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5485.0 - Australian Outward Finance and Insurance Foreign Affiliate Trade, 2009-10 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 27/06/2011  First Issue
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EXPLANATORY NOTES


SCOPE AND COVERAGE

1 The Survey of Outward Finance and Insurance Foreign Affiliate Trade in Services (SOFI FATS) measured the economic activity of finance and insurance foreign affiliates of Australian resident enterprises within the framework defined by Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6). For the purpose of foreign affiliates trade statistics, foreign affiliates refers to enterprises that are majority owned by Australian resident enterprises (more than 50% of the ordinary shares or voting stock). This includes offshore subsidiaries, branches and majority-owned foreign joint ventures.

2 The scope of the survey was limited to finance and insurance foreign affiliates that traded in services and/or goods. There were 30 finance and insurance Australian resident parent enterprises that reported on behalf of all their finance and insurance foreign affiliates.

3 The SOFI FATS population was obtained by using the survey population from two related ABS surveys: the Survey of International Investment and the Survey of International Trade in Services, supplemented by additional units that were identified as in scope.


REFERENCE PERIOD

4 Reporting units were asked to report for their most recent financial year for which financial accounts were available. The nominal reference period was the 2009-10 financial year, with the reference period for respondents varying from financial years ending 31 December 2009 to financial years ending 30 September 2009. No adjustment was made to estimates to account for differing financial year reference periods.


ROUNDING

5 Where figures have been rounded, discrepancies may occur between the sum of component items and the total.


CLASSIFICATIONS

Industry

6 This publication presents industry statistics according to the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (Revision 1.0) (cat. no. 1292.0). The Australian resident parent enterprise classified each affiliate to an industry group based on the primary activity of the affiliate.


Geographic Region

7 Geographic regions have been grouped according to the following Standard Australian Classification of Countries (SACC) (cat. no. 1269.0) groupings:

SOFI FATS Region SACC Grouping

Europe 2 North-West Europe
3 Southern and Eastern Europe
9 Sub-Saharan Africa
Asia-Pacific 1 Oceania and Antarctica
4 North Africa and Middle East
5 South-East Asia
6 North-East Asia
7 Southern and Central Asia
Americas 8 Americas



8 Africa could not be released as a separate region due to the small number of foreign affiliates of Australian enterprises operating in Africa. Therefore, Africa was included in the European region.

9 Many tables include an "Other" category which includes all countries that have not satisfied confidentiality requirements. 61 countries contribute to this category, with the largest contributors being Bermuda, Canada, the Cayman Islands, Germany, India, Ireland, Luxembourg, Mauritius, Mexico, the Republic of Korea and South Africa.


Goods

10 Given the finance and insurance focus of SOFI FATS, there were insufficient data on goods income and expenses for these items to be published separately from services.


Services

11 The services classification used in SOFI FATS was that used in Australia's balance of payments and follows the Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6). Further information on services classifications is available in Balance of Payments and International Investment Position, Australia: Concepts, Sources and Methods (cat. no. 5331.0). The broad finance services category was further classified in Tables 5a and 5b as defined by the Central Product Classification, however due to data constraints it was necessary to collapse several classifications into a residual 'selected services' category.

12 The key measures presented in this publication are broadly aligned with accounting concepts for the finance and insurance industries. Sales include income from finance (including direct fees and charges from deposit services and credit granting services), insurance (including fees and premiums/claims received), pension and other services earned. Purchases include expenses from finance (including direct fees and charges from deposit services and credit granting services), insurance (including fees and premiums/claims paid), pension and other services paid. Sales and purchases exclude indirect charges such as financial intermediation services indirectly measured (FISIM), unless otherwise indicated (see paragraph 21 for more information).

13 Pension and superannuation services are included in insurance services, as they constitute a small percentage of services for both sales and purchases.


MODE OF SUPPLY

14 Mode of supply describes how services may be traded internationally and considers the location of both the supplier and the consumer of the traded service. Under the General Agreement on Trade in Services (GATS), four modes of supply form the basis on which World Trade Organisation (WTO) member countries' agreements for trade in services are negotiated.

