Latest release

International Trade in Services; Concepts, Sources and Methods

This publication outlines the major concepts, definitions, data sources and methods used to prepare the international trade in services estimates.

Reference period
December 2021
Released
9/12/2021

Change to timing of release of International Trade, Supplementary Information, financial year (2020-21) and calendar year (2021)

COVID-19 has impacted the availability and quality of source data used to compile international trade in services estimates. As a result the 2020-21 and 2021 International Trade, Supplementary Information publications (former cat. nos. 5368.0.55.003 and 5368.0.55.004) have been delayed. Both publications are expected to be released commencing from June 2022. 

Introduction

Over the last half-century, Australia has evolved from a freight-centric transport services provider, to a sophisticated trader across the services sector. Tourism, education, business and personal services now join transportation services as important parts of Australia’s trading relationship with the rest of the world.

This paper contains information regarding the concepts that underpin the ABS international trade in services statistics. It also provides information on how international trade in services estimates are produced, the data sources used in compilation and their quality characteristics.

Information in this document will help you:

  • understand what is included in international trade in service statistics.
  • understand the data sources which contribute to different service categories.
  • recognise the uses of international trade in services statistics.
  • understand the quality of ABS international trade in services statistics.

Important Points

  • International trade in services statistics measure the value of services transactions between Australian and overseas entities.
  • International trade in services estimates are an important component of Australia’s Balance of Payments and contribute towards the measure of Gross Domestic Product (GDP).
  • International trade in services statistics are compiled from survey, administrative and modelled data.
  • Monthly estimates of international trade in services are mostly nowcast and should be used with caution.
  • Estimates are revised when input data becomes available (to replace or update nowcasts).

Categories of international trade in services statistics

International trade in services statistics are classified into 12 main service categories. These are each described below along with category exclusions and examples of corresponding trade activities.

Manufacturing services on physical inputs owned by others

Manufacturing services on physical inputs owned by others includes the processing, assembly, labelling and packing undertaken by a service provider that does not own the goods. The cost of the service, not the value or change in value of the good, is reported as the value of the manufacturing service.

Examples of manufacturing services on physical inputs owned by others include:

  • Australian owned crude oil being processed into petroleum in Hong Kong (service debit).
  • the Perth Mint transforming gold bars into coins for the USA (service credit).

This service category does not include:

  • assembly of prefabricated construction (included in construction services); or
  • labelling or packaging services associated with transport (included in transport services).

Maintenance and repair services not included elsewhere (n.i.e)

This service category includes maintenance and repair services performed by the service provider on goods that are owned by residents of a different economy.  Only the value of repair work is included, not the gross value of the goods before or after the repairs.

Examples of maintenance and repair services n.i.e. include:

  • an Australian airline contracting a Singaporean company to repair an aeroplane engine (service debit).
  • a Danish shipping company contracting an Australian service provider to maintain vessels (service credit).

Maintenance and repair services n.i.e. does not include:

  • cleaning of transport equipment (included in transport services);
  • construction repairs or maintenance (included in construction services); or
  • maintenance or repairs of computers (included in telecommunications, computer and information services).

Transport Services

Transport services refer to the carriage of people and objects across international borders. Transport is further split into four sub-categories:

  • passenger;
  • freight;
  • other transport and auxiliary services; and
  • postal and courier services.

Passenger transport covers the international carriage of people (e.g. airfares for individuals) on an airline different to their residence, including services by non-resident carriers provided domestically (e.g. domestic flights by non-Australian airlines). This sub-category includes:

  • the cost of package tours;
  • fees payable by airlines, cruise companies, and other carriers to travel agencies; and
  • other expenditure related to the carriage of passengers (e.g. excess baggage, package tours and food purchased while onboard carriers).

Freight refers to the carriage of objects (not passengers) and includes air mail services.

Other transport and auxiliary services measure transport related services not included elsewhere. These include activities such as warehousing, fees for loading or unloading cargo and airport or harbour fees.

