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5302.0.55.002 - Revisions to international standards in quarterly Balance of Payments and International Investment Position statistics from September 2009, 2009  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 22/07/2009   
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07/12/2009 Note: The concordance table (Table 1) has been updated with corrections to some time series IDs. Please see the I-Note for more detail.

INTRODUCTION

The Australian Bureau of Statistics (ABS) presents statistics on Australia's National Accounts and Balance of Payments and International Investment Position which are compiled in accordance with international standards. These international standards have recently been updated. This paper focusses on the publication Balance of Payments and International Investment Position, Australia (cat. no. 5302.0) and describes:

  • the main changes to the international standards
  • the timing for implementing the changes in Australian statistics
  • the impact on time series in the publication
  • the impact on the presentation of statistics in the publication.

In addition, available from the Downloads tab of this issue is a mock-up of the publication and the correspondences between BPM5 and BPM6 for the related time series spreadsheets as it will appear following the implementation of the new standards. New series identifiers for the time series spreadsheets will be released on 27 October 2009.

An information paper: Implementation of revised international statistical standards in ABS National and International Accounts (cat no. 5310.0.55.002) is expected to be released at the end of September 2009 describing the impact of the international standards on Australia's macro economic accounts including key aggregates for the balance of payments and international investment position. Technical information included in this paper will describe the most significant changes in more detail.


CHANGES TO INTERNATIONAL STANDARDS

The international framework for economic statistics is centred around two key documents, the System of National Accounts, 1993 (SNA93) and the fifth edition of the Balance of Payments Manual (BPM5), both of which were released in 1993. Since the release of these key standards, a number of new economic phenomena have arisen or assumed greater importance as economies continue to develop in their complexity. In response to this, relevant international organisations and a range of national statistical agencies, including the ABS, have reviewed a range of conceptual and measurement issues that were either not clarified completely at the time of the release of SNA93 and BPM5, or have emerged as important measurement issues since that time. These issues are described in the Information Paper: Introduction of revised international standards in ABS economic statistics in 2009 (cat. no. 5310.0.55.001).

The international standards for national and international accounts were updated concurrently and the standards are compatible. The new standards for international accounts are presented in the sixth edition of the Balance of Payments Manual (BPM6). The Manual on Statistics of International Trade in Services is currently being revised and will reflect, as appropriate, changes to BPM6.

In addition to implementing the new standards, the ABS will incorporate the results of a number of data quality investigations into the BPM6 series.These investigations have taken account of any clarification provided by BPM6. As a result, new series will be introduced for the pension service charge, reinvested earnings on investment fund shares and other volume changes due to migrants' transfers. Revised series will be introduced for transport freight services, the insurance service charge, including freight insurance, financial intermediation services indirectly measured (FISIM) and personal transfers. A fuller description of the changes together with the likely impact on key data series will be provided in the information paper that will be released at the end of September 2009.


CHANGES TO GOODS AND SERVICES

The revised international standards have not significantly changed the measurement of international trade in goods and services. The main changes were initially advised in the Information Paper: Revisions to international standards in monthly international trade in goods and services statistics from August 2009 (cat. no. 5368.0.55.012) which was released on 17 June 2009 and are repeated in this paper for completeness.

The main changes to international trade in goods and services are:
  • the more strict application of the change of ownership principle impacting on several components in Goods and Services
  • a number of changes to the Extended Balance of Payments Services (EBOPS) classification
  • the definition of economic territory which changes the scope of Australia's balance of payments
  • the seasonally adjusted, chain volume measures and index goods series will be revised as appropriate to reflect the changes to the ABS classifications for goods and services.

The main changes to the classification of Goods and Services as a result of the above are summarised in Table 1. In addition there are numerous wording changes to the description of lower level Services classifications but these will not change the content of the items.

Table 1 - Main changes to Goods and Services
ItemChange and impact
MerchantingNo longer recorded as Services; goods subject to merchanting will be recorded as exports of goods. This impacts credits only.

Net value (sales less cost of goods sold) will be removed from Services. Both gross (exports and negative exports) and net values [sales (exports) minus purchases (negative exports)] will be added to goods. The use of purchases rather than cost of goods sold will result in a change to the balance on goods and services for some periods.
Repairs on goodsNo longer recorded as Goods; will be included in Services and renamed Maintenance and repair services n.i.e..

Value will be removed from Goods and added to Services. Therefore there will not be any change to the balance on goods and services apart from some minor revisions resulting from additional editing.
Goods for processing No longer recorded as exports and imports of goods; processing activities will be recorded as Manufacturing services on physical inputs owned by others.

