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REISSUE

5 September 2006
The following time series spreadsheets were reissued to correct data problems.
No other changes have been made.

Replacement tables contain corrections for the following series:

Table 6: Chain Laspeyres Price Index; Goods and Services Credits and Goods Credits Terms of Trade Index; Goods and Services

Table 56: Chain Laspeyres Price Index; Goods and Services Credits and Goods Credits Terms of Trade Index; Goods and Services

Table 101: Merchandise Exports, Balance of Payments Basis, Chain Volume Measures ; Combined confidential items excl some of SITC 280 (exports only) and some of SITCs 510 and 520 (imports only)

Table 102: Merchandise Exports, Balance of Payments Basis, Implicit Price Deflators ; Combined confidential items excl some of SITC 280 (exports only) and some of SITCs 510 and 520 (imports only)

Table 113: Percentage Change - Terms of Trade ; Goods and Services

		Mar Qtr 2006	Jun Qtr 2006	Mar Qtr 2006 to Jun Qtr 2006
		$m	$m	% change
TREND ESTIMATES
Balance on current account		-13 949	(a)-13 200	. .
Balance on goods and services		-4 389	(a)-4 073	. .
Net income		-9 456	-9 035	4
SEASONALLY ADJUSTED
Balance on current account		-13 631	-13 239	3
Balance on goods and services		-4 509	-4 138	8
Net income		-9 029	-9 006	-
ORIGINAL
Balance on current account		-13 073	-11 853	9
Balance on capital and financial account		13 349	12 239	-8
Levels at end of period
Net international investment position		533 103	540 869	1
	Net equity	49 219	47 041	-4
	Net debt	483 884	493 828	2
. . not applicable
- nil or rounded to zero (including null cells)
(a) A trend break of $450m has been applied - see page 5 for details.

Current Account, Main aggregates - Trend estimates at current prices(a)

International Investment

JUNE QUARTER KEY POINTS


BALANCE OF PAYMENTS

• The current account deficit, seasonally adjusted, fell $392m (3%) to $13,239m. The deficit on the balance of goods and services fell $371m (8%) to $4,138m. The income deficit fell $23m to $9,006m.
• In seasonally adjusted chain volume terms there was an increase of $543m in the deficit on goods and services. This could be expected to contribute -0.2 percentage points to growth in the June quarter 2006 volume measures of GDP.
• In original terms, the balance on current account for 2005-06 was a deficit of $54.4b, down $2.9b from the deficit of $57.4b for 2004-05.

• Australia's net IIP rose $8b to a net liability position of $541b. Net foreign debt was $494b, an increase of $10b, due mostly to net debt inflows of $16b. Net equity liabilities fell by $2b to $47b.

Incorporation of the latest survey and administrative data has resulted in revisions to the current account back to September quarter 2002. In original terms, these revisions have:

• decreased the 2002-03 current account deficit by $301m
• decreased the 2003-04 current account deficit by $205m
• decreased the 2004-05 current account deficit by $229m
• decreased the March quarter 2006 current account deficit by $232m.

There have been revisions to the international investment position (IIP) data. This issue incorporates revisions to data from September quarter 2002. The revisions are the result of improved reporting, the identification and correction of errors and adjustments to approximate market valuation. These revisions have decreased Australia's net IIP liability as at 31 March 2006 by $37.9b. Net equity has been revised down by $28.3b and net debt has been revised down by $9.6b.

As identified in the International Monetary Fund's Balance of Payments Manual (BPM5, 1993), market valuation is the principle used for valuation of equity. Providers in the Survey of International Investment, the main source of information IIP data, are asked to value equity liabilities and equity assets on this basis. Some providers are unable to provide a market value and report net asset value. Where this creates a significant distortion, the ABS makes adjustments to approximate market valuation, a process that started in September quarter 2000. The adjustment process has been extended to more providers in this issue. These adjustments have been applied across the full time series presented in this issue and do not affect transactions recorded in the balance of payments. These adjustments affect the valuation of direct investment equity assets and improve the consistency of these series with Australia's domestic financial accounts.

CHANGES IN THIS ISSUE

Details of changes in this issue are provided on page 5.

