A CENTURY OF AUSTRALIA'S BALANCE OF PAYMENTS PERFORMANCE
Official estimates of Australia's balance of payments were first published in the 1931 edition (No. 34) of the Official Year Book of the Commonwealth of Australia for the period 1928-29 to 1930-31. No official estimates exist for earlier periods for the accounts as a whole. However, a range of estimates have been compiled by various researchers that can be used to broadly compare Australia's current account performance at the start of the century with the position for 1999-2000. In this article the estimates for the current account for calendar year 1901, from Chapter 11 by Alan Lougheed in W. Vamprey (ed.) Australians: Historical Statistics (Fairfax, Syme & Weldon Associates, Broadway, New South Wales, 1987), are compared with the 1999-2000 estimates in the June 2000 issue of Balance of Payments and International Investment Position, Australia (5302.0).
The balance on current account for the year ended 31 December 1901 was a deficit of £2.3m and represented -1.0% of Australia's Gross Domestic Product (GDP) (table 30.11). For the year ended 30 June 2000, the current account balance was a deficit of $33.7b and represented -5.4% of GDP. The major change in the composition of the current account (as a proportion of GDP) over the century is the decline in the share of exports of goods - down from 22% at the start to 16% by 1999-2000. At the same time the exports of services have risen from a 1% share in 1901 to account for nearly 5% in 1999-2000. Imports of goods have increased their share from -19% to -23%, while the GDP share of imports of services has also risen (from -2% to -5%) over the same period.
Interestingly, the net income deficit has declined in significance over the past century, from -5% of GDP in 1901 to -3% in 1999-2000. The deficit on income was about -5% of GDP up until 1935-36 when rapid growth in GDP and strong trade performances leading up to World War II pushed the ratio down to about -3%. It fell further to about -2% in the early 1960s, and stayed low until the accumulating deficits since the mid 1970s drove the ratio up to around -4% in the mid 1990s.
The following detail on the goods trade in 1901 should be used with care. Goods imported into one State and trans-shipped to another were excluded from imports. The amounts involved are not known but could well be as much as 5% of imports; while estimated at about £1.8m in Vamprey, they have not been included in the balance of payments for 1901. A similar problem also affected goods trans-shipped from the State of production to another State for export, which are excluded from total Australian exports in 1901. However, the problem for exports is likely to be larger than for imports due to the wider distribution of agricultural and mining production for export than applies to the population and industry distribution for the trans-shipment of imports. For particular export and import commodities the undercoverage may be quite significant. Other coverage and valuation problems also affect the 1901 estimates.
In 1901, recorded goods credits were £48.8m. Rural goods accounted for £26.2m or 54% of total goods credits, with wool being the largest single contributor at £15.2m or 31% of total goods credits. Non-rural goods (including ships' stores) accounted for £9.1m or 19% of total goods credits, with mining at £5.4m (11%) and other exports and re-exports at £3.7m (8%). Gold exports were £13.5m (28%).
By 1999-2000, the composition of exports had changed significantly. Non-rural exports were $66.3b or 68% of total goods credits. The largest contributors were metal ores and minerals, and other manufactures, both accounting for 12% of total goods credits. However, fuel exports had risen to 18% of exports compared with negligible levels in 1901. Similarly, elaborately transformed manufactured exports had risen from negligible levels to about a quarter of all exports of goods by 1999-2000. Rural goods accounted for 24% of total goods credits, with cereal grains and cereal preparations, and meat and meat preparations the largest two contributors, both accounting for 5% of total goods credits. Gold exports and goods for processing (mainly gold) were 7%.
In 1901, goods debits were £38.0m. As with exports, the shift in imports composition is away from primary inputs and towards finished goods, particularly capital goods, as well as towards fuels. Imports of apparel, textiles and yarn accounted for the largest proportion of goods imports in 1901, at 29%, compared with just 6% for these goods a century on. Food, beverages and tobacco were at 18% of imports in 1901, slipping to 4% in 1999-2000. In contrast, machinery imports have risen from 5% of total goods debits at the opening of the century to be about a quarter of all imports at its close. If parts for these capital goods are included, the imports share rises to nearly 40% in 1999-2000. Fuels imports are now about 7% of imports compared with negligible levels a hundred years earlier.
In 1901, Australia's services trade recorded a deficit of £1.8m, attributable mostly to transportation. Transportation debits of £2.9m were only partly offset by transportation credits of £1.7m. By 1999-2000, services recorded a deficit of $1.8b, again with transportation services being the dominant contributor to the deficit. Transportation debits exceeded credits by $3.0b, with most of that outcome contributed by a net freight deficit. Unlike 1901, however, when travel also recorded a significant net deficit, by the close of the century travel was contributing a net surplus of $3.2b, most of which was derived from the education-related travel expenditures of foreign students in Australia. In the later part of the century, trade in a range of business, professional, technical and personal services grew to account for about 30% of Australia's trade in services by 1999-2000. At the dawn of the century these components were less than 15% of services exports.
In 1901, income debits were recorded at £11.7m. Two-thirds of this deficit (or 3% of GDP) were contributed by the interest payments of general government (State and local). By 1999-2000 the public sector net interest bill was less than half of 1% of GDP and only accounted for one-seventh of the net income deficit. Data on income credits are not available for 1901. While estimates appear from 1906, measured income credits were negligible until 1928-29, the first year of official balance of payments estimates, when they accounted for about 3% of total current account credits. By the end of the century this share of total current credits had tripled to about 9%.
Current transfers recorded surpluses for both 1901 and 1999-2000 of £0.4m and $94m respectively.
30.11 BALANCE OF PAYMENTS, Current Account - 1901 and 1999-2000
|
 | 1901
| 1999-2000
|
| |
| | £m | % of GDP | $b | % of GDP |
|
| Current account | -2.3 | -1.0 | -33.7 | -5.4 |
| Goods and services | 9.0 | 4.0 | -15.2 | -2.4 |
| - Credits | 51.4 | 22.7 | 125.8 | 20.2 |
| - Debits | -42.4 | -18.8 | -141.0 | -22.7 |
| Goods | 10.8 | 4.8 | -13.3 | -2.1 |
| - Credits | 48.8 | 21.6 | 97.5 | 15.7 |
| - Debits | -38.0 | -16.8 | -110.8 | -17.8 |
| Services | -1.8 | -0.8 | -1.9 | -0.3 |
| - Credits | 2.6 | 1.2 | 28.3 | 4.6 |
| - Debits | -4.4 | -1.9 | -30.1 | -4.8 |
| Income | -11.7 | -5.2 | -18.6 | -3.0 |
| - Credits | n.a. | - | 12.7 | 2.0 |
| - Debits | -11.7 | -5.2 | -31.3 | -5.0 |
| Current transfers | 0.4 | 0.2 | 0.1 | 0 |
| - Credits | 0.9 | 0.4 | 4.7 | 0.7 |
| - Debits | -0.5 | -0.2 | -4.6 | -0.7 |
|
| Source: Australians: Historical Statistics (W. Vamprey); Balance of Payments and International Investment Position, Australia (5302.0). |
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