Existing series have been reviewed. The revised gross values will be removed from Goods and the revised net value added to Services. There will not be any change to the balance on goods and services.
Goods procured in ports by carriersBoth the credits and debits series will be re-classified to General merchandise. This will involve allocating the value of the current Goods procured in ports by carriers series to appropriate goods credits (i.e. Non-rural goods) and debits (i.e. Intermediate and other merchandise goods) items.

This reclassification within Goods will not change either total goods credits or total goods debits.
Postal and courier servicesWill be reclassified to Transport services.
Royalties and licence feesWill be renamed Charges for the use of intellectual property n.i.e..
Telecommunication services and computer and information servicesWill be merged to form a new category Telecommunication, computer and information services. The Communication services category will no longer exist.
Insurance and pension services Revised models will be introduced.
Financial services Revised models will be introduced.


The most significant of these changes is to Goods for processing (which is renamed Manufacturing services on physical inputs owned by others). An investigation by the ABS identified that the level of information available on export and import documentation lodged with the Australian Customs Service is not sufficient to adequately identify Manufacturing services on physical inputs owned by others. As a result, the difference between goods imported for processing and goods exported after processing does not represent an appropriate processing fee. The current Goods for processing series have been reviewed and the BPM6 series will be adjusted as appropriate to reflect an appropriate processing fee. This will result in some transactions currently included in Goods for processing exports and imports being reallocated to Non-monetary gold and other related series. The Manufacturing services on physical inputs owned by others series will be reviewed in more detail in the future to ensure that manufacturing services are adequately measured.


CHANGES TO INCOME

The income account will be renamed 'Primary income account'. The main changes to Primary income are described in table 2 below.

Table 2 - Main changes to Primary income account
ItemChange and impact
Reinvested earnings on investment fund sharesWhen only part of the net earnings on investment fund shares is distributed to shareholders as dividends, the retained earnings will be treated as if they were distributed to the shareholders and then deemed reinvested. The deemed component is captured in the Primary income account.

This will result in an increase in both Primary income credits and debits. However, since the level of Australian investment abroad in investment funds exceeds the level of foreign investment in Australia in investment funds, this change is likely to result in a reduction in the Net income deficit and therefore in the Current account deficit.
Financial intermediation services indirectly measured (FISIM)A revised model will be introduced for calculating FISIM. FISIM will be separately recorded as an international trade in services, and subtracted from reported interest income in the Primary income account in order to avoid double counting.

This will result in a decrease in both Primary income credits and debits and a modest increase in the Net income deficit.
InsuranceInvestment income on technical reserves attributable to non-resident policy holders will be recorded as income in the Primary income account.

This will result in an increase in both Primary income credits and debits.
Pension fundsEmployer contributions to non-resident pension funds will be recorded in Compensation of employees in the Primary income account.

This change will result in an increase in both Primary income credits and debits. However, since Australian participation in non-resident pension funds is greater than non-resident participation in Australian pension funds, the net result is likely to be a modest increase in the Net income deficit.
Fellow enterprisesIncome attributable to financial positions between fellow enterprises will be separately identified under Direct investment.
Other equityOther equity refers to equity that is neither Direct equity nor Portfolio equity (securities) and may include equity in quasicorporations, such as branches, trusts, limited liability and other partnerships, unincorporated funds, and notional units for ownership of real estate and other natural resources.

Income attributable to positions in other equity will be separately identified as 'Withdrawals from income of quasicorporations' under Other investment in the Primary income account.

More details on the impact of the above changes will be released in the forthcoming information paper as mentioned above.

There has also been a significant change to the presentation of the Primary income account tables 20, 21 and 22, with a number of data items renamed and a number of new series introduced. Details of these changes are provided in Table 3: BPM5 and BPM6 Detailed Comparison for International Investment in the Data Cubes section of the Downloads tab.


CHANGES TO CURRENT TRANSFERS

Current transfers will be renamed Secondary income. The main changes are:
  • the Workers' remittances item will be replaced with Personal transfers, which is broader in scope, and Workers' remittances will become a supplementary item. Workers' remittances remains the only component of Personal transfers currently measured and the methodology for this item has been revised. An Information Paper : Estimation of Workers' Remittances based on Balance of Payments Manual & International Investment Position, Sixth Edition (BPM6) cat.no. 5302.0.055.003 describing the new methodology will be released on 14 August 2009
  • the Other transfers item will be renamed Other current transfers
  • the Non-life insurance transfers item will be renamed Non-life insurance premiums and claims. The insurance methodology has also been revised.


CHANGES TO CAPITAL AND FINANCIAL ACCOUNTS

The main changes to the Capital account are:
  • the Acquisition/disposal of non-produced, non-financial assets item will be renamed Gross acquisitions / disposals of non-produced non-financial assets which will be presented as the first item under each credits and debits section
  • General government credits will be split between Debt forgiveness and Other as is already the case for debits
  • Migrants' transfers will be removed from Capital transfers and will be reflected in other volume changes (other adjustments) in the International investment position (see below).