INQUIRIES

For further information contact Bernard Williams on Canberra (02) 6252 5540 for balance of payments estimates, and Joe Whelan on Canberra (02) 6252 5541 for international investment estimates.

CHANGES IN THIS ISSUE


NON-RURAL EXPORTS

The prices of iron ore export commodities significantly increased in June quarter 2006. It is expected that the increased prices will continue to apply and will result in a shift in level of the current price measures of iron ore. The current original and seasonally adjusted estimates reflect the level shift resulting from the increased prices, but the impact of this increase has been taken into account in determining the concurrent seasonal factors.

Since the price increase impact is likely to result in a permanent change in the level of the series (at least for the duration of the current contracts), an estimated trend break correction of $450m has been applied to metal ores and minerals in June quarter 2006. As a minimum of three quarters are required for a trend break correction to be accurately estimated using time series techniques, the size of the trend break may be revised. Therefore, users should interpret the trend estimates for recent quarters with some caution. The June quarter 2006 trend observation is not visible in the broader level charts in this issue affected by the trend break.

CHAIN VOLUME ESTIMATES

A new base year, 2004-05, has been introduced into the chain volume estimates which has resulted in revisions to growth rates in subsequent quarters. In addition, the chain volume estimates have been re-referenced to 2004-05, thereby preserving additivity in the quarters after the reference year. Re-referencing affects levels of, but not the movements in, chain volume estimates.

REVISED TREATMENT OF GOODS FOR PROCESSING IN MERCHANDISE TRADE AND BALANCE OF PAYMENTS STATISTICS

The classification of some imports and exports transactions to goods for processing has changed from this issue and earlier series have been revised. A feature article, Revised treatment of goods for processing in merchandise trade and Balance of Payments statistics, describing the change was released on 14 July 2006 with the May issue of International Trade in Goods and Services (Cat. no. 5368.0). The article can be accessed on the ABS web site www.abs.gov.au from the summary page of the May issue.

The impact on the estimates varies for each financial year but in broad terms the impact on goods credits (exports) for 2004-05 is that goods for processing has been reduced by about $0.7b and non-monetary gold increased by the same amount. For 2004-05 the goods for processing component of goods debits (imports) has been reduced by $2.8b and the non-monetary gold and processed industrial supplies n.e.s. components have been increased by about $1.7b and $1.1b, respectively. This reclassification does not impact on the balance of goods and services in original terms.

TIME SERIES DATA


TIME SERIES DATA

Data available free on the ABS web site <www.abs.gov.au> from the Details tab of this issue include:

• longer time series of all tables contained in this publication
• additional spreadsheets and data cubes as listed below:

