The major part of employee expenses is made up of wages, salaries and supplements

In Australia’s GFS system, depreciation is recorded in lieu of the national accounting concept of consumption of fixed capital because only depreciation information is available from government accounts

2.147. Allowances for overtime, shift-work, living away from home and travel are included, as are in-kind payments such as accommodation, vehicles and clothing provided by employers. Employee expenses also include accrued expenses for the period relating to accident compensation premiums, sick leave, annual leave, long service leave, retirement and redundancy.

2.148. Importantly, employee expenses charged to capital works (e.g. on own-account construction) are excluded from this category and are recorded directly as acquisition of non-financial assets. Taxes paid on employers’ payroll and labour force are not included as employee expenses but are recorded as current transfer expenses. Expenses relating to usage of labour hire agencies are classified as non-employee expenses.

2.149. They include expenditure by government on goods and services that are provided directly to households as social transfers in kind. Examples include medical and pharmaceutical benefits, telephone rental concessions, concessional railway fares, rental subsidies, reduced utility charges, etc. Non-employee expenses also includes usage or ‘intermediate consumption’ of goods and services by public sector units in the accounting period. Usage of goods can be derived as opening value of inventories plus purchases less the closing value of inventories. Also included as non-employee expenses are rentals for the use of buildings or the right to use copyrights, patents, trademarks, etc.

2.150. In keeping with national accounting concepts, non-employee expenses also include purchases of certain types of defence equipment that, in conventional accounting, would be regarded as purchases of capital assets. As well as treating expenditure on destructive weapons (e.g. missiles, rockets, bombs) as current expenditure, the SNA also treats expenditure on the platforms (e.g. warships, submarines, missile carriers and launchers, etc.) from which the weapons can be launched as current expenditure. Consequently, non-employee expenses includes expenditures on such weapon platforms, which are effectively treated as fully consumed during the accounting period in which they are acquired.

2.151. As is the case for employee expenses, non-employee expenses that are charged directly to capital works (e.g. own-account construction) are not included in this category but are recorded directly as acquisition of non-financial assets. 2.152. Depreciation refers to the estimated consumption of non-financial assets during the accounting period. The estimates of consumption of fixed capital in the ASNA are derived independently by the ABS and are in insufficient detail to be used in the GFS system. In keeping with the treatment of purchases of defence weapon platforms as current expenses, depreciation of such platforms is not recorded as an expense.

2.153. Current transfers are amounts payable for current purposes for which no economic benefits are receivable in return. The distinction between current and capital transfers is based on the nature of the activities or assets for which the transfers are made. If the activities or assets relate to the acquisition of assets, other than inventories, that will be used in production for one year or more, the transfers are treated as capital transfers. Otherwise they are treated as current transfers.

Non-employee expenses are operating expenses that are not included elsewhere in the classification of expenses

2.154. Current transfers include grants for current purposes to private non-profit organisations serving households, grants made to foreign governments and organisations including grants made for aid projects, and current grants from one level of government to another (e.g. Commonwealth to State). Current transfers also include subsidies, which are transfers made by general government to public and private corporations and unincorporated enterprises. Subsidies include transfers to public corporations to payday loans Willoughby offset recurring losses that are a consequence of government policy to maintain the corporations’ prices at a level that does not cover the cost of production.