4.4 Public consumption expenditure

Public consumption expenditure includes general government (i.e. central government, local governments, joint municipal authorities and social security funds) spending on the production of goods and services. All goods and services produced by general government are defined as final consumption and therefore "other non-market output" by general government is classified in its entirety under public consumption expenditure. Other non-market output by general government is calculated by deducting from public output (i.e. production costs that consist of employees' wage income + consumption of fixed capital + purchases of intermediate products) sales income from goods and services and output for own final use. Public consumption expenditure also includes social benefits in kind (such as refunds of medical expenses from the Social Insurance Institution).

With respect to general government it is important to bear in mind that in the national accounts, corporations where the public sector has a majority stake and utilities that serve the general public are counted under the private business sector, i.e. they do not belong to the general government sector.

In the national accounts public consumption expenditure is divided, on the one hand, between individual and collective consumption expenditure; on the other hand it is grouped according to the classification of public sector functions. This classification differs from the industry classification in that the public administration sector (L: Public administration and defence; compulsory social security) is mainly divided between different functions, for example administration related to education is placed under the task category of education.

The consumption expenditure of non-profit institutions is counted in the same way as public consumption expenditure (i.e. other non-market output is regarded as consumption expenditure), but it is classified under private consumption expenditure.