52 International investment position by net foreign equity and net foreign debt - Financial year

53 International investment position by foreign assets by equity and debt - Financial year

54 International investment position by foreign liabilities by equity and debt - Financial year

56 Goods and services: terms of trade, original - Financial year

57 Goods credits: original - Financial year

58 Goods debits: original - Financial year

63 Goods credits: implicit price deflators (Index numbers) - Financial year

64 Goods debits: implicit price deflators (Index numbers) - Financial year

65 Services credits: original - Financial year

66 Services debits: original - Financial year

68 Services credits: chain volume measures and implicit price deflators (Index numbers) - Financial year

69 Services debits: chain volume measures and implicit price deflators (Index numbers) - Financial year

70 Income credits: original - Financial year

71 Income debits: original - Financial year

73 Current transfers: original - Financial year

74 Capital account - Financial year

75 Financial Account - Financial year

76 International investment: Australian investment abroad - Financial year

77 International investment: foreign investment in Australia - Financial year

78 International investment: levels of Australian investment abroad - Financial year

79 International investment: levels of foreign investment in Australia - Financial year

80 International investment: foreign debt levels at the end of period - Financial year

81 International investment: gross external debt liabilities - Financial year

83 Balance of payments: exchange rates - Financial year

84 International investment: foreign assets and liabilities: by Industry - Financial year

85 Balance of payments: ratios of current account measures to GDP - Financial year

89 International investment position: historical summary - Financial year

95 Quarterly combined current price seasonal adjustment factors

101 Merchandise exports by SITC division on a Balance of payments basis, chain volume measures

102 Merchandise exports by SITC division on a Balance of payments basis, implicit price deflators

103 Merchandise exports by SITC division and section on a Recorded trade basis, chain volume measures

104 Merchandise exports by SITC division and section on a Recorded trade basis, implicit price deflators

105 Merchandise imports by End-Use categories on a Balance of payments basis, chain volume measures

106 Merchandise imports by End-Use categories on a Balance of payments basis, implicit price deflators

107 Merchandise imports by SITC division and section on a Recorded trade basis, chain volume measures

108 Merchandise imports by SITC division and section on a Recorded trade basis, implicit price deflators

109 Services credits and debits, chain volume measures

110 Services credits and debits, implicit price deflators

111 Balance of payments: current account transactions, seasonally adjusted and trend estimates (percentage change) - Quarter

112 Balance of payments: goods and services, implicit price deflators, original (index) - Quarter

113 Balance of payments: original and seasonally adjusted chain volume measures and indexes (percentage change) - Quarter

114 Balance of payments: goods credits, chain volume measures, original - Quarter

115 Balance of payments: goods debits, chain volume measures, original - Quarter

116 Balance of payments: services credits and debits, current prices, original and seasonally adjusted - Quarter

117 International investment: foreign assets, by direction and type of investment - Quarter

118 International investment: foreign liabilities, by direction and type of investment - Quarter

119 International investment: foreign debt transactions - Quarter

120 International investment: interest income on foreign debt - Quarter

214 Balance of payments: goods credits, chain volume measures, original - Financial year

215 Balance of payments: goods debits, chain volume measures, original - Financial year

216 Balance of payments: services credits and debits, current prices, original and seasonally adjusted - Financial year

217 International investment: foreign assets, by direction and type of investment - Financial year

218 International investment: foreign liabilities, by direction and type of investment - Financial year

219 International investment: foreign debt transactions - Financial year

220 International investment: interest income on foreign debt - Financial year

ANALYSIS AND COMMENTS


BALANCE OF PAYMENTS


CURRENT ACCOUNT

The trend estimate of the balance on current account for the June quarter 2006 was a deficit of $13,200m, a decrease of $749m on the deficit recorded for the March quarter 2006 after the trend break correction of $450m - see page 5 for more details. The largest decreases were in:

• the net goods deficit, down $297m to $3,936m
• the net services deficit, down $19m (12%) to $137m
• the net income deficit, down $421m (4%) to $9,035m.

• the net goods deficit fell $483m (11%) to $3,963m
• the net services deficit rose $112m (178%) to $175m
• the net income deficit fell $23m to $9,006m.

In seasonally adjusted terms, the balance on goods and services was a deficit of $4,138m, a decrease of $371m (8%) on the March quarter 2006 deficit where:

• the goods deficit fell $483m (11%) to $3,963m
• the services deficit rose $112m (178%) to $175m.

The increase in goods credits was driven by:

• non-rural goods, up $1,552m (5%)
• other goods, up $1,186m (43%).

The increase in goods debits was driven by:

• intermediate and other merchandise goods, up $1,100m (6%)
• other goods, up $771m (46%)
• consumption goods, up $613m (5%).

The increase in the services deficit resulted from higher services debits, up $127m (1%), partly offset by higher services credits, up $15m.

In seasonally adjusted volume terms, the deficit on goods and services was $9,476m, an increase of $543m (6%) on the $8,933m deficit recorded in the March quarter 2006. The net deficit on goods rose $373m (4%) to $9,145m. Goods debits rose $1,029m (2%) and goods credits rose $656m (2%). The net services balance was a deficit of $331m, an increase of $169m (104%) on the March quarter 2006 deficit of $162m.

The increase of $543m in the deficit on goods and services in volume terms could be expected to contribute -0.2 percentage points to growth in the June quarter 2006 volume measures of GDP, assuming no significant revision to the GDP chain volume estimate for the March quarter 2006.

Goods and Services(a)

In seasonally adjusted current price terms, goods credits rose $2,729m (7%) to $41,513m.

Exports of rural goods, in seasonally adjusted terms at current prices, fell $9m to $6,422m. The largest decrease was in cereal grains and cereal preparations, down $54m (4%), with volumes down 8% and prices up 4%.

