Title: 11th%20OECD-NBS%20Workshop%20on%20National%20Accounts%2025-28%20September%202007%20Beijing
111th OECD-NBS Workshop on National Accounts25-28
September 2007Beijing
- Update of the 1993 SNA Progress Report and Main
Issues - Paul Schreyer, OECD
2Contents
- Background
- Three issues with potential implication for China
- Next steps
3Background
- 2003 United Nations Statistical Commission
(UNSC) calls for update of the 1993 System of
National Accounts - Reason bring SNA into line with the new economic
environment, advances in methodological research
and the needs of users. - In principle, no fundamental changes to the 1993
SNA that would impede its implementation
4Background
- Intersecretariat Working Group on National
Accounts (ISWGNA) (Eurostat, IMF, OECD, UNSD,
World Bank) to organize and coordinate the update
project, assisted by a project manager and
editor. - SNA, Rev.1 to have two deliverables
- core chapters, in 2008
- remainder, in 2009.
5Background
- 2007 consolidated list of recommendations
presented to UNSC to which it gave its assent - 44 issues in total
- UNSC emphasized need for the broadest possible
involvement of the global statistical community - Advisory Expert Group (AEG) on National Accounts
6Background
- Project website, http//unstats.un.org/unsd/nation
alaccount/snarev1.asp, which promotes
transparency and wide involvement of national
accounts experts - Well-defined process
- Several sub-groups to deal with specific areas
such as Canberra II Group on Non-financial assets
7Issue 1 Pension schemes
- 1993 SNA distinction
- Employer pension schemes a means of
redistributing income over time for a single
individual. - Social security schemes redistribution of income
among a set of individuals at a single point in
time.
8Private pension schemes
- 1993 SNA social contributions by an employer and
employee in a period should be the amount
actually paid into a pension fund. - For a defined contribution scheme, this is
correct and complete since the eventual payment
depends only on the amounts set aside in a
pension fund. - For a defined benefit plan, there is no guarantee
that the amounts set aside will exactly match the
liability of the employer to the employee.
9Private pension schemes
- New calculation for defined benefits
- employers contribution in period t increase in
the net present value of the pension entitlement
the employee has earned in the period in
question, costs by pension fund for operating
the scheme - contribution by employee - Calculation should take not take into account
impact of any future pay increases on the
ultimate pension benefit.
10Private pension schemes
- NPV of future pension payments rises as
retirement gets closer, even if there are no
contributions in a given period - This is treated as imputed flow of property
income payable to the employee and returned to
the pension fund as a social insurance
contribution supplement. - Liability of the pension fund to the employee is
to be shown in the financial account and balance
sheet.
11Private pension schemes
- The assets of the fund are then to be regarded as
belonging to the fund and not (as stated in the
1993 SNA) as belonging to the employee. - Any excess of the liabilities over the available
assets may represent a claim of the pension fund
on the employer and vice versa.
12Government employer schemes
- How should pension entitlements of schemes for
government employees be recorded, given the
diversity of funding arrangements across
countries? - A standard table should be prepared
- pension entitlements accruing to households for
all pension schemes, regardless of the means of
funding or the category of the unit bearing the
responsibility to meet the obligations of the
pension scheme.
13Government employer schemes
- Flexibility about whether the full increase in
the entitlements will be shown as income and
saving of households - In cases where particular schemes are not carried
forward, a reasoned explanation for why this is
not done will be required. Internationally agreed
criteria for when a scheme might not be carried
forward should be developed
14Quantitative impact of change to treatment of
pension schemes
- Likely to vary considerably between countries
- Compensation of employees, GOS and household
saving could change - If government liabilities are recognised for
unfunded employer defined benefits scheme for
government employees then the ratio of the SNA
public debt to GDP could rise substantially,
maybe by between 20 and 80.
15Issue 2 RD capitalisation
- In the 1993 SNA, research and experimental
development are current expenditure - Proposal to capitalise RD already in the 1993
SNA, but no agreement on how to do it. - Problems of implementation also recognised in
current Revision - Rev. 1 In principle, RD should be recognized as
part of capital formation. However, before the
objective can be reached, satellite accounts will
provide a useful way of working towards
solutions.