The postal and courier sub-category includes the pick-up, transport and delivery of letters, newspapers, other printed materials, parcels and packages, including door-to-door and express delivery. It also includes services provided at post office counters, such as the sale of stamps and mailbox rental services.

Examples of transport services include:

  • Australian residents being carried on a non-Australian aircraft flight (passenger transport service debit).
  • an Australian ship transporting wood chips to China (freight service credit).

The value of transport services includes any labelling or packing incidental to transport. Excluded from transport services are:

  • repair and maintenance of transport equipment (included in maintenance and repair n.i.e);
  • repairs of harbour, rail, or airfield facilities (included in construction services);
  • freight insurance (included in insurance services);
  • the rental or charter of carriers without crew (included in other business services: operational leasing);
  • services provided to individuals when they travel to a different economy (included in travel services e.g. a bus fare purchased by an Australian tourist in London);
  • cruise fares (included in travel services); and
  • rentals which are financial leases.

Travel Services

Travel differs from most of the other service categories in that it is the consumer that defines the service, not the type of product. Travel services includes the value of purchases of goods and services acquired by a person during a visit outside their own country.

Travel services is split into sub-categories distinguished by the main reason for an overseas trip:

  • business-related travel (e.g. to attend a conference or meeting); and
  • personal travel, which is further broken down into:
    • education-related travel (i.e. undertaking a formal education program, physically in the providing economy); and
    • other personal travel (e.g. holiday or visiting friends and relatives).

All expenditure for an individual is allocated to one category (based on a self-identified main reason for travel). Examples of travel services include:

  • a Chinese resident who travels to Australia to attend university and while they are in Australia also attend a business conference. The total travel expenditure (including the business conference fee) is included in education-related travel credits as the individual’s main reason for travel is education.
  • an Australian resident who travels to Spain for a holiday and decides to take a short course in Spanish while they are overseas. The total trip expenditure (including language course fees) is included in other personal travel debits.

Excluded from travel services are:

  • the acquisition of goods or services by diplomats, consular staff or military personal (included in government goods and services n.i.e.); and
  • education programs undertaken online from outside the providing economy (included in personal, cultural, and recreational services).

Compilation of travel services

At the most fundamental level, the value of travel services is calculated as the number of travellers multiplied by their spend on goods and services while overseas. This applies to each sub-type of travel but the compilation methods and data sources for each vary slightly. The broad methodology and key data sources for each sub-category of travel are described below.

Business travel

For business travel the number of travellers is determined by the number of overseas arrivals and departures (ABS) who self-reported business as their reason for travel. This figure is multiplied by the average spend of business travellers (sourced from Tourism Research Australia).

Education-related travel

For education-related travel the compilation differs for credits (international students in Australia) and debits (Australian students studying abroad).

Education-related travel debits are compiled in a similar manner to business and other personal travel. The number of travellers is sourced from the overseas arrivals and departures (ABS), while spend estimates come from Tourism Research Australia datasets using the average spend from Australian travellers who have self-identified education as their reason for travel.

For education-related travel credits, the number of students is determined by the number of people, in Australia, on a primary student visa (as reported by the Department of Home Affairs). The number of students is then multiplied by an average spend estimate from Tourism Research Australia (as per the other travel sub-categories). This estimate is supplemented by the addition of the total expenditure on course fees (of international students studying in Australia, sourced from the Department of Education, Skills, and Employment).

Other personal travel

For other personal travel the number of travellers is determined by the number of overseas arrivals and departures (ABS) who self-reported their reason for travel as neither business nor education. This figure is multiplied by the average spend of non-business, non-education, travellers (sourced from Tourism Research Australia).

Construction

Construction services refers to the creation, renovation or repair of construction projects such as buildings, roads, bridges and dams. This includes all aspects of the building process, such as (but not limited to) general construction, demolition, site preparation and associated project management services.