Largely offsetting this decrease were increases in:

• other rural, up $25m (1%), with volumes up 4% and prices down 3%
• wool and sheepskins, up $17m (3%), with volumes up 2% and prices up 1%.

• metals ores and minerals, up $1,126m (16%), with volumes down 2% and prices up 18%
• metals (excluding non-monetary gold), up $399m (14%), with volumes down 2% and prices up 16%
• other non-rural (incl. sugar and beverages), up $305m (10%), with volumes up 8% and prices up 2%.

• coal, coke and briquettes, down $306m (5%), with prices down 5%
• other mineral fuels, down $33m (1%), with volumes down 1%.

General Merchandise Credits(a)

In seasonally adjusted current price terms, goods debits rose $2,246m (5%) to $45,476m.

Imports of consumption goods, in seasonally adjusted terms at current prices, rose $613m (5%) to $13,187m, on increased volumes. All components increased with the largest increases in:

• non-industrial transport equipment, up $260 (8%), with volumes up 7% and prices up 1%
• consumption goods, n.e.s., up $175m (4%), with volumes up 4% and prices up 1%
• food and beverages, mainly for consumption, up $61m (4%), with volumes up 2% and prices up 2%
• toys, books and leisure goods, up $46m (4%), with volumes up 4% and prices up 1%.

• civil aircraft, down $326m, largely on reduced volumes
• industrial transport equipment, n.e.s., down $126m (9%), with volumes down 8% and prices down 1%
• ADP equipment, down $102m (6%), with volumes down 2% and prices down 5%.

• capital goods n.e.s., up $252m (18%), with volumes up 20% and prices down 1%
• machinery and industrial equipment, up $144m (4%), with volumes up 1% and prices up 3%.

• fuels and lubricants, up $767m (14%), with volumes up 1% and prices up 13%
• other merchandise goods, up $105m (46%), largely on increased volumes
• other parts for capital goods, up $81m (3%), with volumes up 4% and prices down 1%
• processed industrial supplies n.e.s., up $51m (1%), with volumes down 1% and prices up 3%.

• iron and steel, down $23m (3%), with volumes down 6% and prices up 3%
• textile yarn and fabrics, down $10m (3%), largely on decreased prices.

General Merchandise Debits(a)

In seasonally adjusted terms, net services recorded a deficit of $175m, a rise of $112m (178%) on the March quarter 2006 deficit of $63m.

Services credits, in seasonally adjusted terms at current prices, rose $15m to $9,747m, with volumes down 1% and prices up 1%. The increases were in:

• transportation services, up $41m (2%) with volumes up 2%, driven by passenger and other transportation services, up $45m (2%) with volumes up 2%
• travel services, up $16m, with volumes down 1% and prices up 1%.

Services debits, in seasonally adjusted terms at current prices, rose $127m (1%) to $9,922m on increased volumes. The increases were in:

• travel services, up $195m (5%), with volumes up 5% and prices up 1%
• other services, up $6m, with volumes down 1% and prices up 1%.

Seasonally adjusted, tourism related services credits rose $58m (1%) to $6,221m, and seasonally adjusted, tourism related services debits rose $217m (4%) to $5,162m.

Implicit Price Deflator

In seasonally adjusted terms, the implicit price deflator (IPD) for total goods and services credits rose 4.2%. In original terms, it rose by 4.4%. The chain Laspeyres price index for goods and services credits rose 4.2%. The IPD for goods credits, in original terms, rose 4.8% and the IPD for services credits rose 0.8%.

The total goods and services debits IPD rose 2.2% in seasonally adjusted terms. In original terms, it rose by 2.0%. The chain Laspeyres price index for goods and services debits rose 2.1%.

IMPLICIT PRICE DEFLATOR(a), Seasonally Adjusted

In original terms, the implicit price deflator for total goods debits rose 2.3% and the chain Laspeyres price index for goods imports rose 2.6%. The import price index (IPI) rose 2.3% during the June quarter 2006.

Terms of trade

Australia's seasonally adjusted terms of trade rose 1.9% to 113.1, with an increase of 4.2% in the IPD for goods and services credits and a 2.2% increase in the goods and services debits IPD. The trend estimate of the terms of trade increased 1.8% to 113.4.

Income

The trend estimate of the net income deficit fell $421m (4%) to $9,035m.

