5331.0 - Balance of Payments and International Investment Position, Australia, Concepts, Sources and Methods, 1998  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 22/09/1998   
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17.4 In practice, some divergences are made from these principles where data sources use different classification principles, or where suppliers of information have difficulties in providing it on the required basis. The following paragraphs describe the methods for allocating global estimates to individual countries or groups of countries.

17.5 The goods component is classified to country largely based on country data reported in international trade statistics. In these statistics, exports and imports are classified to the country of consignment (final destination) and origin respectively. This will conform broadly to the principle of country of new owner for exports. However, while the country of origin will also generally conform with the country of former owner (imports) it is subject to significant error. For example, goods from China that are bought by traders in Hong Kong and then on-sold to Australia will appear as imports from China, not from Hong Kong. The extent of this mismatch between the country of transactor and the country of origin of the goods varies with the commodity and the country concerned. For some countries the error is as high as 20 per cent; in other cases, such as for Australia’s imports from the USA (our largest imports supplier) the error is about 10 per cent. Gold purchases and sales reported by the Reserve Bank on behalf of non-residents (reported in the Survey of International Investment) are not allocated to country.

17.6 For transportation services three main principles of country allocation are followed. First, for the non-freight earnings from Australia by non-resident transport operators and for their acquisition of services in Australia, the country of head office of the non-resident operator is used to allocate data to country. Second, for freight debits the global estimate from 1993-94 onwards is allocated to country on the basis of the value of the commission earnings and representative costs components of the acquisition of services in Australia of foreign transport operators. In previous years, freight earnings by country were directly estimated from detailed voyage by voyage reporting of cargoes by shipping agents. From analysis of past reporting, commission and representative costs in Australia were considered the best practical approximation for country shares of Australia’s freight on imports. Finally, for transactions by resident transport operators, the country to which the service is provided or from which it is obtained is used to allocate data to country.

17.7 For travel services, separate estimates are compiled for foreign student expenditure in Australia and other travellers’ expenditure in Australia and abroad. For foreign students, global estimates of fees and other expenditure in Australia are allocated to country according to the country shares of expenditure obtained from Foreign Student statistics (Department of Employment, Education, Training and Youth Affairs). For other travel credits, global estimates of travel expenditure derived from the Travel by Foreign Residents Model are estimated by country on the basis of both the numbers of visitor arrivals from each country in the Overseas Arrivals and Departures statistics (based on country of residence) and the expenditure amounts per visitor, by country, measured in the International Visitor Survey conducted on behalf of the Bureau of Tourism Research. For other travel debits, amounts are estimated using both Overseas Arrivals and Departures statistics (based on main country visited) and expenditure per visitor by main country visited from the Survey of Returned Australian Travellers. Where Australian travellers abroad visit more than one country, this allocation basis will differ from the stated principle to the extent that they will not necessarily spend money in those countries in proportion to the time actually spent in those countries.

17.8 For ‘other’ services, including insurance and financial services, estimates are allocated to country on the basis of country of user (credits) or provider (debits) reported in the Survey of International Trade in Services (miscellaneous services) and other sources. The business surveys and other sources that are used to allocate these services credits and debits are not as good as for transportation and travel, and about 15 per cent of both credits and debits remains unallocated, making ‘unallocated’ the second largest country category (after the USA) for these other services. Some of the data are confidential by country. In other cases, only the top one or two trading partners are provided to the ABS, with the balance shown as unallocated. While the amount unallocated for total services credits and debits is about 6 per cent, within the ‘other’ services category this proportion jumps to 15 per cent. Care should be used in interpreting the country allocations for these ‘other’ services.

17.9 For current transfers and capital transfers various data sources are used to determine the country of allocation. For the acquisition/disposal of non-produced, non-financial assets, data come from the Survey of International Trade in Services.

17.10 For income, compensation of employees is estimated based on the Overseas Arrivals and Departures statistics as obtained for travel services. Investment income is as reported in, or based on data reported in the Survey of International Investment. In the case of investment income, limited data are available for many types of debt securities issued abroad and for reserve assets, as explained in the following paragraphs.

17.11 For the financial account and international investment position, country data are as reported in, or based on data reported in the Survey of International Investment. The data are available on bases which broadly correspond to the principle of country of foreign creditor/debtor. However, in the case of debt securities issued on a single capital market abroad, information is only available to classify transactions to the country of the lead manager of the issue and not necessarily according to the country of the supplier of funds (the creditor). Issues floated on several markets at once (such as Eurobonds) are classified to an international capital markets category.

17.12 Only limited country data are available for reserve assets. As a result, foreign exchange denominated in United States dollars is classified to the United States of America. Foreign exchange not denominated in United States dollars is classified to Other OECD, reflecting the fact that these reserves represent claims on countries that are mostly members of the OECD. No country breakdown is applicable for the items monetary gold or SDRs. Monetary gold is allocated its own special category (Reserve Bank gold) while SDRs are allocated to the international institutions category.

17.13 In instances where balance of payments transactions relate to but cannot be classified to a specific country, they are recorded in an unallocated category. No country classification is attempted for the net errors and omissions item.

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