9.4. Current transfers are classified primarily by institutional sector, i.e. general government and other sectors, with the latter further split into workers’ remittances and other transfers. Within the other transfers component, non-life insurance transfers are separately identified. The standard classification of current transfers is shown in table 9.2. In Australia’s balance of payments statistics it is not possible to identify workers’ remittances separately, for which estimates are included in other transfers.
9.5. As with all balance of payments entries, this classification represents transactions from the point of view of the Australian entity. For example, pensions paid by the Australian Government to former Australian residents (now non-residents) are classified to general government sector debit, while pensions received by residents from foreign governments are classified to other sectors credit.
General government sector
9.6. The principal components of current transfers of the general government sector include:
- the Australian Government’s foreign aid program, including gifts of food, clothing, other consumer goods, medical supplies, technical assistance, etc. (and including the Government’s administrative costs associated with aid). An important component of this aid is contributions made by the Commonwealth Government toward expenditure on education services (fees) and living expenses of foreign students studying in Australia (these contributions are offset in the students’ expenditure component of travel credits);
- other transfers in kind effected between governments for the purpose of financing current consumption, including consumption under foreign military assistance programs;
- social security benefits paid to non-residents;
- regular contributions to international organisations of which Australia is a member; and
- withholding taxes levied by the Australian Government on the earnings in Australia of non-residents in the form of dividends, interest and royalties; on freight earnings of foreign shipping operators; and insurance and reinsurance premiums paid abroad.
9.7. The principal components of the current transfers of other sectors are:
- workers’ remittances, which cover remittances by employees who are migrants, to family and relatives abroad. Migrants are persons who stay in an economy (other than the economy of which they were previously residents) for a year or more (foreign students are not covered by this twelve months rule). Where persons move abroad to work for less than twelve months they are treated as foreign workers, not migrants; their wages and salaries are included in compensation of employees, and their expenditure in the country visited is included in travel services;
- net premiums (i.e. gross premiums minus an imputed service charge) and claims on non-life insurance (see box 7.5 for a fuller explanation);
- pensions paid by foreign governments to residents, either directly or through the Commonwealth Government;
- withholding taxes paid by residents to foreign governments;
- regular contributions to charitable, religious, scientific and cultural organisations, and aid of a current nature, by the non-government sector; and
- other miscellaneous transfers - principally receipts by residents from abroad, or payments to non-residents, of gifts, alimony, legacies and inheritances, tickets sold by and prizes won from lotteries, other sustenance payments between individuals, regular contributions (including membership dues) to charitable, religious, scientific and cultural organisations, and non-government pension payments.