data to determine a regular seasonal pattern, which is then used to calculate the seasonal adjustments. Extreme unusual movements can disturb the seasonal pattern, so in some cases we exclude an extreme quarter from the seasonal pattern calculation by applying an additive outlier treatment. We have continued our use of additive outliers to treat unusual data points for June 2021 quarter and retained the previous outliers applied from March 2020 quarter onwards. Changes to methodology in compiling listed company equity Revisions to any asset and liability instrument will result in changes to equity liabilities as this is the balancing instrument. Also impacting equity liabilities is a change to methodology in compiling listed company equity. Listed companies are recorded in sector 1 (non-financial business enterprises) and sector 2 (financial business enterprises). Equity liabilities of listed companies are adjusted from their book value to a market value using an index sourced from RBNZ. This index has now ceased from the June 2020 quarter, so has been held constant since then. This does not mean that equity liability estimates are held constant since that time, as the underlying book values are interpolated between the annuals. We are currently working to implement an index from the June 2020 quarter based on data available from the NZX. This work is scheduled to be completed in time for the next quarterly release and will result in further revisions to this series. Changes in methodology in compiling equity liabilities of listed companies also impact on the net worth of the relevant sectors. Change in methodology for land owned by central government institutions A new method has been applied to deriving the value for land owned by central government institutions. Past method relied on extrapolating quarterly series from annual March benchmark estimates. The new method uses estimated values from the Crown Financial Information System (CFIS) (using non-June quarter schedules) and benchmarking June quarters to Government Financial Statistics (GFS) based estimates (i.e., for June 2020 and prior). Change in methodology for dividends paid and received by financial business enterprises The quarterly dividends paid and received by financial business enterprises methodology has been improved to make use of data from BOP for the holding companies of multi-national banks. These revisions affect all quarters, and range upwards to $1 billion, but are mostly offsetting with dividends received and paid by financial business enterprises moving in the same direction leaving saving largely unchanged. Revisions to previously published statistics Revision to gross domestic product series There are some areas causing gross domestic product (GDP) series revisions. See Gross domestic product: June 2021 quarter – changes and revisions for further information. Gross domestic product – production measure • Improvements in application of alternative indicators for COVID-19 affected quarters. • Revisions to value of building work put in place data. • Incorporating annual agricultural production statistics. • Updated indicator data. Gross domestic product – expenditure measure • Improvements in application of alternative indicators for COVID-19 affected quarters. • Revisions to balance of payments data. • Revisions to value of building work put in place data. • Updated indicator data. Revisions to Income and Outlay statistics Revision to final consumption expenditure Final consumption expenditure is undertaken by private households, private non-profit organisations serving households, central government, and local government. Revisions to BOP data included exports and imports of travel services, which contributed to revisions to household consumption expenditure. Revision to compensation of employees Our main data source used in compensation of employees is the BFD salaries and wages. The revised BFD data has led to revisions to compensation of employees in the June, September and December 2020 quarters, and the March 2021 quarter. Revision to gross operating surplus and gross mixed income Revisions are seen in the data sources we are using, including BFD and GDP series. Revision to taxes on production and imports and subsidies Taxes on production and imports revisions are due to revisions to some components in gross domestic product – expenditure measure, which were used as indicators for GST, such as household consumption expenditure. Wage subsidy payments have been updated based on the latest wage subsidy refunds data. This causes revisions to subsidies in the COVID-19 impacted quarters, i.e., March and June 2020 quarters and March 2021 quarter. Revisions to household saving The following table shows previously published and revised quarterly household saving, both actual and seasonally adjusted values in current price, for the June 2016 – March 2021 quarters. Household saving in current price, seasonally adjusted values, $(million) Quarter Published July 2021 Published October 2021 Jun-16 556 460 Sep-16 -244 -244 Dec-16 -243 -208 Mar-17 438 449 Jun-17 -441 -531 Sep-17 -191 -194 Dec-17 353 407 Mar-18 151 186 Jun-18 334 254 Sep-18 148 119 Dec-18 287 250 