An example of a construction service is an Australian company contracted to repair buildings in New Zealand after the 2016 earthquakes (service credit).

Construction services excludes:

  • the value of architectural drawings or engineering designs (included in other business services);
  • any work provided by an enterprise which has established a base of in the economy of operations; and  
  • construction work on embassies or similar government owned facilities (included in government goods and services n.i.e).

Construction services debits are difficult to disaggregate for Australia. Foreign companies that undertake significant construction projects in Australia are usually required to establish a base in Australia (i.e. by registering an ABN and establishing an office), which then means they are out of scope for international trade in services. Furthermore, construction services are often bundled with other related services such as engineering and architectural services, increasing the difficulty of disaggregation.

Insurance and pension services

This category covers the provision of various types of insurance and pension services and is further divided into four sub-categories:

  • direct insurance (including life insurance, freight insurance and other direct insurance);
  • reinsurance;
  • auxiliary insurance services; and
  • pension services (including standardised guarantee services).

Insurers charge premiums, pay claims and invest funds. Similarly, pension funds receive contributions, pay benefits and invest funds. International transactions are particularly common in specialised areas involving reinsurance or for high-value items such as ships and aircraft. Cross-border life insurance and pension transactions can also occur on a significant scale.

A direct insurance transaction occurs between an insurance company and the public (an individual or organisation). Reinsurance occurs where both parties to the policy are providers of insurance services i.e. reinsurance allows insurance risk to be transferred from one insurer to another. Many insurers act as both direct insurers and reinsurers.

The value of insurance and pension services is computed from the service component of the total premiums paid.

Examples of insurance and pension services include:

  • an Australian insurance company who re-insures an insurance company in New Zealand (service credit).
  • an Australian company who insures the freight of their imports through a Danish insurance provider (service debit).

Financial services

Financial services consist of financial intermediation and auxiliary services provided by institutions including banks, stock exchanges and credit card companies. Financial services also cover financial intermediation service charges indirectly measured (FISIM).

A broad range of activities are included in financial services and are listed below:

  • commissions and fees associated with financial transactions;
  • financial advice or financial asset management services;
  • custody services for financial assets or bullion;
  • corporate finance and venture capital services;
  • credit card or other credit granting or credit rating services;
  • foreign exchange;
  • regulation or administration of financial markets; and
  • service charges on purchases of International Monetary Fund resources.

FISIM is computed from the difference between the actual interest payable or earned and the amount that would be payable/earned if the reference rate was used.

Financial services exclude:

  • the dividends or interest earned on any deposits, loans, financial leases, or debt securities;
  • all insurance services (included in insurance and pension services); and
  • non-financial advisory services provided by banks (included in other business services n.i.e).

Examples of financial services include:

  • an Australian bank charging a service fee on a loan provided to a Dutch bank (service credit).
  • an American firm charging a brokerage fee to an Australian company for buying shares on the NASDAQ (service debit).

Charges for the use of intellectual property not included elsewhere (n.i.e)

Charges for the use of intellectual property n.i.e. is further divided into five sub-categories:

  • franchises and trademarks licensing fees;
  • licenses for the reproduction or distribution of computer software;
  • licenses for the reproduction or distribution of audiovisual and related products;
  • outcomes of research and development; and
  • other charges for the use of intellectual property.

Costs associated with the initial production of audio-visual content is included in personal, cultural and recreational services. Given the complexity of certain products or commercial arrangements, some of the payments for the use of intellectual property may be included with the services item (or goods) to which they relate.

Examples of charges for the use of intellectual property n.i.e. include:

  • an American television network purchasing the licence to reproduce and distribute their own version of "Kath and Kim" (service credit).
  • an Australian cinema chain purchasing the right to screen a Hollywood blockbuster film (service debit).

Telecommunications, computer, and information services

Telecommunications, computer, and information services is broken into two sub-categories:

  • telecommunication services; and
  • computer and information services.