In seasonally adjusted terms, the net income deficit fell $23m to $9,006m. Income credits rose $1,222m (19%) to $7,704m and income debits rose $1,199m (8%) to $16,710m.

In original terms, the net income deficit fell $608m (7%) to $8,481m. Income credits rose $1,543m (24%) to $7,929m and income debits rose $935m (6%) to $16,410m.

Net Income

CAPITAL AND FINANCIAL ACCOUNT

Capital Account

In original terms, the capital account surplus was $241m, down $49m on the March quarter 2006 surplus. Capital transfer credits fell $93m (13%) to $603m and capital transfer debits fell $45m (11%) to $361m.

Financial Account

In original terms, the balance on financial account recorded a net inflow of $12.0b, with a $15.8b inflow of debt and a $3.8b outflow of equity.

Direct investment in Australia recorded an inflow of $5.8b in June quarter 2006, an increase of $4.1b on the March quarter 2006 inflow of $1.7b. Australia's direct investment abroad recorded an outflow of $4.6b, a decrease of $0.2b on the previous quarter's outflow of $4.8b. In net terms, direct investment recorded an inflow of $1.2b, a turnaround of $4.4b on last quarter's outflow of $3.1b.

Portfolio investment recorded a net inflow of $18.7b, an increase of $0.2b on the net inflow of $18.6b in March quarter 2006. This was driven mainly by continued strong net issuance of debt securities.

Other investment recorded a net outflow of $5.9b, an increase of $5.4b on the net outflow of $0.5b in the previous quarter.

Reserve assets recorded a net outflow of $2.8b, an increase of $1.3b on the previous quarter's net outflow of $1.5b.

INTERNATIONAL INVESTMENT POSITION


INTERNATIONAL INVESTMENT

Australia's net international investment position at 30 June 2006 was a net foreign liability of $540.9b, up $7.8b (1.5%) on 31 March 2006. The increase consisted of:

• net transactions of $12.0b;
• price changes of -$9.4b;
• exchange rate changes of $5.6b; and
• other adjustments of -$0.4b.

During the June quarter 2006, net equity liabilities fell $2.2b (4.4%) to close at $47.0b. The major contributors to this decrease were market price changes of -$5.6b and net transactions of -$3.8b, partially offset by exchange rate changes of $6.8b.

FINANCIAL YEAR: 2005-06 SITUATION


BALANCE OF PAYMENTS

In original terms, the balance on current account for 2005-06 was a deficit of $54.4b, a 5% decrease on the deficit of $57.4b recorded for 2004-05. The balance on goods and services deficit was $16.5b, a decrease of $8.0b on the deficit of $24.5b recorded in 2004-05. Goods exports increased $26.0b or 20% (due largely to increase in prices) and goods imports increased $18.9b or 13% (due to an increase in both volumes and prices).

The 2005-06 services deficit was $0.7b, a decrease of $0.8b on the deficit of $1.5b in 2004-05.

The 2005-06 net income deficit rose $5.0b (15%), with an increase in income credits of $4.0b (19%) and an increase in income debits of $9.0b (17%).

The balance on financial account recorded a net inflow of $53.4b, with a net inflow on debt of $68.2b and a net outflow on equity of $14.7b. This result was down $0.1b on the net inflow recorded for the previous year as a result of:

• an increase of $60.7b on the net inflow on portfolio investment;
• a turnaround of $52.4b to a net outflow on direct investment;
• a decrease of $7.5b on the net inflow on other investment;
• a turnaround of $3.4b to a net outflow on financial derivatives; and
• a decrease of $2.5b on the net outflow on reserve assets.

• net transactions of $53.4b;
• price changes of -$19.8b;
• exchange rate changes of $5.4b; and
• other adjustments of -$1.9b.

Net foreign debt rose to $493.8b, up $61.9b (14%) on the previous year, with transactions of $68.2b and exchange rate changes of $9.8b being partially offset by price changes of -$13.5b and other adjustments of -$2.6b.

At 30 June 2006, the ratio of Australia's net international position to GDP using the latest available GDP figure (for the year ended 31 March 2006 using current prices) was 57.2%. This compares with 56.4% one year ago and 53.1% one decade ago.