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The Australian Balance Sheet
A Comprehensive Balance Sheet
For the Commonwealth of Australia,to 30th June 2020
Assets $AUD Billions
Human resources (education and training only) 4,587.30
Non-dwelling constructions 2,965.70
Financial assets with the rest of the world 3,069.60
Shares and other equity 1,574.0
Securities other than shares 811.0
Loans and placements 366.4
Other accounts receivable 169.6
Currency and deposits 121.7
Monetary gold and statutory deposit reserves 12.1
Insurance technical reserves 14.8
Sub-soil assets 928.70
Machinery and equipment 668.50
Australian investments abroad 862.10
Consumer durables 412.60
Private, non-farm 160.8
Public authorities 8.3
Livestock (from Table 60) 25.5
Plantation standing timber 9.7
Intellectual property products 247.90
Research and development 100.6
Mineral and petroleum exploration 92.7
Computer software 51.2
Artistic originals 3.4
Cultivated biological resources 24.50
Weapons systems 75.80
Spectrum availability and allocation (communication asset) 20.20
Permission to use natural resources 4.10
Native standing timber 1.70
Total National Assets 26,822.13
Liabilities $AUD Billions
Financial liabilities to the rest of the world 3,980.30
Securities other than shares 1,772.1
Shares and other equity 1,391.2
Currency and deposits 227.9
Loans and placements 503.7
Other accounts payable 75.4
Monetary gold and statutory deposit reserves 6.2
Insurance technical reserves 3.8
The Issued Money Supply 2,331.00
Foreign investments in Australia 1,087.90
Ownership transfer costs 289.30
Total National Liabilities 7,719.53
Net National Assets (Liabilities) 19,102.60
Notes to the Account
All statistics have been taken directly from the Australian Bureau of Statistics’ tables at https://www.abs.gov.au/statistics/economy/national-accounts/australian-system-national-accounts/latest-release#data-download with the following exceptions:
Human Resources (education and training )
Government expenditure on education in 2019-20 was $114.1 billion. See https://www.abs.gov.au/statistics/economy/government/government-finance-statistics-education-australia/latest-release#:~:text=Total government education expenses was,$41.5 billion in 2019%2D20
The link https://www.finder.com.au/australian-household-spending-statistics gives Household Expenditure on education as $55.8 in 2020.
Thus, total spending on education totalled $114.1 plus $55.8 billion to equal $169.9 billion in 2020.
The average working life in Australia is over 40 years, and it may reasonably be considered to be worth its expenditure over 20 years. After 10 years practicing one’s craft, we are better bricklayers, accountants, or medicos etc. so there is an experiential appreciation of abilities of perhaps 50%. As we approach retirement there is an actuarial depreciation of the training. A value of our total investment in vocational training might therefore be $169.9 billion X 20 (years of expenditure) X 1.5 to reflect the 50% increase in vocational ability due to experience, and divided by nine tenths to account for provision for retirements.
The result is $4,587.3 billion. In this way both politicians and economists may learn something of our value to each other.
A population which is at peace with each other, possessing common ideas as to the purpose of society, and respected by neighbouring nations as acting in good faith, has a goodwill asset; a gaggle of warring tribes where law is not respected would not. The entry of $1 billion is nominal, and obviously awaits societal attention to national accounts before a realistic figure might be suggested and accepted.
The Issued Money Supply
The link http://www.rba.gov.au/statistics/tables/xls/d03hist.xls gives the money supply (M3) as $2,331.0 billion as at 30th June 2020. If a “current liabilities” figure is required, term deposits which are of course, currently unavailable to the public, should be deducted from this.
Why We Need National Comprehensive Balance Sheets
Balance sheets tell us more than how rich or poor we are. They also tell us why we are rich, or poor, and something about how we managed it.
Knowing how rich we are tells us much about what we can afford. These accounts list all of the advantages (assets) we have in trying to do “stuff”, and also list the claims against us (our liabilities) which limit our ability to do things.
If the idea of building a land bridge to Tasmania was suggested, consulting the Balance Sheet would indicate whether we had the where-with-all to do it if we wished.
I have called this balance sheet “comprehensive”, not because it is; it doesn’t give details of the specifics of the “Machinery and Equipment” for instance, just a total value. It does, however, attempt to surpass the last national balance sheet done by the Australian Bureau of Statistics in 2012, which neither listed one of our greatest assets, nor our greatest liability.
Our greatest asset is of course our people. Just giving the value of our vocational training as we have, shows this, though it is but a small fraction of what has been invested in them.
The greatest claim upon our assets is the issued money supply. While money is a personal asset, at a national level it is like the number of IOUs which have been issues against us, and is a liability. Because politicians often don’t understand this our national interests are often mis served.
When a farm is sold to a foreign interest, three things happen. We have one asset less, and we have one asset more in foreign exchange of the same value. Then counterpart funds are created against the foreign exchange to pay the farmer. The result is that we have one asset less, one asset more, and one liability more, all being of the same value. We are poorer by the value of the sale.
This same problem appears when we export more in value than we import. The asset which is exported for a foreign exchange asset, causes a money supply increase to pay the exporter. Until the foreign exchange is used to bring in an import, reversing the process, we are the poorer for it.
The term “a favourable balance of trade” is often used to describe a situation where we export more than we import. This is a nonsense as we are poorer in this circumstance. A national balance sheet will evidence, demonstrate, and measure this.
This Comprehensive Balance Sheet offers a good deal of reassurance to Australians. With our total net assets at $19,102.6 billion, and our population of 25.69 million, our net assets per each are $743,581.15. That is nearly $3 million per family of four.
Somewhere there must be a reason why Government doesn’t bother to tell us this good news.
Compiled and presented by Charles Pinwill
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