Telecommunication services includes:

  • broadcast or transmission of sounds, images, data or other information via any telecommunication mode (including telephone, radio, television and email); and
  • services for mobile telecommunication, internet and online access.

Computer and information services includes:

  • hardware and software consultancy;
  • installation, implementation, maintenance and repair of hardware;
  • data processing and recovery;
  • data base services;
  • provision of news, photographs and feature articles; and
  • subscriptions to newspapers and periodicals.

Examples of telecommunications, computer and information services include:

  • an Australian company developing customised project management software for a firm in New Zealand (service credit).
  • an Australian telecommunications company paying to access an American mobile network to supply international roaming to its customers (service debit).

Telecommunications, computer and information services excludes computer training courses that are not designed for a specific user (included in personal, cultural and recreational services)

Other business services

Other business services contains a large number of activities under four sub-categories:

  • research and development services (of or for new products and processes);
  • professional and management consulting services (including legal, accounting and public relations services);
  • technical and trade-related services (including architectural, engineering, scientific, waste treatment, de-pollution, agricultural, mining and operating leasing services); and
  • other business services not included elsewhere (a residual category which includes utility distribution services, security, building cleaning and translation services).

Examples of other business services include:

  • Australian engineers developing autonomous and electric vehicle technology for General Motors (service credit)
  • an Australian company who employs a German architectural firm to design their Sydney office (service debit)

Personal, cultural, and recreational services

Personal, cultural, and recreational services consists of two sub-categories:

  • audio-visual and related services; and
  • other personal, cultural and recreational services.

Audio-visual and related services includes services and fees for the:

  • production of motion pictures, radio and television programs and musical recordings;
  • provision of service by performing artists, authors, composers and sculptors; or
  • electronic delivery of audio-visual content (excluded if delivered on physical media).

Other personal, cultural and recreational services includes:

  • health services;
  • education services; and
  • other personal, cultural and recreational services not included elsewhere.

Health and education services include services delivered on-site, or remotely, but not services provided to non-residents in the territory of the service provider (included in travel services).

Examples of personal, cultural and recreational services include:

  • an Australian university offering an online (correspondence) course for international students who are not physically located in Australia (service credit).
  • an American rock band touring Australia (service debit).

Government goods and services not included elsewhere (n.i.e)

This service category covers all transactions by government and international organisations that are not covered by the other service types. It includes expenditure by embassies and consulates, military units and agencies and international organisations.

Due to the nature of activities included in government goods and services n.i.e, data sources are often not timely and provide only broad aggregates or partial data. Therefore, data models are often used to extrapolate components of the service.

Examples of goods and services n.i.e. include:

  • office supplies, purchased in Australia, for the United Nations Information Centre in Canberra (service credit).
  • utilities to service Austrade’s Beijing office (service debit).

The expenditure for locally engaged staff (at embassies, military bases etc.) and staff of international institutions that stay in the host economy for more than twelve months are excluded as they are regarded as residents of the host economy.

Data sources

A wide range of data sources are used to compile international trade in services statistics, including:

  • the ABS Survey of International Trade in Services (SITS);
  • ABS international merchandise trade (trade in goods) statistics, in turn compiled from customs records;
  • the ABS Survey of International Investment (SII);
  • the ABS Overseas Arrivals and Departures (OADs); and
  • data from other government organisations and administrative data sources.

These data sources are integrated in economic models to compile the official statistics.

For example, for travel services, the measurement concept is simply the number of travellers multiplied by their spend (while overseas). Despite this straightforward concept, over eight data sources are used to contribute to travel service estimates. Each dataset has its own reference period(s), scope, revisions, quality and context. Statistical models are required to interpolate, nowcast, concord, and combine these discrete input data to compile statistics.

Additionally, there are no data sources for many service categories that are available prior to publication, therefore data for the most recent statistical reference periods must be nowcast.
For example, there are no monthly data sources for Transport available prior to publication. Quarterly data sources for Transport services must be modelled to produce monthly indicators.