The main changes to the Financial account are described in table 3 below. These changes also impact on the primary income and/or the International Investment Position and therefore are also included in Tables 2 and 4.

Table 3 - Main changes to the Financial account
ItemChange and impact
Other volume changes due to migrants' transfersMigrants are assumed to transfer all assets to their new country of residence over a period of two years. These transfers are captured as a series of negative transactions in the Financial account until the International investment position is reduced to zero.

This change will reduce both Australia's investment abroad and foreign investment in Australia. However, since the number of immigrants exceeds the number of emigrants the net result is likely to be an increase in Australia's Financial account surplus. This will offset the removal of Migrants' transfers from the Capital account.
Pension fundsMember contributions to, and benefit payments from, non-resident pension funds are now explicitly recorded as transactions in the Financial account with offsetting amounts recorded as Other current transfers in the Secondary income account.

This change will result in an increase in both Australia's investment abroad and foreign investment in Australia. However, since Australian participation in non-resident pension funds is greater than non-resident participation in Australian pension funds, the net result is likely to be a decrease in Australia's Financial account surplus.
InsuranceInvestment returns on technical reserves are recorded as income to policyholders in the Primary income account, and effectively paid back to the insurance company as premium supplements. This is captured as transactions in the Financial account.
Reinvested earningsReinvested earnings on investment fund shares are now deemed to be a payment of income and a reinvestment of that income into the investment fund. The deemed reinvestment is recorded as a transaction in Portfolio equity in the Financial account.

This will result in an increase in both Australia's investment abroad and foreign investment in Australia. However, since the level of Australian investment abroad in investment funds exceeds the level of foreign investment in Australia in investment funds, this change is likely to result in a reduction in the Financial account surplus.
Fellow enterprisesTransactions between fellow enterprises are separately identified under Direct investment.
Other equityTransactions in Other equity, which refers to equity that is neither Direct equity nor Portfolio equity (securities), is separately identified under Other investment.


More details on the impact of the above changes will be released in the forthcoming information paper as mentioned above.

There has also been a significant change to the presentation of the Financial account table 25, with a number of data items renamed and a number of new series introduced. Details of these changes are provided in Table 1: Correspondence between BPM5 and BPM6 for Time Series Spreadsheets in the Data Cubes section of the Downloads tab.


CHANGES TO INTERNATIONAL INVESTMENT POSITION

The main changes to the International investment position are described in table 4 below.

Table 4 - Main changes to International Investment Position
ItemChange and impact
Other volume changes due to migrants' transfersMigrants' transfers are removed from the Capital account and the effect of migration is now captured in changes in the International investment position. The changes are recorded as other volume changes under Other adjustments in the reconciliation accounts.

This change will increase both Australia's investment abroad and foreign investment in Australia. However, since the number of immigrants exceeds the number of emigrants the net result is likely to be a decrease in Australia's Net international investment liability.
Pension fundsMember balances (technical reserves) in non-resident pension funds now explicitly contribute to the International investment position.

This change will result in an increase in both Australia's investment abroad and foreign investment in Australia. However, since Australian participation in non-resident pension funds is greater than non-resident participation in Australian pension funds, the net result is likely to be a decrease in Australia's Net international investment liability.
InsuranceTechnical reserves attributable to non-resident purchasers of insurance (and reinsurance) services now contribute to the International investment position and are now separately identified.
Fellow enterprisesFinancial positions between fellow enterprises are now separately identified under Direct investment.
Other equityPositions in Other equity, which refers to equity that is neither Direct equity nor Portfolio equity (securities), is separately identified under Other investment.

More details on the impact of the above changes will be released in the forthcoming information paper as mentioned above.

There has also been a significant change to the presentation of the International investment position tables 26, 27, 28 and 29, with a number of data items renamed and a number of new series introduced. Details of these changes are provided in Table 1: Correspondence between BPM5 and BPM6 for Time Series Spreadsheets in the Data Cubes section of the Downloads tab.


IMPLEMENTATION TIMING

Changes to Balance of Payments and International Investment Position, Australia resulting from the implementation of BPM6 will be implemented with the September quarter 2009 issue of (cat. no. 5302.0) which will be released on 8 December 2009. This is consistent with the timing for implementing the new standards in the Australian National Accounts.

