GovernmentPublicPrivate Sector Delineation Issues

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Government/Public/Private Sector - Delineation
Issues

• GRAHAM JENKINSON
• OFFICE FOR NATIONAL STATISTICS

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More CONTROL Less
Public Sector
Private Sector
Non- Market ie Sales lt50 of costs Market ie S
ales gt50 of costs
General government Examples HM Treasury Kent
County Council
Non-profit institutions - NPISH Example -
Oxfam (includes households)
Public corporations - both real and quasi -
non -government. Examples Post Office London
Underground
Private market Financial and non-financial
corporations Example British Airways
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Important issues

• UK examples
• EU focus on general government
• Focus on improving SNA
• but also greater harmonisation with IPSAS

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Many Issues identified

• Agree - the priorities

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Recommendation 1

• The definition of control in the SNA be extended
  to include the power to receive a benefit (other
  than from tax)
• The proposed change will result, correctly, in
  the classification of pension funds for public
  sector employees in the private sector

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Recommendation 2

• The treatment of foreign subsidiaries of public
  corporations cannot be harmonised.
• But recommend that separate records of domestic
  and foreign subsidiaries should be maintained in
  the financial accounting data so that the correct
  economic statistics can be derived.

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Recommendation 3

• Elaborations from IPSAS of the definition of
  control should be added to the text of SNA
• In general, more elaboration of the definitions
  of control is needed in both the SNA and the
  IPSASs to ensure uniform treatment

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Recommendation 4

• Common standards should be developed on the
  treatment of Special Purpose Vehicles jointly for
  both SNA and IPSASs - to fill the current vacuum
• Recommendation 5
• Guidance should be added to SNA on the
  statistical treatment of public - private joint
  ventures
• (Units cannot be partitioned in SNA.)

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Recommendation 6

• Clarify SNA treatment of corporations jointly
  controlled by several public sector entities
• Consider clarify of IPSASs on this point
• (Corporations owned by governments of more than
  one country?)

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Recommendation 7

• Further clarification of the status of non-profit
  institutions in both the SNA and the IPSASs
• (Issue is interpretation of the requirement to
  control and mainly finance in current SNA.)

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Recommendation 8

• SNA should explain more fully the concept of
  economically significant prices so that it can be
  applied more uniformly.
• Recommendation 9
• Research and clarify how entities of the public
  sector are classified (A relaxation of the IPSAS
  definition of a GBE would improve harmonisation.)

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Recommendation 10

• To facilitate the compilation of economic
  statistics, it is desirable to maintain financial
  accounting data in sufficient detail to meet the
  needs of economic statistics.
• (SNA aggregates, IPSAS and GFS consolidate -
  should SNA change?)

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How to package all this?

• Clear it is a clarification of SNA
• Not a fundamental change

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Two big issues

• Better definition of control together with
  indicators of control
• Better definition of economically significant
  prices with supporting examples
• Other issues are relatively minor

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ANY QUESTIONS ?
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Public sector boundary

• Change the definition of control in the SNA to
  include
• the power to receive a benefit from the
  controlled entity (1)
• explanation that the power to control must be
  presently exercisable and that regulatory powers
  do not imply control (3)
• use of a decision tree (-)

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Clarification and elaboration of the SNA of

• Definition of an institutional unit (9)
• classification of non-profit institutions (7)
• distinction between foreign and domestic
  operations of public corporations (2)

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Guidance in the SNA on how to evaluate and
classify

• special purpose vehicles (4)
• public joint ventures (6)
• public-private joint ventures (5)

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Clarification and elaboration in the IPSASs of

• definition of the reporting entity (9)
• classification of non-profit institutions (7)

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Guidance in the IPSASs on how to evaluate and to
classify

• special purpose vehicles (4)
• public joint ventures (6)
• public-private joint ventures (5)

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General government sector

• Clarification and elaboration in the SNA of
• concept of market/non-market production (8)
• economically significant prices (8)