Monthly estimates should be interpreted with caution. See the Quality section for more information. 

Key data sources

Table 1 provides an overview of the key data sources for each service type. The reference period (frequency) and lag to the statistical reference period is listed for each source.

Where there are no data sources for service categories that are available prior to publication, data for the most recent statistical reference periods must be nowcast. 

Table 1: Key data sources for international trade in services statistics
Service categoryKey data sourcesFrequency of input dataLag to statistical reference period
Manufacturing services on physical inputs owned by othersABS: International Trade in GoodsMonthly1 Month
Maintenance and repair n.i.e.ABS: International Trade in GoodsMonthlyUp to 1 month
Transport servicesABS: International Trade in GoodsQuarterly1 Quarter
ABS: Survey of International Trade in ServicesMonthly1 Month
ABS: Overseas Arrivals and DeparturesMonthly1 Month
Tourism Research Australia: International and National Visitor SurveysQuarterly1 Quarter
BITRE: Airline dataQuarterly1 Quarter
Travel servicesABS: Overseas Arrivals and DeparturesMonthly1 Month
ABS: Survey of International Trade in ServicesQuarterly1 Quarter
Tourism Research Australia: International and National Visitor SurveysQuarterly1 Quarter
Department of Home Affairs: student visa numbersMonthlyNo lag
Department of Education, Skills and Employment: Student feesQuarterly1 Quarter
ConstructionABS: Survey of International Trade in ServicesQuarterly1 Quarter
Insurance and pension servicesABS: International Trade in GoodsMonthly1 Month
ABS: Financial AccountQuarterly1 Quarter
APRA: Insurance, reinsurance and superannuationVariousUp to 3 years
ATO: Net foreign employment incomeAnnual20 months
RBA: Foreign exchange ratesQuarterlyNo lag
Financial servicesABS: Survey of International Trade in ServicesQuarterly1 Quarter
ABS: Survey of International InvestmentQuarterly1 Quarter
Charges for the use of intellectual property n.i.eABS: Survey of International Trade in ServicesQuarterly1 Quarter
Telecommunication, computer and information servicesABS: Survey of International Trade in ServicesQuarterly1 Quarter
Other business servicesABS: Survey of International Trade in ServicesQuarterly1 Quarter
Personal, cultural and recreation servicesABS: Survey of International Trade in ServicesQuarterly1 Quarter
Department of Education, Skills and Employment: Student feesQuarterly1 Quarter
Government goods and services n.i.e.ABS: Overseas Arrivals and DeparturesQuarterly1 Quarter
Various Commonwealth, State and Territory government data sourcesVariousVarious

 

Survey of International Trade in Services (SITS)

The ABS Survey of International Trade in Services (SITS) is a quarterly survey of Australian businesses who engage, or are likely (in the near future) to engage, in trade in service activities, royalties or licence fees.

The SITS was developed to collect data on service activities which have no alternate data source.  The Survey is designed to capture robust estimates at the national level. As a result, the quality of estimates decreases with increasing geography or service level detail. 

As the SITS is a sampled survey only part of the total service trading population is approached for response each quarter. Respondent data is then ‘expanded’ or ‘weighted’ to make inferences about the total population. The ABS samples and censuses page provides more information on sample surveys.

The SITS is mandatory and is collected under the Census and Statistics Act 1905.

There is no comprehensive source or list to identify enterprises that engage in international trade in services. The ABS Australian Business Register, Australian Tax Office records (ATO), other ABS surveys and environmental scanning are used to identify enterprises that may be in scope.

Information collected from services traders in the SITS also informs the Balance of Payments and International Investment datasets.

Publication of international trade in services statistics

The ABS publish international trade in service estimates across a range of economic statistics outputs:

  • Monthly estimates provide a partial indicator series for some service categories.
  • Quarterly outputs, including statistics for each service category, are included in key economic indicators including Balance of Payments, the Current Account and National Accounts (including GDP).
  • Annual publications (on a calendar and financial year basis) provide supplementary information, which include a more granular view of international trade in services by partner country and by state.

