Government expenditure by function (COFOG)

Expenditure of General Government by Function (COFOG divisions and groups) 2008-2011, ESA 1995, General Government, consolidated (in million EUR)

In the year 2011 the expenditure of general government increased by €33 m in COFOG division 01. General public services. The expenditure in this COFOG group rose by €533 m in 2010 and by €780 m in 2009. This was mainly due to the increase in the expenditure for the GNI-own resources in COFOG group 01.1 Executive and legislative organs, financial and fiscal affairs, external affairs. The developments in expenditure for interest (COFOG group 01.7 Public debt transactions) also have a wide influence on expenditure in COFOG division 01. In the year 2010 it has also to be considered that in this COFOG division the capital injections of general government in multinational development banks (COFOG group 01.2 Foreign economic aid) have been classified for the first time as Other capital transfers. Generally, it is important to note that COFOG group 01.8 Transfers of a general character between different levels of government comprises necessary contra entries because of consolidation adjustment (see Explanations below) and therefore fluctuates every year. To prevent distortions in the various other COFOG groups, these contra entries were allocated to COFOG group 01.8.

In COFOG group 02.1 Military defence the expenditure decreased by €532 m in the year 2009 and by €109 m in the year 2010. This can be explained by the presentation of the expenditure for the fighter aircrafts on an accrual basis in the years 2007 to 2009.

The expenditure in COFOG group 04.5 Transport increased by €572 m in 2011. This was due to higher investment grants of federal government for railway transport. In the year 2009 a decrease of €453 m can be noticed in this COFOG group. This can be explained by the increased values of the year 2008 caused by the payments of federal government for the Austrian Airlines. The distinctive increase by €1.5 bn in COFOG group 04.9 Economic affairs n.e.c. in the year 2010 can be attributed to the payments of federal government to the KA Finanz AG and to the Hypo Alpe Adria Bank AG. The write-off from participation capital to the Hypo Alpe Adria Bank AG is primarily included in this COFOG group in the year 2011.

In the year 2011 the expenditure in COFOG group 05.3 Pollution abatement decreased by €56 m. This was due to a decrease of investment grants. In the year 2010 the expenditure remained on the high level of the year 2009. This development and the increase in expenditure from 2008 to 2009 in this COFOG group (+€225 m) were mainly caused by increased expenditure for the purchase of emission permits in industrialized, newly industrialized and developing countries. A further reason was increased investment grants of federal government in the years 2009 and 2010. The expenditure for the scrapping premium was another reason for the increase in the year 2009.

The expenditure in COFOG group 06.1 Housing development shows a decrease of €55 m in the year 2011. A higher increase in expenditure can be noticed in the years 2009 (+€163 m) and 2010 (+€122 m) in this COFOG group. This can be primarily attributed to increased expenditure on supporting the renovation of houses in the year 2009 and to higher expenditure for housing subsidies in the year 2010.

An increase in expenditure by 2.1% can be found in COFOG division 07. Health in 2011. This was also due to the increase of 1.5% in 2011 in COFOG group 07.3 Hospital services. The development in this COFOG group in 2011 was caused by lower debt assumption for hospitals. The decrease in expenditure in 2009 in COFOG group 07.1 Medical products, appliances and equipment by €142 m can be attributed to the reduction of the VAT on medicaments.

In COFOG division 09. Education the expenditure rose by 1.8% in 2011. In the year 2010 the expenditure in COFOG group 09.1 Pre-primary and primary education (+4.6%) and in COFOG group 09.2 Secondary education (+1.4%) increased less than 2008 and 2009. These developments in 2010 were mainly due to only slightly increasing expenditure for nursery schools and for general compulsory schools.

An increase in expenditure by €878 m can be noticed in COFOG division 10. Social Protection in 2011. In COFOG group 10.2 Old age the rise of €1.1 bn in the year 2011 was mainly due to the increase of old-age pensions. Higher decreases in expenditure can be found in COFOG group 10.4 Family and children and in COFOG group 10.5 Unemployment in the year 2011. The expenditure in COFOG group 10.4 Family and children decreased by €362 m in 2011. This can be mainly explained by the decrease in payments for family allowances. The reasons for this are consolidation measures such as the reduction of the 13th family allowance or the payment of family allowances only until the 24th birthday. A higher increase in expenditure (+€302 m) can be noticed in this COFOG group in the year 2009. This was mainly caused by the increase of the tax credit for families with children.

The expenditure in COFOG group 10.5 Unemployment decreased by €97 m in 2011. This was caused by a decrease in expenditure for unemployment benefits in this year. An increase by €234 m can be found in this COFOG group in the year 2010. This development was mainly due to an increase in expenditure for emergency assistance. In 2009 a significant rise in expenditure of 26.0% in this COFOG group can be noticed. This was mainly caused by increased expenditure for unemployment benefits and emergency assistance in this year.

The developments in the respective COFOG groups led to a 1.4% increase in expenditure in COFOG division 10. Social protection from 2010 to 2011.

Expenditure of General Government by Function (COFOG divisions) 2008-2011, ESA 1995, General Government, consolidated (as a percentage of total expenditure of general government)

Besides the described developments in the individual divisions and groups, the annual increase in the individual divisions relative to the annual increase in total expenditure of general government is also relevant as regards the percentage share of the COFOG divisions vis-à-vis total government expenditure. For instance, an increase in COFOG division 10. Social protection of €878 m in 2011 resulted in an increase of 0.2 percentage points compared to 2010, as total expenditure of general government rose by €1.5 bn in 2011. The decrease in expenditure in COFOG division 04. Economic affairs by €384 m in 2011 resulted in a decrease of 0.4 percentage points compared to 2010. Furthermore the small increase (+€33 m) in COFOG division 01. General public services in 2011 resulted in a decrease of 0.1 percentage points.

Explanations

Consolidation adjustment

The expenditure and revenue of sector general government have to be shown as “consolidated”, i.e. intergovernmental flows are not depicted. In order to not affect the net lending/net borrowing as a result of this “consolidation”, intergovernmental expenditure of sector general government has to be identical to intergovernmental revenue. As this is not the case in practice a balancing mechanism is used: At the next highest transaction class level, the ratios “Current transfers within general government” to “Miscellaneous current transfers” and “Investment grants” to “Other capital transfers” are adjusted as necessary so that the figures may then be consolidated. This is known as “consolidation adjustment”.