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5368.0 - International Trade in Goods and Services, Australia, Aug 2005  
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Feature Article - Changes to International Trade in Services Travel Statistics


INTRODUCTION

This article describes revisions to the international trade in services series which have been implemented with the August 2005 issue of International Trade in Goods and Services, Australia (cat. no. 5368.0). New methodologies and data sources have been used to compile the travel component of international trade in services. The changes have resulted in revisions to both the travel credits and debits series. Estimates for relevant periods have been recompiled using the new methodologies and data sources. Estimates for earlier periods have also been revised to maintain consistency across the time series.


Introducing these changes is consistent with the ABS's aim of improving the accuracy of estimates, including by making use of new data sources as they become available.


The major changes are to:

  • education related travel credits - a new methodology and a new data source have been introduced; and
  • business and other personal travel (excluding education) debits - a new data source for traveller expenditure has been introduced.

Other changes introduced include:
  • a reclassification of data for conference and convention travellers for both credits and debits; and
  • a change to the treatment of data for visitors on prepaid package tours (credits).

This article outlines the changes and summarises the impact on ABS statistics on international trade in travel services.



STATISTICAL IMPACTS

The largest impact of the new methodologies and data sources on both travel credits and debits has been in the past five years. Graphs 1 to 3 below illustrate the overall effect on travel estimates on an annual basis, including the balance on travel services.


The increase in travel credits has been mainly due to the revised estimates for education related travel. In 2004-05, travel credits were estimated to be worth $19.1b (revised up $1.5b from the previous estimate of $17.6b).


Travel debits have also generally increased, although the effect varies by year. The travel debits series has been most affected when the number of Australians travelling for personal reasons such as holidays has been highest. In 2001-02 and 2002-03, the number of Australians travelling overseas for personal reasons fell due to fears of terrorist attacks, SARS and the war in Iraq. The value of the $A was also relatively low against many other currencies during 2001 and 2002, making overseas travel more expensive to many destinations. By comparison, in 2004-05, record numbers of Australians travelled overseas, leading to an overall increase in travel debits in that year to $14.8b (revised up $1.3b from the previous estimate of $13.5b).

1. Total travel credits
Graph: 1. Total travel credits
2. Total travel debits
Graph: 2. Total travel debits



The balance on travel services has been most significantly affected for the three years 2001-02 to 2003-04. In that period, the travel surplus has been increased substantially, due to the much larger revision to travel credits compared with the relatively small revision to travel debits. The surplus on travel services peaked in 2001-02 at $6.3b (revised up by $1.6b from the previous estimate of $4.7b).

3. Balance on travel services
Graph: 3. Balance on travel services




EDUCATION RELATED TRAVEL CREDITS

The ABS has developed a new methodology for estimating expenditure in Australia by overseas students. The new methodology is based on monthly estimates of the number of students in Australia and their monthly expenditure on education fees and other goods and services.


The number of overseas students is derived from a combination of end of quarter estimates of the number of overseas students in Australia, and monthly overseas arrivals and departures data for students. Both datasets are sourced from the Department of Immigration, Multicultural and Indigenous Affairs' (DIMIA) visa data. The end of quarter estimates take account of visitors who may change their visa status after arrival (eg from a student visa to a permanent resident visa).


Fees estimates have been updated to incorporate annual expenditure on student fees during the period 2000 to 2004 recently supplied by the Department of Education, Science and Training (DEST). The fees data were significantly higher than the previous estimates.


DEST's Survey of International Students' Spending (SISS) is the source of estimates of expenditure by overseas students on other goods and services. This survey was conducted in 1997 and 2004. However, the 2004 estimates were not available in time to be introduced with the current changes. Expenditure estimates of goods and services from the 1997 survey continue to be used as the benchmark but they have been moved forward based on the quarterly movements in the Consumer Price Index (CPI).


The benchmark will be revised at a later date using data from the 2004 SISS. Any changes arising from this updated data source will not be introduced into the travel series until September quarter 2006.


A summary of data sources and methods for the previous and current estimates are outlined in the table below.

Previous methodology Current methodology

Estimation of student numbers

1. based on DIMIA passenger arrival cards 1. based on DIMIA's quarterly estimates of visitors on student visas and monthly overseas arrivals and departures
2. total monthly education arrivals adjusted by a factor to account for students arriving multiple times in a year (eg going home for holidays) 2. number of students in Australia in each month by type of student, eg higher education, vocational, English language, etc.

Expenditure on fees

1. sourced from DEST's annual fee data up to 1999 1. sourced from DEST's annual fee data up to 2004
2. average student per capita expenditure in one calendar year allocated to month of arrival 2. allocated monthly by pro-rating fee data according to monthly student numbers

Expenditure on other goods and services

1. sourced from DEST's 1997 SISS 1. sourced from DEST's 1997 SISS
2. adjustments for cost of living increases applied at irregular intervals 2. adjustments for cost of living increases applied quarterly based on CPI movements
3. incorporated into a total estimate of average student per capita expenditure in one calendar year 3. incorporated into a monthly estimate of expenditure by type of student


The new methodology is more responsive to real world changes, including:

  • when travellers change visa status, for example, from a temporary education visa to become a permanent resident, they are no longer included in travel estimates after the month in which their status changes;
  • compositional changes in the types of courses being undertaken by international students (higher education, vocational, secondary schools, English language); and
  • different rates of increase in expenditure on fees and other goods and services.