16RD capitalisation
- RD definition as in OECD Frascati Manual
creative work undertaken on a systematic basis
in order to increase the stock of knowledge,
including the knowledge of man, culture and
society and use of this stock of knowledge to
devise new applications. - This excludes, however, human capital formation
- By convention, since much RD is carried out on
own account, it should be valued at cost.
17RD capitalisation
- In practice, the information collected in
accordance with the Frascati Manual will provide
estimates of RD expenditure discussion is
ongoing to make adjustments to the Frascati
framework to meet the needs of the SNA more
closely. - A detailed guide to implementation is being
worked out by the OECD.
18RD capitalisation
- All RD expenditure that is sold or is expected
to bring a benefit in the future to its owner
(including for the provision of public services
in the case of RD undertaken by government) is
included within the asset boundary. - Only RD that brings no economic benefit
discernable at the time of its completion is
excluded. - With the inclusion of RD in the asset boundary,
patented entities will no longer be separately
identified as such in the system, but they will
be subsumed into RD assets.
19RD capitalisation some difficulties
- The technical difficulties fall into three
groups - scope of RD capital formation,
- methods for compiling RD price indices and
capital measures, - collecting the raw data to derive estimates of
RD capital formation.
20RD capitalisation some difficulties
- Scope of RD capital formation,
- Treatment of freely available RD
- Does not belong to anyone, so can it be an asset
- But then again, very hard to determine
- Price indices and capital measures
- Most RD is own account ? no market prices
- Input price indices ? ignore productivity change
in the production of knowledge
21RD capitalisation some difficulties
- Pseudo price indices (eg price change of RD
intensive industries etc.) - Rate of depreciation
- Raw data
- From Frascati Manual but adjustments needed to
RD surveys - Capturing international flows is difficult
22Issue 3 Goods for processing
- The situation
- The 1993 SNA and the Balance of Payments Manual
(BPM) treat goods that are sent abroad for
processing and then returned to the country from
where they were dispatched as undergoing an
effective change of ownership. - Exports when goods leave the first country
- Imports when goods return to the first country.
23Issue 3 Goods for processing
- The situation (2)
- Full value of goods is shown in country that
processes, even though the processor never has to
pay for the value of the goods on entry. - Increasing importance of offshore processing,
such treatment is increasingly questionable. - Also, different recommendation for goods being
processed in one country for a second, which
instead of being returned to the second country,
are sold (on behalf of the owner in the second
country) to a third country.
24Issue 3 Goods for processing
- The recommended change
- Imports and exports should be recorded on a
change of ownership basis - ? goods being processed in one country on behalf
of another would no longer be part of imports and
exports in the balance of payments and SNA. That
would be a change from the 1993 SNA. - ownership principle? no transactions will be
recorded for intra-enterprise (inter-establishment
) deliveries when goods are passed from one
establishment to another for processing and then
returned.
25Issue 3 Goods for processing
- Input-output tables they would reflect what
each unit contributes to the production process
rather than the physical technology, as
previously was the case. - Implications for reconciliation of data on
physical movement of goods (merchandise trade
statistics) and the national accounts. - Import and export flows measured on an ownership
basis are difficult to capture with customs-based
trade statistics. It may be necessary to
increasingly rely on business survey information
as a statistical source.
26Issue 3 Goods for processing
- Quantitative impact
- Lower estimates of output and intermediate
consumption, but the reduction will be the same
and so there will be no change to industry gross
value added. - Exports and imports will also be reduced by the
same amount, and for some countries the
reductions could be relatively large.
27Other important issues
- Cost of capital services (see new Manual on
Capital Measurement) - Treatment of military expenditure
28Implementation
- European countries
- Revision of ESA by 2011
- Implementation by 2014
- Australia 2009
- Canada 2010
- United States progressive introduction of
changes with likely completion by 2012/13 - Korea 2014
- Japan no concrete plans yet