Mar-19 74 155 Jun-19 550 601 Sep-19 927 960 Dec-19 554 674 Mar-20 1,536 1629 Jun-20 6,975 6459 Sep-20 2,198 1894 Dec-20 1,564 1475 Mar-21 199 -239 Central government saving Revisions to central government saving have arisen due to updated data for COVID-19 wage subsidy refunds becoming available, updated interest payable and interest receivable numbers as well as updated June quarter benchmarks for the components of final consumption expenditure. Revisions to Balance Sheet statistics Most of the main revisions are seen in land values, which flow into equity and investment fund shares (for both assets and liabilities) and in turn revise net worth across different sectors. Residential and other land for all sectors (except central and local government) has been revised up for the March 2021 quarter by $87 billion. The revisions, however, mainly affect these following sectors: • Sector 1 (non-financial business enterprises) revised up $41.4 billion. This sector includes residential rental properties owned by households. • Sector 5 (households) revised up $43.7 billion due to revaluation of land for owner-occupiers of residential property. More details on the revisions by sector are as follows. Non-financial business enterprises Quarterly indicators for many of the financial assets and liabilities for this sector use counterparty data from financial business enterprises sector and rest of the world (ROW) sector. In many instances revisions have occurred for ROW sector revising the estimates for the counterparty sector. Non-financial business enterprises sector is also the balancing sector for many of the financial instruments. Where there is an imbalance between total assets and total liabilities of an instrument class, a sector is nominated to be adjusted to balance. Thus, revisions to other sectors will result in revisions to the balancing sector. Equity and investment fund share liabilities have been revised $34.6 billion for the March 2021 quarter. This is due to a combination of land revisions on the asset side (increasing equity liabilities) and a revised method for estimating equity liabilities of listed companies. Net worth revisions are the result of underlying changes to assets less liabilities. Central government institutions Compared to the last release, the net worth of the central government is revised by $3.0 billion at March 2021 and up to $4.4 billion back to June 2016. Those revisions in the sector’s net worth are mainly driven by the upward revisions in the land value (by $3.1 billion at March 2021 and $4.4 billion in June 2016). In this release, a new method has been applied to derive the value for land owned by central government institutions. The previous method relies on extrapolating quarterly series from annual March benchmark estimates. This new method uses estimated values from the CFIS (using non-June quarter schedules) and benchmarking June quarters to GFS based estimates (i.e, for June 2020 and prior). Apart from those changes above, other marginal revisions can be found in other series for this sector. Most of our interpretation of the estimates from the last release for central government institutions remains unchanged except the sector’s net worth at March 2021, in fact, was $190 billion, down $7.2 billion (3.6 percent) compared with March 2020. Household Land accounts for almost all revisions in the household sector. This is both directly from revised residential land for owner-occupiers and indirectly from revised equity of the non-financial institutions sector. Some of the equity liability is owned by households and is recorded as an equity asset in the household sector. As a result, net worth of households is revised up by $71 billion in the March 2021 quarter. The following table shows previously published and revised quarterly household net worth from the June 2016 – March 2021 quarters. Household net worth in current prices, actual values (not seasonally adjusted),$(billion) Quarter Published July 2021 Published October 2021 Jun-16 1,444 1,444 Sep-16 1,494 1,497 Dec-16 1,528 1,523 Mar-17 1,537 1,537 Jun-17 1,569 1,573 Sep-17 1,602 1,608 Dec-17 1,633 1,642 Mar-18 1,664 1,664 Jun-18 1,661 1,666 Sep-18 1,698 1,696 Dec-18 1,714 1,699 Mar-19 1,722 1,721 Jun-19 1,720 1,720 Sep-19 1,761 1,761 Dec-19 1,816 1,816 Mar-20 1,863 1,862 Jun-20 1,885 1,885 Sep-20 1,976 1,973 Dec-20 2,146 2,126 Mar-21 2,264 2,336 Rest of the world The largest revisions at March 2021 are in the value of equity and investment fund shares both from asset and liability sides by $2.6 billion and $2.5 billion respectively. The value of debt securities held by New Zealand to the ROW is also revised, down by $1.1 billion. These are due to respondents updating previously reported survey data, new respondents being added to the survey and validation of data against financial statements of enterprises. In addition, the change in migration model applied in this release affects the values of other accounts receivable and payable. Along with other minor changes in other categories, the net worth at March 2021 is revised by $4.2 billion. However, these statistics revisions do not alter our interpretation for this sector in the last release. en-NZ