Australia Yearbook - 2001

Chapter 29—National accounts 975
29.2 GROSS DOMESTIC PRODUCT, Chain
Volume Measures(a)
GDP GDP per capita
Year
$m
1972–73 253 713 18 924
1973–74 267 567 19 657
1974–75 270 576 19 581
1975–76 278 159 19 917
1976–77 287 943 20 406
1977–78 291 211 20 393
1978–79 306 536 21 234
1979–80 314 200 21 518
1980–81 323 949 21 874
1981–82 335 833 22 307
1982–83 327 778 21 435
1983–84 346 017 22 345
1984–85 361 840 23 074
1985–86 376 960 23 707
1986–87 387 354 24 000
1987–88 408 191 24 891
1988–89 424 832 25 461
1989–90 440 584 26 011
1990–91 439 783 25 603
1991–92 441 458 25 379
1992–93 457 735 26 026
1993–94 476 556 26 824
1994–95 498 113 27 732
1995–96 520 669 28 616
1996–97 540 379 29 327
1997–98 565 881 30 363
1998–99 591 546 31 363
(a) Reference year 1997–98.
Source: Australian National Accounts: National Income,
Expenditure and Product (5206.0); Australian System of
National Accounts (5204.0).
The chain volume measure of GDP increased by
4.5% in 1998–99, following an increase of 4.7% in
1997–98. For some analytical purposes, it is
important to allow for the impact of population
growth on movements in GDP. Annual growth in
GDP per capita has been about one to two
percentage points lower than that for GDP since
the mid-1970s and was negative in 1974–75,
1977–78, 1982–83, 1990–91 and 1991–92
(graph 29.3). In 1998–99 GDP per capita
increased by 3.3%.
Chain volume or ‘real’ GDP
Chain volume measures were introduced into the
Australian national accounts in 1998. They were
first presented as experimental measures for the
expenditure components of GDP in the
December quarter 1997 issue of Australian
National Accounts: National Income,
Expenditure and Product (5206.0), and were an
addition to the long-standing constant price
estimates which were still the ‘official’ volume
estimates. Subsequently, in the September
quarter 1998 issue of 5206.0, the constant price
estimates of both the expenditure and
production components of GDP were replaced
with chain volume measures from the September
quarter 1986, and they became the ABS’s ‘official’
volume estimates.
The reason for having either chain volume or
constant price estimates in the national accounts is
to provide time series of expenditure and
production aggregates which are free of the direct
effects of price change. All the current price
aggregates of expenditure and production
appearing in the national accounts are estimates of
the sums of the values of individual transactions.
Each of these transactions has two components: a
price and a quantity. From one period to another
the quantities and prices comprising the
transactions change. This means that when the
current price value of an aggregate, such as GDP,
in one period is compared with the current price
value in another period the difference between
them usually reflects both changes in quantity and
changes in price of the constituent transactions. In
order to estimate by how much the ‘volume’ of
GDP has changed between the two periods we
need to measure the value of GDP in each period
using the same unit prices.
For many years the ABS derived constant price
estimates as a means of measuring changes in the
volumes of aggregates. Constant price estimates
are derived by fixing the unit prices of goods and
services to those of some base year. These base
year unit prices are effectively the weights used to
combine the quantities of the different goods and
services purchased or produced. The unit prices
of different goods and services tend to grow at
different rates—some at dramatically different
rates, e.g. the prices of computer equipment are
estimated to have declined by about 75%
between 1989–90 and 1997–98, while the prices
of most other goods and services have increased.
Therefore, over time, the price relativities of
some goods and services change appreciably.
This adversely affects the usefulness of constant
price estimates for periods distant from the base
year, and implies that the base year used to
derive constant price estimates needs to be
changed from time to time. It was ABS practice,
in common with many other national statistical
agencies, to change the base year every five years.
However, it has been found that rebasing every
five years is commonly insufficient, and SNA93
recommends rebasing every year and linking the
resulting indexes to form annually reweighted
chain volume measures. ABS analysis of
Australian data has confirmed the need to adopt
annually reweighted chain volume measures.