Revisions

International trade in services statistics are subject to revisions.

Revisions occur because of three types of events:

  1. new input data which improves or replaces nowcasts;
  2. revisions to input data; and
  3. changes to methodology or input data sources.

Significant changes to methodology or input data sources are accompanied by detailed information papers. 

As most input data sources are lagged compared with the reference period, estimates of international trade in services for recent time periods are predominately nowcast, are subject to revision(s), and should be used with caution.

Confidentiality

The ABS collects data from individuals and organisations as a routine part of statistical compilation. There is a legal and ethical responsibility for the ABS to respect and maintain the secrecy, privacy and identify of those providing the information.

For international trade in services statistics two main treatments are used to manage the risk of disclosure – data modification and data reduction.

Data modification (perturbation) involves adding a random component to some, or all, cells in a table. This technique ensures that the total does not change (this is important for economic statistics that feed into the National Accounts) and generally results in a minimal loss of information (reasonable estimates of the true value are maintained).

International trade in services statistics implement data removal only in cases where data modification is not possible (too few contributing statistics) or would result in the economic narrative being severely compromised. In these cases, cells with dominant contributors or a small number of contributors may be suppressed.

These data treatments are applied at each level of the services product classifications, as well as to other dimensions (e.g. state and country) and cross-classifications. In each case, the upper levels of the hierarchy are preserved over the lower levels (e.g. personal, cultural and recreational services will be prioritised over audio-visual and related services).

More information on the ABS’ confidentiality framework, and treatments, can be found in the ABS Confidentiality Series.

History

Prior to 1980 the ABS International Trade in Services Statistics were compiled from a monthly survey of banks’ non-trade foreign receipts and payments. The Reserve Bank of Australia (RBA) ran this survey as a by-product of banking sector regulations.

The deregulation of financial institutions in the 1980s (resulting in the RBA data becoming increasingly incomplete or unavailable) coincided with a push from users of international trade in services statistics for more detailed output. As a result, the Survey of International Trade in Services (SITS) was developed. The SITS commenced as a biennial business survey (1987-88) but has been run as a quarterly survey since 1995-96.

Since that time, there have been changes to the collection and dissemination of international trade in service statistics to accommodate for changes to international guidelines. However, the collection and processing principles have remained largely unchanged over time.

Principles of international trade in services statistics

The term “services” covers a wide range of intangible and varied products and activities that are difficult to describe with a single definition.

Broadly there are two types of services:

  • Transformation services – services that are the result of a production activity that changes the mental or physical condition of a good or consumer (e.g. the provision of education, repair or accommodation).
  • Margin services – services that facilitate the exchange of products or financial assets (e.g. transport and financial services).

Services are often difficult to separate from the goods with which they may be associated. Some service categories (such as Travel, Construction and Government goods and services not included elsewhere) specifically include the value of goods. Similarly, trade in goods statistics may include service charges for insurance, intellectual property payments or packaging.

In macroeconomic terms, the main principle of international trade in services statistics is to record the services trade between residents and non-residents of an economy. This is consistent with the Balance of Payments and System of National Accounts.

International trade in services statistics measure export (credit) and import (debit) transactions and the resulting balance (credits minus debits), consistent with methodological standards for macroeconomic statistics compilation.

International guidelines

The ABS compile international trade in service statistics in accordance with international conceptual and classification frameworks including the:

The Balance of Payments Manual (BPM6) defines twelve, categories of services trade which are then extended into detailed sub-items by the Extended Balance of Payments Services Classification (EBOPS 2010):

  1. Manufacturing services on physical inputs owned by others
  2. Maintenance and repair services not included elsewhere
  3. Transport
  4. Travel
  5. Construction
  6. Insurance and pension services
  7. Financial services
  8. Charges for the use of intellectual property not included elsewhere
  9. Telecommunications, computer and information services
  10. Other busines services
  11. Personal, cultural and recreational services
  12. Government goods and services not included elsewhere

Residency

The concept of residency is vital for international trade statistics – including for international trade in services.