The new methodology is considered superior to the previous estimation technique which attributed annual student expenditure to the month that students arrived in Australia. Under the previous methodology, monthly and quarterly estimates of education related travel were strongly influenced by the arrival dates of students in Australia. This made the February and July monthly, and March and September quarterly estimates significantly higher than the other months and quarters of the year. Graph 4 below shows how the new methodology has smoothed the quarterly series.

4. Education related travel credits
Graph: 4. Education related travel credits



The level of the education related travel credits series has been revised back to March quarter 2000. The annual calendar year totals back to September quarter 1971 have been reallocated to smooth the monthly and quarterly series consistent with the new methodology.



BUSINESS AND OTHER PERSONAL TRAVEL DEBITS

The previous benchmarks for travel debits were based on the 1995-96 ABS Survey of Returned Australian Travellers. As an alternative to re-conducting this survey, the ABS is using Tourism Australia's National Visitors Survey (NVS) to update expenditure estimates for travel debits.


The NVS is conducted quarterly and collects data from Australian residents about their recent travel both domestically and overseas. The survey commenced at the beginning of 1998 and has collected expenditure on overseas travel in all years except 2003. The survey sample was increased from the beginning of 2005, which should have a positive impact on the reliability of estimates. Up to 2004, estimates of overseas expenditure have been based on responses from 4,000 - 4,500 travellers. This is expected to increase to around 6,000 travellers annually from 2005.


The NVS collects data on purpose of travel, main destination and a detailed breakdown of travel expenditure. Expenditure estimates from the survey are used for business and other personal travel. However, the survey is not suitable for estimating expenditure for education related travel. As the NVS focusses on the spending of Australian residents currently in Australia, the number of responses for education related travel is limited. To reduce volatility, the benchmarks for each quarter are derived from responses for the 12 month period to the end of the quarter.


The NVS does not completely align with the scope of travel services in the Balance of Payments. For business and other personal travel, the Balance of Payments seeks to measure all goods and services (excluding the international carriage of passengers) acquired by travellers from another economy during visits of less than one year. A number of adjustments have been made to account for the classification and conceptual differences, including:

  • the NVS only includes estimates of expenditure by travellers 15 years and over. To take account of this scope difference, the ABS deflates the estimate of per capita expenditure to reflect lower expenditure for travellers under 15 using the proportion of total travellers aged 15 years or more;
  • the NVS includes estimates of expenditure on international airfares. These are removed from the travel estimates as they form part of transportation services. These data are collected directly from airlines via the Survey of International Trade in Services; and
  • expenditure relating to commissions paid to Australian residents is removed, as this is out of scope of the Balance of Payments.

The NVS has similar design and concepts to the International Visitors Survey which is also run by Tourism Australia. The ABS has used data from the IVS to estimate expenditure by overseas visitors in Australia for many years.


Data from the NVS indicate expenditure by Australians travelling for personal reasons such as holidays and visiting friends and relatives has been higher than previously estimated by the ABS, while expenditure by business travellers has been generally lower. Graph 5 shows that the current business travel debits are therefore consistently lower than the previous estimates, despite including travellers to conferences and conventions (see Other changes below) while Graph 6 shows that estimates for personal travel debits are consistently higher than the previous estimates.

5. Business travel debits
Graph: 5. Business travel debits
6. Other personal travel debits
Graph: 6. Other personal travel debits



Revisions have been applied based on actual NVS expenditure estimates from 1998, with earlier series back to September quarter 1992 being revised proportionately to ensure consistency in the data series.



OTHER CHANGES

Reclassification of data on conference and convention travellers

Previously, travel to attend conferences and conventions was included by the ABS in other personal travel. However, according to international Balance of Payments standards, travel to conferences and conventions should be included as business travel.


The reason for the inclusion of travel to attend conferences and conventions in other personal travel was that a previous data source did not separately identify these travellers and included them in other personal travel. Separate estimates for this item are now available. The ABS has taken the opportunity to correct the classification as part of its overall review of international travel services. The changed classification has been applied to both travel credits and debits estimates.


Changed treatment of international visitors on prepaid package tours

Prepaid package tours tend to cover both international airfares and the land component of the tour. As outlined previously, the international airfare component should be included in transportation services. In addition, prepaid package tours include a commission component that normally remains in the resident economy of the visitor. While expenditure by international visitors on prepaid package tours (credits) had been accounted for, the estimation methodology has changed. The quarterly estimate is based on a factor which removes the airfare and commission component from the International Visitors Survey estimate of expenditure on prepaid package tours. This aligns with the treatment for debits.


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