15 GATS defines the four modes of supply of services as:
  • Cross border supply (mode 1) occurs when a service is delivered from a supplier abroad to a consumer in their country of residence without either supplier or consumer moving into the country of the other. When viewed from the country of operation of the foreign affiliate, cross border provision of services refers to those services provided to another country without either supplier or consumer moving into the country of the other (e.g. provision of computing or architectural services by the foreign affiliate to another country by phone or internet).
  • Consumption abroad (mode 2) occurs when a consumer resident in a country moves to another country to obtain a service. When viewed from the country of operation of the foreign affiliate, consumption abroad occurs when a consumer from another country visits the country of operation of the foreign affiliate to obtain a service from the foreign affiliate (e.g. repairs to aircraft or ships).
  • Commercial presence (mode 3) occurs when a commercial presence abroad is established (i.e. subsidiary, branch or joint venture) to supply services to the consumer in their country of residence. When viewed from the country of operation of the foreign affiliate, domestic provision of services refers to those services provided by the foreign affiliate to residents within that country.
  • Presence of natural persons (mode 4) occurs when an individual moves to the country of the consumer in order to provide a service without becoming a resident of that country. When viewed from the country of operation of the foreign affiliate, a representative of an enterprise from another country is sent temporarily to the country of operation of the foreign affiliate to provide a service to the foreign affiliate (e.g. an intra-company temporary transfer from another country); or a self-employed individual travels to the country of operation of the foreign affiliate to provide a service to the foreign affiliate (e.g. private consultant); or an expatriate provides a service to the foreign affiliate.

16 Modes 1, 2 and 4 are combined and classified as exports or imports in relevant tables. Mode of supply has been developed to be applied to trade in services only. In SOFI FATS, trade in local-resident services was classified as commercial presence (mode 3).

17 This publication refers to outward foreign affiliate trade only. To calculate a complete balance for finance and insurance services, additional information would be required on Australia's inward foreign affiliate trade. Currently, the ABS only collects modes 1, 2 and 4 data on a regular basis for Australian resident trade in services.


IMPUTATION

18 All units provided full responses to all aspects of this survey, with the exception of breakdowns for employment data into managerial and other. To account for partial response for both number of employees and wages and salaries, an explicit imputation strategy based on the responses of reporting units was used. Where the number of employees of partially responding units was close to those of the fully responding units, the employment data provided by the fully responding units were used to estimate missing data of the partially responding units. Consequently, these reporting units were assessed on a case by case basis and any estimates were closely based on the information provided by partially responding units and estimates from fully responding units.


ABS CONFIDENTIALITY RESTRICTIONS

19 Under the Census and Statistics Act, 1905 it is an offence to release any information collected under the Act that is likely to enable identification of any particular individual or organisation. Tables are specified to minimise the risk of identifying organisations. Four steps have been taken to ensure that output cells in this publication are not likely to enable the identification of a particular organisation.
  • First, output cells that were likely to enable identification were identified.
  • Second, a perturbation technique adjusted certain cell values to prevent any identifiable data from being exposed. These adjustments resulted in small introduced random errors. However, the information value of the table as a whole is not impaired. The technique allows tables, for which there are strong client demands, to be produced even though they contain numbers of very small cells. It is not possible for users to determine which cells have undergone perturbation.
  • Third, it was sometimes necessary to collapse certain industry and country divisions into a residual category (other) in the published tables.
  • Fourth, if data could not be perturbed or collapsed, the cells were suppressed and included in totals where applicable.


ESTIMATES OF GROSS VALUE ADDED

20 Information has been collected to approximate Gross value added (GVA) which is published in Table 1. GVA is the value of output at basic prices minus the value of intermediate consumption at purchasers' prices. The term is used to describe gross product by industry and by sector. Valuation of output at basic prices removes the distortion caused by variations in the incidence of commodity taxes and subsidies across the output of individual industries.


ESTIMATES OF FISIM

21 Financial intermediation services indirectly measured (FISIM) was calculated for tables 5a and 5b. For more information on FISIM and how it is calculated, see chapter 12 of the Information Paper: Implementation of new international statistical standards in ABS National and International Accounts, September 2009 (cat. no. 5310.0.55.002). FISIM values represent the services provided by financial intermediaries where no explicit services are charged.


PROFIT

22 Tables 1 and 7 show Profit on a before tax basis, however profit attributed to Australia refers to after tax. Retained profit in Table 7 refers to the accumulated net income which has been retained for reinvestment in the business rather than being distributed to shareholders in the form of dividends.


FUTURE STUDIES

23 Data presented in this publication are final. The extent of data presented was affected by confidentiality restrictions. Consequently, any further cross-classifications or disaggregation of data are not possible.

24 Finance and insurance is one of the largest of the service industries traded by foreign affiliates. Other service industries are likely to consist of a low number of contributors and result in additional confidentiality restrictions. As such, it is likely that any future studies into other services industries would be problematic and lack detailed breakdowns.


RELATED INFORMATION

25 Users may also wish to refer to the following publications which can be downloaded from the ABS website:

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