Residency is not based on location, nationality or legal status (e.g. citizenship). Instead, residency is defined by ‘the centre of predominant economic interest’ of an organisation or individual.

It is not always easy to determine the residency for an organisation or individual. Typically, residency is determined based on (or intent to engage in) significant economic activity. Economic activity can be deemed significant either by value, or by time (usually a minimum of one year).

The only exception to this residency guideline is for international students, who are deemed residents of their home economies for the duration of their study.

For example, a tourist from New Zealand who visits Australia for a month is classed as a non-resident and therefore their travel would contribute to international trade in services. If that tourist decided to stay in Australia to undertake study, they would continue to be classed as a non-resident and their education related travel would continue to contribute to international trade in services statistics. If instead, they chose to extend their holiday to Australia and stayed for longer than twelve months, they would transition from a non-resident to a resident for the purposes of international trade statistics. Their expenditure would no longer be captured in international trade in services statistics as it is assumed that they have set up a household within Australia and are contributing to the economy domestically.

Timing

Where possible, international trade in services transactions should be recorded at the time in which they were rendered (delivered or received). This may differ from the time at which payment for those services was received. That is, transactions should be recorded on an accrual rather than a cash accounting basis.

An example of this would be a rock band performing an international tour. It is likely that venues along the tour route would be secured and payed for well in advance of each concert, but these transactions should be recorded as occurring at the concert date. 

Valuation

Common unit of account

All transactions should be recorded in Australian dollars, the common unit of account.

When services are transacted in other currencies, the market exchange rate at the time of the transaction should be used to convert the value to Australian dollars.

Market price

The price at which buyers and sellers trade the service in an open marketplace (the market price) should be used as the basis of valuation for international trade in services transactions.

Exchanges between affiliated enterprises often use the book-keeping concept of “transfer pricing” which may not be based on market considerations. Adjustments may be made to reports of transfer pricing to reflect market price equivalents.

Modes of Supply

International guidelines also provide a statistical approach for measuring the value of international trade in services by the mode in which they are supplied.

Mode 1: Cross border supply

This occurs when a service is supplied from one country to another, but only the service crosses the border (i.e. neither the supplier nor the consumer moves).

Examples of cross border supply include:

  • an Australian company contracting an Indian company to provide call centre services (service debit);
  • an Australian company providing legal advice over the phone to a company overseas (service credit).

Mode 2: Consumption abroad

This mode of supply occurs when the consumer moves across a border to access services (i.e. the supplier does not move).

Examples of consumption abroad include:

  • an American tourist consuming travel services (accommodation, food and entertainment) while they are visiting Australia (service credit);
  • an Australian who travels to the United Kingdom to complete a university degree (service debit).

Mode 3: Commercial presence

Commercial presence requires the service supplier to set up operations in another country to provide services there. In this mode only the supplier moves from their resident country, establishing an on-the-ground presence in the consumers’ market as a foreign affiliate.

Examples of commercial presence include:

  • an Australian university establishing a campus in Asia (service credit);
  • a Chinese hotel chain opening a resort within Australia (service debit).

Mode three is not included in ABS international trade in services statistics. The ABS has produced commercial presence trade estimates which can be found in the Australian Outward Foreign Affiliates Trade and Economic Activity of Foreign Owned Business in Australia publications.

Mode 4: Presence of natural persons

In mode four the services supplier moves temporarily from one country to another to deliver services.

Examples of presence of natural persons include:

  • an employee of an Australian software company flying to Fiji to deliver training (service credit);
  • an architect from an UK-based firm working in New South Wales to provide consulting services for a new development in Sydney (service debit).