To accommodate additional processing required to compile the Balance of payments and international investment position time series according to the revised standards, the release of the September quarter 2009 issue of Balance of Payments and International Investment Position, Australia (cat. no. 5302.0) will be delayed one week until 8 December. Due to this delay and additional time required to compile the national accounts according to the revised standards, the September quarter 2009 issue of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) will be delayed two weeks until 16 December 2009. Future issues of the publications will be released according to the standard timing


IMPACT ON TIME SERIES

From the September quarter 2009 issue of Balance of Payments and International Investment Position, Australia (cat. no. 5302.0), all data will be presented on a BPM6 basis. The changes being implemented with BPM6 will not generally impact on the value of total goods and services but will impact more significantly on the Primary income account, Financial transactions and the International Investment Position. Data quality improvements will result in a shift in the level of some series. To maintain the integrity of time series, any level shifts will be backcast. The length of backcasting varies for individual series but the Goods, Services and Secondary income series will be revised to September quarter 1959. The individual goods and services series which will be revised are listed in Tables A1 and A2 of Appendix 1.

All series in the International investment position, the Financial account and the Primary income accounts will be backcast to September quarter 1988.

An information paper will be released at the end of September 2009 describing the impact on the international standards on Australia's macro economic accounts including key aggregates for the Balance of payments and international investment position. Further details of the impact on key aggregates of implementing BPM6 will be provided in the September quarter 2009 issue of Balance of Payments and International Investment Position, Australia (cat. no. 5302.0).


KEY CHANGES TO OUTPUTS

The standard BPM6 presentation for Goods is not very detailed and will be supplemented by the current more detailed ABS classifications of Goods credits and debits, changed as appropriate to take into account BPM6 changes. BPM6 specified a number of supplementary items but only Workers' remittances will be presented. The BPM6 supplementary items for Goods, Re-exports on BoP basis, will not be shown but an equivalent item is available on a recorded trade basis. Other supplementary items will be presented in the future if they are relevant to the Australian economy and appropriate data are available.

The standard BPM6 presentation for Services will be adopted as fully as practicable. The major divergence is for Transport services where mode of transport is not shown, but in a number of cases more detail will be provided than required by BPM6.

The standard BPM6 presentation for International investment will be adopted as fully as practicable. The time series spreadsheets will include further sector splits as per the standard presentation however, these will not be presented in the pdf version of the publication. Time series spreadsheets will include the sectoral classification of Portfolio investment income in the Primary income tables and the sectoral classification of Other investment liabilities in the Primary income tables. The Primary income account memorandum item interest before FISIM will also be included in the time series spreadsheets but not in the pdf version. The Financial account and the International investment position time series spreadsheets will include the further split of the Other sector between 'Other financial corporations' and 'Non-financial corporations, households and NPISHs'.

Details of changes to each impacted publication table are described in the Key changes to outputs section in Appendix 2 of the Downloads tab.


MOCK-UPS OF THE PROPOSED PUBLICATION AND THE RELATED SPREADSHEETS

Available from the Downloads tab of this publication are:
  • a mock-up of the quarterly publication,
  • Data Cubes: Table 1: Correspondence between BPM5 and BPM6 for Time Series Spreadsheets,
  • Data Cubes: Table 2: BPM5 and BPM6 Detailed Comparison for Services
  • Data Cubes: Table 3: BPM5 and BPM6 Detailed Comparison for International Investment.

Time series spreadsheets Tables 39, 89, 114, 115 and 116 will be removed due to the following:
  • Table 39 - same information can be found in tables 2, 3 and 4
  • Table 89 - same information can be found in tables 52, 53 and 54
  • Table 114 - same information can be found in table 101
  • Table 115 - same information can be found in table 105
  • Table 116 - same information can be found in tables 15, 16 and 17.


TIME SERIES IDENTIFIERS

The changes described above will result in new time series for some series and the new time series identifiers will be available from the Downloads tab of this paper on 27 October 2009.


CONCEPTS, SOURCES AND METHODS

Balance of Payments and International Investment Position, Australia: Concepts, Sources and Methods (cat. no. 5331.0) describes the underlying concepts and structure of the balance of payments and the sources, methods and terms used in compiling the estimates. The current version of this publication reflects BPM5 concepts and a number of references to data sources and methods are, or will be, out-of-date. A revised Concepts, Sources and Methods publication is scheduled for release in late 2010.


FURTHER INFORMATION

The publications impacted by the implementation of BPM6 include:
The international standards are described in:
Related information papers to be released include:
  • An information paper: Implementation of revised international statistical standards in ABS National and International Accounts (cat no. 5310.0.55.002) is expected to be released at the end of September 2009.

Related information papers already released include:
If you would like further information please contact Selvi Sekhar on (02) 6252 5540 for Goods, Current transfers and Capital account, Karen McGuigan on (02) 6252 5415 for Services and Val Tot on (02) 6252 6171 for Income, Financial account and International investment position.


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