Quality of international trade in services statistics

The lag in availability of most data sources, compared with the publication reference period, results in most international trade in services estimates being nowcast - especially at the monthly level.

Regular revisions occur as a result of updates to the nowcasts, as well as replacements of nowcasts with estimates modelled from actual data (when they become available).

Due to the nature of this data in a volatile economic climate, it is recommended monthly services estimates be interpreted with caution.

Unlike international trade in goods statistics, there is no single, complete data source from which to compile international trade in services statistics.

The ABS data quality framework describes seven quality dimensions. These dimensions have been developed to assist the ABS in developing statistical collections, but also to aid data users in interpreting the data (including determining if a dataset is fit for purpose).

The seven dimensions are interconnected, and the importance of each is likely to change based on the purpose for which the statistics will be used.

Institutional environment

Institutional environment includes the impartiality, objectivity and independence of ABS statistics– from the data sources used to the statistical products published. Consideration of the institutional environment enables an assessment of the validity, reliability or appropriateness of a product.

Data for international trade in services is collected by the ABS, under the provisions of the Census and Statistics Act, or collected by other government organisations under objective protocols.

Relevance

International trade in services is an important component of Australian trade, which is a main economic indicator because of the importance of international trade to the Australian economy.

The conceptual framework of the ABS international trade in services statistics is compliant with international standards and guidelines. Adherence to these standards allows for comparison of the ABS’ international trade in services statistics with data from other countries.

Timeliness

Headline international trade in services estimates are available monthly, within 5 weeks of the reference month.

International trade in services are available on a quarterly basis as part of the Balance of Payments. These data include more detailed service sub-categories. The quarterly data are available within ten weeks of the reference quarter.

Detailed international trade in services statistics are available on an annual basis (both calendar and financial year) within 20 weeks of the end of the reference year. These data include services classified by partner country and state.

The time frames for these releases either meets or exceeds the international requirements set by the IMF’s Special Data Dissemination Standards (SDDS).

Accuracy

There is no simple way of measuring the accuracy of international trade in service statistics as there are no direct data sources for many of the services concepts.

The Survey of International Trade in Services (SITS) is subject to non-sampling errors (in coverage, measurement, processing and non-response). The ABS perform various procedures and checks to ensure these errors are minimised. The Survey methodology is designed to capture high-quality national estimates for each of the twelve key service categories. Therefore, care should be taken when using the more detailed aggregations, i.e. by sub-service category, partner country, state or any cross classification.

The lag in availability of most data sources, compared with the publication reference period, results in most international trade in services estimates being nowcast. Revisions result from updates to the nowcasts, as well as replacements of nowcasts with estimates modelled from actual data (when they become available).

The confidentiality treatment of data modification (perturbation) also impacts the accuracy of published estimates. However, statistics are suppressed in preference to modification that alter the economic narrative.

Coherence

Coherence refers to the internal consistency of a statistical collection, as well as comparability with other sources of information.

The use of international standards, classifications and definitions for statistical compilation ensures that the ABS has adopted collection methods which are comparable to other national statistical organisations. These frameworks also ensure that time series for a particular data item are highly coherent (comparable through time).

There are very few comparable sources of international trade in services information or statistics for Australia. However, where there are available alternate estimates, differences usually arise from conceptual/definitional variance. For example, the economic contribution of international students is captured by education-related travel services but could also include components of transport services and personal, cultural and recreational services depending on the defined scope of “economic contribution”.

Interpretability

Interpretability refers to the availability of information to help provide insight into the data.

Measures to increase the interpretability of international trade in services statistics include:

  • key materials, including this paper, to provide supporting information to users;
  • inclusion of analytical summaries and key messages in statistical releases;
  • clearly denoting tables which have been subject to data modification to protect confidentiality; and
  • providing users with revision tables.

Accessibility

ABS international trade in services statistics are available, for free, on the ABS website. Each publication includes key statistics, main features, analytics and downloadable datasets.

The datasets provide international trade in services estimates from 1971 to present.